SP500 In the Sky with Diamonds

Nov 18, 2014: 2:03 AM CST

I couldn’t resist the catchy headline to demonstrate the mini-Diamond Pattern forming in the S&P 500.

Let’s take a look and chart a possible course for this developing pattern:

Diamonds are relatively rare consolidation or contraction patterns that represent balance in price.

At the moment, the “Balance Price” is the 2,036 level which reflects the black diagonal line in the pattern.

The green line represents the vertical distance as the “Diamond” or Kite pattern expands and contracts about the 2,036 level.

The short-term future swings could continue to compress or bounce (play “ping-pong”) between the compressing blue trendlines, and if so, then that is your roadmap for the next two or more price swings.

However, we’ll look to play a simple price breakout above the 2,040 level – and especially the price high above 2,042 – as an alternate “pro-trend” breakout.

Logic does suggest a downside break and bearish trigger under the 2,033 level.

Monitor this short-term, intraday pattern as you trade the next few sessions – and the 2,036 Balance Level.

My friend John Carter just released a video on some of his favorite options strategies which I’ll link below:

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

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