Today lets do some pure Technical analysis and measurements on the S&P 500 chart.
The holiday reversals at the end of December we skidded down but I will still class this at the bottom of the right shoulder of the inverted head and shoulders.
So we have the bottom of the head and shoulders at about the 1340 level. If take the measured move from the bottom of the head to the neckline, and double that over, we are up around the 1495 - 1500 level. Possibly higher.
We have already broken the neckline, and broken it very convincingly! So it will be interesting what happens in the next week or so.
The weekly chart on the daily if you zoom back is also asking for the 1490 - 1500 level. So that is giving us a double confirmation we might see these levels.
The smart money is now back in the market, and they were not short. The novice retails traders who traded through xmas were short, and it was the wrong move to make.
As you can see on the chart below, what a difference 2 or 3 days make on the market.
Inverted head and shoulder patterns do not always work out, but when they do, its a real sight to see. So now we have a double confirmation we will wait and see what happens. :-)
|inverted head and shoulders|