The S&P for all of its wackiness in 2015 has a very bullish pattern emerging for traders to possibly look forward to… if it can confirm. 

And if it does confirm, you have the potential for a very promising start to 2016 as the pattern plays itself out. 

The pattern is an inverse head and shoulders that you can see by looking at the chart below: 

Spy head and shoulders Pattern

As you can see, the pattern is obvious, but not really being talked about anyone. Instead the focus is on terrorism, China, and of course whether the Fed will raise rates in December, so this pattern may catch a lot of traders by surprise, especially the ones that are short on this market. 

The key will be for $SPY to hold the $202.18 lows established earlier this month. If that price level is breached, the pattern will be nullified and no longer worth following, anything above it though and the pattern remains in full effect. 

When determining a target for such a move on $SPY, one could surmise that a confirmed breakout could lead to a $20 rally on $SPY or a 10% move on $SPX. That would be, no doubt, mighty impressive. 

But for now, lets see whether the pattern can confirm and if so, we can talk about price targets then. 

You Might Like

  • The rise of the retail trader in the stock market.

    The Retail Trading Revolution: How Small Investors Are Reshaping the Stock Market

  • fading the gap

    Fading the Gap: How Large Overnight Moves in SPY and QQQ Play Out During the Trading Day

  • how to trade a bear flag

    How to Trade a Bear Flag