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The inverted H&S crowd is out in force. If one considers the pattern from the 3500 low to present price levels as the patterns’ range, then the target is simply 3800+300=4100, which is a level that bulls were chattering about a week or more ago. I’m not so sure, particularly since the pattern is messy and also based on the lunatic action of October 13th. I think ~3900, a target I suggested in recent days, is a more sensible exhaustion point, as circled below. We shall soon see………
The projection of the larger bull flag that I posted on Thursday morning delivered like a champ, with a perfect touch of the channel support followed by a break up that almost reached the target at a retest of the flag high on Friday afternoon. The full target should be made at the open today. So what now?
SPX 5min chart:
This is truly one for the books: Silicon Valley Bank (SIVB). I’ve written about this many times before, such as here, three months ago. Just look at what a beautiful path SIVB followed from precisely one year ago (literally, to the day) to now, which represents about a $500 drop, or 70%. Amazing!!!
Last Friday there was a clear break back below the 5dma, and that was a fix under the Three Day Rule. On this rule SPX should retest the last low at 3491.58 before any retest of the prior high at 3806.91. I haven’t counted but there have been nine previous fixes in 2022 and I’d be surprised if this rule hasn’t fixed well over 100 times since the start of 2007 and on the current rules for this, after a small tweak in 2019, there has not yet been a failure, although there have been two marginal higher lows when triangles were forming at the lows.
I have mentioned that there is no such thing as a perfect market stat, and that I would therefore expect to see a fail on this stat at some point, but there’s no particular reason to think that would be here. I have been asked this week what I would expect to see if it does fail here but, as that hasn’t happened before, I have no idea, though it would open the next possible resistance level in the 3900 area.
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