(MENAFN – DailyFX) S & P 500/Dow Jones Technical Outlook: S & P 500pulling back from 3000+, top-side t-lineDow Jonesalso coming off a top-side trend-line Continue to watch the Russell 2000 as it lags severely
See how the quarterly forecast has played out what it could mean for the big-picture –Q2 Equity Markets Forecast.
S & P 500 pulling back from 3000+, top-side t-line
The S & P 500 topped 3k last week, notching it for the first time ever. In the process of doing so a top-side trend-line dating back to the January 2018 high was tagged. An interesting confluence of a psychological level and form of resistance.
So far, the response has been relatively benign with only a shallow pullback developing. That could change of course, but as long as the market doesn’t fall apart, despite resistance, we will have to respect the generally strong trend.
If, however, we see the market start to turn lower with aggression, then it is possible it is the beginning of a decline out of a Reverse Symmetrical Triangle (RST), or known to some as a Megaphone pattern.
These patterns through their increasingly larger price swings indicate growing instability in a trend and can mark major tops; in this case it would be growing uncertainty in a bull market since 2009 that has been one of the most persistent in history. The time from Jan ’18 to now is a large span of time for such a topping pattern to develop, which is in good proportion to the extreme bull market run we’ve seen since the depths of the GFC. It’s implications could be quite sizable.
A top and drop could be arriving at an interesting point in time as well given we are heading through the summer towards the fall, a