Option Investor
Printer friendly version
The daily SPX chart has built a bullish reverse head and shoulders although the left shoulder could be the February 23rd swing low or the January 20th swing low. If you pick either one the pattern is lopsided but you cannot discount the bullishness of it.

Now comes the hard part, where to draw the neckline. I know there are differences of opinion on how and where to draw this line and, of course, it will depend on which swing low you use for the left shoulder so here is what I am going to do. I will use the black line joining the February 9th high to the April 2nd high and put on a bullish position when/if SPX breaks through. If it does I suspect it will not take too much to rally to the magenta line and once it does I will put my stop to just below 850. If/when SPX breaks the through the magenta line I will add to my position.

[Image 1]

Market Monitor Archives