The MJ Journal

state of the market

Is this a bear market rally ? Or, is the March low the bottom? This is the debate of the time. Personally, I believe the March low is the worst.

Having said that, I think all traders should keep an open mind. We do not trade by “forecast”, rather, we trade by the “sign”. If the market starts to move up from the market low as forecasted, then a reversed head and shoulder pattern can be expected. With that in mind, I would make my trades accordingly.

Now the left shoulder and the head have been in place, I am expecting a right shoulder to be formed next. On the other hand, if the market moves down further and even break the March low, then all bets are off .

Reversal Head and Shoulder?

First attached is the daily chart of S&P 500.  The index has moved up from the downward trend.  This is a very positive sign.

 

Also attached is the weekly chart. The weekly chart also shows the breakout from the downward trend. If the index pulled back from here down to 800, that would be the perfect point to get in . A reversal head and shoulder pattern is forming.

 

I think this is what most money managers are planning. As such, this has been the action of the market.