| S&P: The Neutral-Bullish developing pattern
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We like horizontal chart patterns - they are cleaner when they break and provide tighter risk points. In this case, we are looking at a consolidation that is occurring at the lower end of a potential horizontal range. If this range breaks to the downside, 1280-1300 would be the next stop. If price holds here, then we can rally back to 1400. We would only be tempted to go long if price breaks above last week's high and holds above that level. |
| S&P: The bearish patterns
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Using diagonal trendlines instead of horizontal ones, we can make the case that we have broken down already and that last weeks action was simply consolidating the first leg down. The next leg should take us down to 1300 or lower. A sustained break below last weeks low would confirm this scenario.
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| The Trade(s)
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Given the ambiguity here, we are going to have to bracket the market. A CLOSE above last week's high of 1370.25 would be reason to trade from the long side. A CLOSE below last week's low of 1339.25 would be reason to trade from the short side. Right now, I'm suggesting we stand aside until the market tips its hand. Please note that we want to see the price CLOSE above these points. Otherwise, you risk having an intraday spike push above these points only to close below them and keep you inside last weeks consolidation range.
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| More Markets
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