Should you sell the head-and-shoulders topping pattern on the S&P 500 Index? While the technicals look threatening, sentiment indicators suggest an appealing risk to reward.
Stocks closed firmly lower on Wednesday as investors bet that the trade war between the USA and China would get worse before it gets better. The S&P 500 Index shed just less than 0.7%, weighed down by interest rate sensitive areas of the market (Utilities and REITs). The sell-off was fuelled by a break below support on the large-cap index around 2800, which also marks the neckline to a head-and-shoulders topping pattern. Downside target of the topping pattern points to 2650, or around 4.8% below Wednesday’s close. Financial news was quick to jump on this technical event, with analysis overwhelmingly turning bearish on the market technicals and fundamentals. The market has shifted from being overly-complacent at the start of May, which suggested downside risks in stocks, to the other extreme of excessive pessimism, which now opens the door to opportunities.
You can read the entire report by downloading today’s Equity Clock report at the following Link. What you need to do is highlight the following URL, Right-Click on it, and choose Open Link in a New Window: … http://www.equityclock.com/2019/05/29/stock-market-outlook-for-may-30-2019/
