Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Saturday, January 23, 2016

S&P Dome Top Continues to Form

If the newly started short squeeze continues higher for the almost obligatory S&P 2000 backtest (everyone was wondering if this simply wasn't going to happen but it looks like it may now), the technicians around the globe will have a smile on their faces if they see that the huge dome top that is 80% built continues to completion.  The dome is the king of all topping formations and this one may end up stretching 2.5 years wide with almost perfect shape.  When the 2017 stock market text books are published this top will very likely be an absolute must as you will be hard pressed to find a more beautiful price pattern throughout market history looking at it solely from a technical perspective.  

click on image to enlarge

Looking at the S&P through the lens of the SPY in the chart above, it's easy to see how we could have 1-3 additional make or break tests of the neckline before the dome completes its right side.  No one knows how it will play out but if  if the pattern continues to develop with the technical purity it has so far the price action I have sketched in is certainly plausible.

Trade well my friends


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