Markets gaped higher this morning trying to take immediate advantage of the bullish broadening wedge and the bullish cup and handle pattern, but pulled back and traded choppy and sideways into the fed meeting at 2pm. The usual low liquidity whipsaw occurred at 2pm, but as things settleded down, we saw the formation of both a cup/handle targeting 2075.43 and a mini inverse head and shoulders in the cup. You guys that know me well, there is nothing I like more than a cup/handle with an inverse in the cup.
After acquiring the intraday bullish cup/handle basically to the penny (seen above), markets pulled back a tiny bit into the close. That leaves us still with 3 bullish patterns in motion.
1) The bullish double bottom cup/handle targeting 2169.81 (seen on 3rd chart below)
2) The bullish broadening wedge targeting 2093.84 (show below)
3) The bullish cup handle targeting 2106.96
Our first red flag that something might be wrong is for the broadening wedge to fail by moving back into it, say with a move below 2042. There is no price action evidence that will occur at this point, so do not be shorting into this rally until the price action gives you reason to. Put your opinions, fears and everything else aside and look at price! PRICE PRICE PRICE.
In order to kill this off, the bears first need to kill off the other two smaller patterns. Then take out Monday’s low. So lots of work to do and no price action evidence of it occurring. I can’t babysit intraday, but if I see any signs of weakness, you know I will bring it up to you in the nightly report.
THE BOTTOM LINE: The price action remains bullish above 2042 with 3 bullish patterns in motion targeting higher prices ahead.