This is it folks. Sometimes we can complicate things and other times we can try and keep it simple. Today let’s just stick with the two obvious trendlines that everyone seems to be talking about. The first is declining off the April highs and has been tested 3 times. The second trendline serving as support comes up from the June lows and has also been tested 3 times:
The resolution to this pattern is coming quickly as we approach the apex of the triangle. Confirmation will come on a breakout above 1375 to the upside or a breakdown below 1335 to the downside.
There are two reasons why I think the breakout will be higher. First of all, technical analysis isn’t cut and dry. Often times, we see temporary penetration of boundaries before prices officially resolve themselves towards the opposite direction. In this case, we saw a brief breakdown of support last week before quickly recovering. This is a sign to me of positive things to come.
And secondly, I’ve been watching the leaders of this bull market that began off those October lows last year – the Small-Caps. Look at a similar chart of the small-cap russell2000 already breaking out above the declining trendlines from the spring highs. More clues of higher S&P500 prices:
Tags: $SPX $SPY $ES_F $RUT $RUTX $IWM