I have mentioned many times about pattern recognition and its ability to increase your success and investment returns. Below is the daily chart of the SP500 which you can see has formed a symmetrical triangle. Triangles are one of the few patterns that (when recognized) don’t provide me an edge as I wrote about here. We do know because they are subject to reversals after their initial breakouts, it is best to wait for confirmation before making any investment decision. The other important thing to keep in mind is as price gets closer to the apex, a breakout is imminent and when it does it is usually swift and decisive whichever way it finally moves.
So, once again we are at another crossroad in the market and this one should be resolved very soon. The catalyst likely being our beloved Federal Reserve which meets this week where they are expected to update us on their ongoing financial engineering “experiment” to control the US economy. This includes a decision on raising interest rates ... or not.
As investors there are times to be active and aggressive and others to be an observer. When triangles are present, I lean towards the latter. Regardless of whichever way we break from this pattern I do believe we still have a destiny with our prior 2014 lows. This will need to occur before we can move on to first break the 2040 overhead resistance and then on to all-time highs. In the mean time when intervention on the scale of what the Fed is capable of doing is always on the table, investors should not try and front-run them but rather patiently wait and then respond based upon the market's reaction to their announcement.
