On Feb. 18, I brought to investors’ attention a developing bullish pattern of S&P 500 Index represented by SPDR S&P 500 ETF Trust SPY, staging gains of 1% plus three days in a row. The previous time it happened was in 2011, and a rally ensued. On Feb. 19 when the market was pulling back, as well as gloom and doom had taken hold, I wrote, “Stocks are pulling back. After the strong four day rally, this pull back is natural and does not foreshadow anything about the future.”
As shown on the chart, a bullish ‘W’ pattern is forming now.
Please click here for an annotated chart of ESH6.
The chart also shows the heavy resistance zone. The market is now right up against this resistance zone
When a ‘W’ pattern is formed near the bottom of the yearly range, there is about 66% probability of the market going up. However, if the market can now overcome the heavy resistance zone shown on the chart, there is an 84% probability of the market going up.
If only the markets were so simple. Technicals patterns work until they don’t work. or this reason, technical patterns constitute only a small part of The Arora Report’s adaptive timing model…Read more on MarketWatch
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