• 13 hours Robinhood’s $40B March IPO Is In Grave Danger
  • 2 days Are Bots Responsible For GameStop’s Massive Runup? 
  • 3 days Learning From Buffett’s $11 Billion Mistake
  • 6 days The Token Boom Spawns Digital Gold Mine in Art, Collectibles
  • 6 days The “Oil Of The Future” Is Set To Soar In 2021
  • 7 days Wealthy Could End Up Footing The Bill For States’ Budget Shortfalls
  • 7 days Could This Be The Hottest Commodity Play Of 2021?
  • 8 days JP Morgan Says Fintech Will Steal The Disruptor Show
  • 10 days Facebook Plays Dirty Down Under
  • 10 days Could This Be The Most Exciting Lithium Play Of 2021?
  • 13 days China Sidelines US As EU’s New Top Trading Partner
  • 15 days 3 Smart Ways To Play the Global Chip Shortage
  • 16 days Flying Taxis Are The Number One Speculative Bull Arena
  • 17 days Ocean Power: The Missing Link
  • 22 days Luxembourg’s Ultra-Secrecy Still Attracts Hundreds Of Billionaires
  • 23 days Robinhood Is Under Fire And Trading ‘Democracy’ Is In Question
  • 24 days Bitcoin Could Be Worth $12 Trillion In The Long-Term
  • 25 days The Biggest Tech IPO Since Uber … For Farmers
  • 27 days The Biggest Boost Yet for the Cannabis Industry
  • 28 days Biden Administration Signs $231 Million Deal For At Home COVID Tests
Chris Vermeulen

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Contact Author

  1. Home
  2. Markets
  3. Other

Critical Inflection Point!

This week will very likely be one we look back on as a big inflection point. We will see that the bears are coming back.

It appears the market is forming a head and shoulders topping pattern. There are a couple different ways to trade this pattern depending on the level of skill and aggressiveness.

One can wait for a closing bar below the 'neckline' on the time-frame in which you have identified the pattern. By operating on a closing bar basis you significantly reduce the risk of entering on a 'false' breakout. Entering prior to the close of the bar increases the risk of becoming part of the wick of a reversal candlestick should it close back above 'neckline' support.

Another way is to try and time the right shoulder and short into the bounce or pause just before you think a neckline break is about to occur.

Both, have then pro's and con's, which is better, that all depends on the overall market conditions and that of the trader making the trade.

Take a look a couple charts below so you can see where I feel the stock market is within this pattern.

iViewMarkts.com Bullish Sentiment Indicator: This shows active traders have been very bullish and are just now starting to become bearish. As more short term traders start to sell their long positions and build up short positions this will put downward pressure on stocks and likely start the new trend down.

Bullish Sentiment Indicator

SP500 Bullish Percent Index: This chart is telling us more stocks are starting to form bearish price patterns after being overbought the last couple months.

SPX Daily Chart

Head & Shoulders Pattern: This is the pattern I speak of showing where most traders enter positions for this price pattern. There is always a possibility that the market does not do a Kiss goodbye (retest of breakdown). The strongest moves to the downside will not retest the breakdown in most cases so playing the breakdown I think is vital.

Idealized Head and Shoulders Pattern

SP500 Head & Shoulders Pattern:

SPX Daily Chart 2

That is a quick snapshot of the market and where it stands...

 


Get My Trade Alerts In Real-Time: www.TheGoldAndOilGuy.com

 

Back to homepage

Leave a comment

Leave a comment