Gotta love the action today. The right shoulder of this inverse head and shoulder pattern is setting up very nicely. But until we see a breakout above the neckline, that’s all it is, a nice right shoulder forming. This is typical with this pattern, Bulls and Bears playing a tug of war, jockeying for position. Yesterday it was the day of the Bear, today it was a Bull day. We might see this go on for several more days, you just need patience. There’s no guarantee either that we’ll see a breakout at all, so prepare yourself for that scenario. But more often than not, this pattern is a winner.
A breakout on the Naz would need to pass through 2360, on the S&P 500 it’s at 1387. If and when we pierce the S&P neckline, the next stop is the 200 Day Moving Average (currently at 1444 and change), so I wouldn’t be thinking short here, just wouldn’t be prudent.
So what made today such a good day? Well, advancers led decliners about 3 to 2 on the Naz, and 2 to 1 on the NYSE! Most stocks, like AAPL burst out of the gates early and held their ground right to the end of the session. And this all happened with markedly better volume than we’ve had the past two days. So, consider, down days we had lack luster volume, and today we had a big increase in volume, that’s bullish in my book. I’m just not gonna let it get to my head just yet, and neither should you. Best to be stoic right now, supress the emotion. Remember, there are Bulls that are just as eager to bring this market down, so show them the respect they deserve. Only after the breakout can you have bragging rights!
The best recommendation is to have your cash ready. Because when she blows, your gonna want to shoot your wad.
-zach bass
Tagged as: Head and Shoulder
