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Megaphone Bottom

Since there is little else to hang your hat on, we will look at the technical levels for the S&P 500.  In June of this year, 1257 served as a powerful floor that propelled the S&P above 1350 in July.  In August, this same floor was broken sharply with a run down to 1100.  Since then the S&P has been range bound and has now made a pattern that looks like a megaphone bottom:

Lower lows alongside higher highs with a final breakout to the upside

S&P 500 showing a megaphone bottom?

In the last few days we have seen a strong test of the 1257 level from the other side of the trading range with a high on October 24th of 1256.55.   So far, it has certainly seemed like we have bounced off of this 1257 barrier.

It is an interesting pattern because I could see the markets trading in either direction…a strong break upwards through 1257 or a sharp move lower to trade once again at 1050.  Two vastly different outcomes hinging on the political brinkmanship of Europeans.  I have taken some chips off of the table and this level because it feels more like betting on red or black at the roulette table.

Posted in Markets, Technical Analysis, Trading Ideas.

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