Head And Shoulder Pattern: Stock Markets Flush To Target
The markets have now completed the head and shoulder pattern target at $115.00 on the SPDR S&P 500 ETF (NYSE:SPY). The head and shoulder pattern can be seen clearly on the chart below. This pattern was a classic technical bearish signal. In this situation, it completed in record time. With the completion of this pattern, it is highly likely the markets will find support for a short term bounce.
The downside today came on the back of a downgrade to the credit rating of the United States. The S&P downgraded the U.S. credit rating from AAA to AA+. Europe continues to be a mess while the ECB (European Central Bank) said it would start buying Italian and Spanish bonds to push down interest rates.
Key stocks are beginning to look very attractive. Amazon.com, Inc. (NASDAQ:AMZN) a master trend line support point at $193.00. Since then it has bounced sharply intra-day. Caterpillar Inc. (NYSE:CAT) and Ford Motor Company (NYSE:F) are also all at master support levels on the daily charts.
The key is to find a stock that is into major support and match it up to the S&P completion of the head and shoulders pattern. This gives it a higher percentage chance of success. Essentially, buy a position on support with a bounce in the market like the wind in your sails.