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Bull Trap In Play? Stock Market Analysis 11-9-18

Technical analysis of the US stock market via SPY, QQQ, /NQ & /ES highlighting some recent technical developments & key levels to watch.

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2018-11-09T10:40:09+00:00Nov 9, 2018 10:40am|Categories: Equity Market Analysis|Tags: , , , , , |3 Comments

3 Comments

  1. chrisneal November 9, 2018 12:05 pm at 12:05 pm

    I was seeing the inverted head & shoulders forming, but I’m new at this and I’ve been seeing some patterns that haven’t panned out. It’s nice to have some guidance, and I appreciate the details provided in these videos!

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    • rsotc November 9, 2018 12:41 pm at 12:41 pm

      Sometimes, the best looking chart patterns don’t play out. One piece of advice that I might pass along would be to become familiar with some of the requirements or “ideal” developments for each chart pattern. For example, as mentioned with the potential Inverse Head & Shoulders pattern on SPY in this video, a IHS pattern is a topping pattern that comes after a prolonged uptrend, not a continuation or bottoming pattern. While I’ve seen many traders highlight IHS patterns as continuation patterns in the past, some of which even played out as such, overall they don’t pan out as such.

      Another important but often overlooked criteria for a H&S topping or IHS bottom pattern are the volume patterns. For a H&S topping pattern, ideally, you want to see volume expansion on the move down off the top of the head and once again, volume expansion on the move down on the formation that finalized the right shoulder (ditto for an IHS but in reverse). More info can be found in the following links:
      https://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:head_and_shoulders_top_reversal
      https://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:head_and_shoulders_bottom_reversal

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  2. chrisneal November 10, 2018 4:02 am at 4:02 am

    Roger. So more is needed than just recognition of a shape on a chart. I’m reading those linked descriptions now. Thanks!

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