There’s an inverted head and shoulders on the S&P500;.  Remember, technicals haven’t been working all too great lately but its worth noting, and paying close attention to.  We saw a similar inverted head and shoulders last month which didn’t really go anywhere but down.

Read About Inverted Head & Shoulders Here:

http://www.chartpatterns.com/headandshoulders.htm

Here’s a chart of the SP500

http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=0&mn=3&dy=0&id=p75894158908

Remember, this is just a technical indicator that can easily go nowhere.

This rally is looking strong on a technical basis folks.  That SP500 inverted head and shoulders is breaking out to the upside.  The DJIA just tested and broken the 50-day moving average for the first time since BEFORE the collapse.  The DJIA is now flirting with 9000.  If we get a major break on the DJIA, we may be forming support at the 50-day.  Yet, these are just technical indicators which can easily reverse course.  I haven’t been putting so much emphasis on technical analysis lately.  But on a holistic basis, this rally looks a whole lot better than previous ones.  I think we still will test 7,800 to form a large inverted head and shoulders on the DJIA before making a bottom.  I still think the markets will reverse FAR FAR before everyone thinks.  I’m the only one on that side of the boat.

AAPL Technicals - Bullish

- ADX crossover +DI over -DI for the first time since mid Sept
- RSI > 50
- Tightened BBands indicate strong move. (happened today)
- Parabolic SAR’s been bullish for 4 days
- CMF turned positive today

superbaka - 08 December 2008 03:57 PM

AAPL Technicals - Bullish

- ADX crossover +DI over -DI for the first time since mid Sept
- RSI > 50
- Tightened BBands indicate strong move. (happened today)
- Parabolic SAR’s been bullish for 4 days
- CMF turned positive today

Don’t be too happy yet.  Refer to mid Aug on this daily chart.

H&S and inverse H&S are very common and happen all the time.  From EW perspective, LS is wave four, H is wave five and RS is wave B.

Mace - 08 December 2008 06:35 PM

superbaka - 08 December 2008 03:57 PM

AAPL Technicals - Bullish

- ADX crossover +DI over -DI for the first time since mid Sept
- RSI > 50
- Tightened BBands indicate strong move. (happened today)
- Parabolic SAR’s been bullish for 4 days
- CMF turned positive today

Don’t be too happy yet.  Refer to mid Aug on this daily chart.

H&S and inverse H&S are very common and happen all the time.  From EW perspective, LS is wave four, H is wave five and RS is wave B.

What’s interesting about H&S is that they’re only very common in Bear Markets.  Bullish Pennants are far more common and prevalent in Bull Markets.  Also, H&S is one of the most reliable technical indicators out there.  This bear market started with a Head and Shoulders and will end with an inverted head and shoulders.

Don’t count your chickens yet. We are only at the neckline of a right shoulder. It ain’t over until it’s over! H&S like EW is only valid after it is done. There could be no right shoulder if the price takes off and keeps going. Also if it falls apart and heads to a new low, there is no H&S.