Pimp My Trade

More S&P Voodoo

Posted on February 23, 2009 by Adam

I’ve been watching the following pattern develop for a long time now - almost a year. I’m talking about the massive double top that’s been forming in the S&P. This is a pattern that’s been forming since 1997! If we close below support, we will have confirmed this horrible pattern.

Based on the price pattern measuring rule, it predicts that the S&P will drop to 400. Of course, we could see a sharp rally from this level, as we did in November, but the more times we test this level, the weaker support becomes.

Let’s hope it doesn’t play out as bad as it looks.

The way to play this from a trade perspective is to stay balanced. That way, if we do see a rally, you won’t be stuck in a book full of short positions.

A pretty ominous looking double top that is about to confirm.

Good luck!