THIS BULLISH TECHNICAL PATTERN IN THE STOCK MARKET SUPPORTS TRUMP AND XI’S TRADE TANGO $CGC $NBEV $TSRO $AAPL $AMZN $OAS $CLR $XOM $HAL $CAT $BA $FB $GSK $QQQ $SPY $DJIA

In the 1880s, a partner dance called the tango originated in Argentina. Now U.S. President Trump and President Xi of China have orchestrated a successful tango at the G-20 meeting in Buenos Aires calling for a truce in the trade war.

Is foresight more valuable than hindsight, especially to stock market investors? The week before the positive news, we wrote in the Arora Report’s Morning Capsule: “Both sides want a deal. The probability of the market going higher on Monday (after the meeting) is fairly high.” Many were predicting a failure in Argentina, and some expected a big decline in the stock market.

There is now a bullish technical pattern developing in the stock market. Let’s examine the issue with the help of a chart.

Chart

Please click here for an annotated chart of S&P 500 ETF SPY.  A similar conclusion can be drawn from the chart of the Dow Jones Industrial Average DJIA but the charts of Nasdaq 100 ETF QQQ and small-cap ETF IWM look different. Please note the following from the chart:

• The chart shows the left shoulder, the head and the right shoulder.

• The chart shows the neckline.

• The chart is showing the potential formation of an inverse head-and-shoulders pattern. This is bullish if the pattern actually forms. If the pattern fails, that will be of concern.

• The pattern will be complete if the neckline is broken to the upside.

• The chart also shows the resistance zone.

• The resistance zone is not that far away. This indicates some caution.

• The chart also shows that RSI (relative strength index) is entering the overbought region. This also indicates some caution.

• So far the volume has not been what I would have liked for a long-term sustained rally.

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Special situations

Several investors have noticed that lately I have been emphasizing special situations. Those who do not subscribe to The Arora Report are asking for examples. Here is an example: On Nov. 16, The Arora Report gave a buy signal on Tesaro TSRO with an average buy price of $34.61. The Arora Report gives targets at the time of issuing a buy signal. On Nov. 16, when the stock was trading in $30s, we wrote: “It will not be surprising to see a buyout north of $75.”…Read more at MarketWatch.

 

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