As we have seen in the past few days, bulls clearly have the favor here as they've managed to push nearly to post correction highs. Amidst a trade war and upcoming earnings, investors still seemingly have a positive outlook of the economy. From a technical perspective, however, we have witnessed below average volume and high capital outflows. As investors, should we still be concerned of the ongoing trade talks and potential recession or relinquish our fears and start buying more of the market?
Regardless, I still feel that technicals are important to a certain degree and it would be invaluable to continue using this data to predict our next moves. In the chart above, I have outlined two major technical formations. First, we have a large symmetrical triangle (green thick lines) from the drop back in Feb. From today's rally, we should be testing the upper trend-line soon and potentially bounce down from a past-due correction. Second, there also appears we have a rising wedge formation as (thick lines in blue). Though, we will have to wait till it breaks out of the triangle to do further testing on the wedge. A breakout in high volume of both of these upper trend-lines may result in the continuation of the current upwards channel.
In addition, the current run-up appears to be very similar to the run in the beginning of May. There was also a sharp rally that ultimately led to SPY trading flat for the next one and half weeks. Unless SPY breaks out of the triangle's upper trend-line, in the short term, I forecast that we should see similar days of flat trading. The next few days/weeks will be important in deciding the direction of the market.
Feedback is welcome and appreciated.
Regardless, I still feel that technicals are important to a certain degree and it would be invaluable to continue using this data to predict our next moves. In the chart above, I have outlined two major technical formations. First, we have a large symmetrical triangle (green thick lines) from the drop back in Feb. From today's rally, we should be testing the upper trend-line soon and potentially bounce down from a past-due correction. Second, there also appears we have a rising wedge formation as (thick lines in blue). Though, we will have to wait till it breaks out of the triangle to do further testing on the wedge. A breakout in high volume of both of these upper trend-lines may result in the continuation of the current upwards channel.
In addition, the current run-up appears to be very similar to the run in the beginning of May. There was also a sharp rally that ultimately led to SPY trading flat for the next one and half weeks. Unless SPY breaks out of the triangle's upper trend-line, in the short term, I forecast that we should see similar days of flat trading. The next few days/weeks will be important in deciding the direction of the market.
Feedback is welcome and appreciated.
Comment:
Oops! The pattern outlined in Blue should be an ascending triangle rather than a rising wedge. Nevertheless, I expect to see a minor correction down to 272 or 273 and we'll continue our upwards trend from there.