The other day, I made an observation I felt deserved mention.
In that post, I used the S&P futures contract as my example because it was pertinent for timing (it was before the opening bell in the US). My observations still hold, and are now being expressed in clearer detail via the actual S&P 500 index during market hours.
Here's what I'm looking at, for those who want to know, because I was inundated by friends and colleagues after the post to explain my interest further. So, without further ado, here's what I'm watching. To wit:
(Chart Source: Investing.com)
The above is the S&P 500 a few minutes after the opening bell via a 4 HR chart (i.e., every bar/candle represents 4-hour intervals when the markets are open). As you can see, what I referred to as the "diagonal" pattern appears here as well. Here's what matters.
As I stated in the prior post, this pattern is usually a signal or precursor, if you will, for the ending of a prior trend. Doesn't mean it will, just means it's a signal to watch and now see if other "signals" develop that make its forecast all the more foretelling. It may be doing just that as I type this. So here's the next step to look for if the pattern has significance.
We are currently in what is known technically as the "Throwover" stage, i.e., we gapped over and out of the pattern entirely.
What would make this what is known as a "bearish" pattern is if, in the very near future (i.e., next few days or so), the market begins to move and prices close within or thereabout the highlighted box. If so, it should be your utmost concern, because that would be a signal that a reversal may be upon the markets.
Can we go higher? We sure can, but the dynamic and technical to watch remains. The "markets" could spike higher, but it's the sudden reversal of it that's the key.
Let me remind everyone this one point: Technical analysis has been rendered near useless when trying to garner information via the main indexes since the rise of HFT (high frequency trading) and central banking largesse. However, with that said, with the Fed now reversing that largesse where there's less money for the bots to manipulate as before, patterns that used to be reliable may become reliable once more.
As always, we shall see. But that doesn't mean we shouldn't be watching for clues.
That's just good business sense.