Saturday, July 25, 2009

Inverted Head and Shoulders Pattern

Dow Jones Industrial Average Technical Chart:
In May 8th I gave a bullish scenario "What if this rally has some legs!" to read this article click here . This post would be a follow up to my May 8th article. If you are one of my the hardcore followers you know that I'm not bullish by no measure. We got a pull back that I was looking for big institutions managed to jump back in and save the market. As long as S&P500 stays above 880 and Dow Jones hold on to 8087, bulls would have the upper hand. I remain sceptical; I'm not sure if this is a real bull market rally or just a bear market rally. I'd like to point the possibility of bullish scenario.

Despite a lack of fundamentals to support this rally ,technicals look perfect for continuation of rally. It's up to you to base your investments on pure technicals or not. In May 8th article I pointed a possibility of inverted head and shoulders, the scenario is getting closer to become reality. As you see in the chart Dow Jones has formed the inverted head and shoulders pattern, that is very bullish, if this pattern wants to come to play it has to stay above 8800 the target will be 10300-11500 which is much higher than May 8th forecast(9800 to 10200). Let's see what is going to play out.