• 12 hours Federal Reserve Downgrades U.S. Growth And Cuts Rate Hikes
  • 15 hours Disney Beats Out Comcast In $71.3B Mega-Merger
  • 18 hours The Feds Continue To Prop Up Equities Markets
  • 20 hours Bejing's Sway In South China Sea Is Fading
  • 1 day Saudis Eye Billions As Stocks Get Emerging Market Boost
  • 2 days Airbnb In Acquisition Mode Ahead Of IPO
  • 2 days Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 2 days Champagne Sales Slow As European Economic Worries Grow Louder
  • 2 days Putin Signs “Digital Iron Curtain” Into Law
  • 3 days Russian Metals Magnate Sues U.S. Over Sanctions
  • 3 days Tesla Looks To Jump Into Indian Market
  • 3 days Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 3 days Homeowners Experiment With Risky New Investment Trend
  • 4 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 4 days De Beers To Expand World’s Most Profitable Diamond Mine
  • 4 days Ford CEO Gets Raise After Massive Layoff Round
  • 4 days Germany’s Flirtation With Recession Could Cripple The Global Economy
  • 5 days Where To Look As Gold Miners Inch Higher
  • 5 days Google Faces Billions In Fines From European Regulators
  • 6 days The Energy Industry Has A Millennial Problem
The Chatroom Cartel Running Global Bond Markets

The Chatroom Cartel Running Global Bond Markets

Eight major banks have been…

Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

  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