Inverted head and shoulders - a inverted head and shoulders

Inverted head and shoulders ?

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

WHAT IF YOU KNEW WHICH WAY THE MARKET WAS ABOUT TO MOVE BEFORE IT HAPPENED?  CLICK HERE To Join Our VIP ELITE GROUP  -- FREE 10 Day Trial Offer Today! 

nasdaq daily chart

As with the previous post => FISCAL CLIFF PANIC we stated that the last few days have been classic holiday reversals, and EXTREMELY LOW volume

Have a look at the nasdaq daily chart.

As you can see we have sold off since the start of the holidays. We sold off on very thin volume, meaning right now the smart money is gone from the market.

Also the stochastics are confirming that we are now very oversold on the market and a bounce is due soon.

It seems we are still in holiday reversal time period and with the fiscal cliff talks that is also putting added pressure on the markets. The breadth and other market indicators are skeptical that these moves will hold for long, and there is a considerable sized bounce coming very soon.

Charts are just saying this is a dip before a larger move higher. If you are a bear, do not fall in love with the downside, doing that in holiday reveral time periods can sometimes be very dangerous.

Enjoy you weekend and we will come back next week and monitor things closely.


WHAT IF YOU KNEW WHICH WAY THE MARKET WAS ABOUT TO MOVE BEFORE IT HAPPENED?  CLICK HERE To Join Our VIP ELITE GROUP  -- FREE 10 Day Trial Offer Today!