Last week I wrote about the SPX trading within a range-For Now! The pattern has been well publish (a triangle) and many are now looking for a possible top target for the pattern. It is pretty simple to figure out. You just take the points from top/bottom of the triangle and add them to where it broke out and that is your target.

So the high for the triangle pattern came on 02/25/15 and the price was 2119. The low came on 03/11/15 and the price was 2039. 2119-2039 is 110 points. The breakout of the pattern came on 04/23/15 when it traded above 2109. Add the 110 points to 2109 and the triangle pattern target is 2219.

Is there a question why everybody has turned overly bullish these days? The trouble hits if that triangle pattern was never really in play. Meaning yes it is there-clear as day. But how many times have we seen a widely publicized pattern and target come into play-exactly as scripted? Not many!

Does that mean the SPX isn’t heading to that target? I have no idea and nor do I care. What I care about is making money. The fact that every mom and pop have that triangle posted on their refrigerator, has me a little skeptical it will play out as planned.

On 05/17 the Dorsey Market Sentiment triggered a 1% bullish reading. Everybody was bearish and that triggered the low. Over the last week, we have seen a series of bullish reading in the 90’s. Everyone is expecting higher! The SPX may grind higher, but will it go straight to the 2219 target, that everyone is expecting?

The odds are not great and there is an expected high date looming in the not so distant future. Maybe once mom and pop get washed out and give up on that pattern target, will it then have a better probability of playing out. That will most likely start on the expected low date-some 3 weeks from now.

Be careful of following the “herd” they have not been right on direction in either direction. Follow the sentiment and start looking the other way-once they are all convinced they know what is going to happen.

 

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