What we have now is an Ascending Triple Top Breakout on the S&P. Take a look at the P&F chart:
This is a very strong bullish pattern with high probability of follow through to the upside. The last time I saw this pattern was last September when the S&P ran up from about 1477 on 09/18/07 to the high of 1576 on 10/11/07.
From where we stand now, it looks like we may not run into resistance until 1420. While we are not completely out of the woods pertaining to a downside reversal, the situation for the bulls has improved greatly this past week.
In regard to a potential downside reversal, given all the news and “noise”, the market could get “bitch slapped” around a bit next week. However, I wouldn’t expect to see a confirmed reversal of this recent leg up, until we get down to around 1360 or a little lower. So the bulls shouldn’t get too worried if we see a pullback from here. Right now, the market is trading off of technicals, not fundamentals—obviously.
The risk reward on an S&P trade right here looks promising. The upside target is 1490 and the downside reversal point is at 1360. From the current level of 1395, that is a positive risk/reward of over 2 to 1.
I will provide a more in depth technical analysis of the S&P and my reasons for why I prefer to use the P&F charts, later on this weekend (before the Super Bowl of course).
Go Giants!
Developing…..
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