Monday, November 19, 2018

SPX S&P 500 Daily Chart; Potential Inverted H&S

The red lines show the rising wedge pattern (along with the overbot conditions and negative divergence) that Keystone highlighted and explained, that created the spank down from the early October top.

Armchair technicians are now discussing the developing inverted head and shoulders (H&S) pattern. This is a bullish pattern. The head is at 2635 and neck line at 2815 which is a difference of 180 points. Thus, if price breaks out above 2815, the 3K level is on the table.

On the bear side, both the 50 and 200-day MA's are sloping negatively which is a bearish development. The 50 may come down for a death cross of the 200 in December. The bull's first goal that proves they have strength is to move price above the 200-day at 2761.

If price comes back down to the 2635-ish neighborhood, the inverted H&S pattern will be nullified. The pattern may actually morph into a W pattern bottom which is also an extremely strong bullish pattern. Of course if price falls through the 2635-ish support from late October, it's ovah. Stocks will take another major leg lower. The action since the October drop is sideways choppy slop that chews up bulls and bears alike. In this type of action, for proper risk management, you want to typically decrease your trading activity. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 9:48 AM EST: Stocks are trading on Monday. The SPX is down 7 points to 2729. VIX 18.71. The SPX remains below the key 12-month MA at 2750 which signals a cyclical (weeks and months) bear market ahead.

Note Added 7:34 PM EST: Stocks are smacked hard in the Monday session. The SPX plummets 46 points, -1.666%, to 2691. VIX 20.10.

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