Has The Rising Wedge On S&P 500 Broken Downward?

Here’s the question on everyone’s mind - did the S&P 500 (^GSPC) officially break out of its rising wedge pattern this morning?  Let’s look.

(Click for larger image)

A quick look says “Yes,” but always keep a close eye on the risk, and the possibility that this break could be an insidious ‘bear trap.’

The trendlines have converged to form a bearish rising wedge pattern with an official break, though bulls have been resilient in the face of overhead resisatnce, overbought oscillator signals, etc.

The implication is that price will break-down hard out of this pattern, whether one takes a classic technical analysis outlook, or a more complex Elliott Wave projection.

In Elliott terms, there’s debate over whether this is an “Ending Diagonal” or a “Leading Diagonal” which I posted in a previous update.  Either way, the next likely swing would be a down-swing, and it has the potential to be a violent one.

Let’s keep watching this closely for signs of continued impulse down, or let’s see if bulls can overrule this powerful technical sell-signal.

Subscribe by RSS Subscribe by Email