Parsing the S&P
Well, that was a rather orderly pullback. It's the way an overbought market ought to take a breather. The bears got what they wanted, and the bulls got what they wanted, so let's discuss the measured targets.
If we want to be subdued, we'd note that the S&P 500 head-and-shoulders bottom measures to around 1380. To calculate the measured target, we take the high of the pattern -- the neckline -- at 1330 (and I do a lot of rounding when I do this). From that we subtract the low, or the head of the pattern. If we want, we can use 1265 or even 1270, since the index plunged down there intraday. But I prefer to begin conservatively, so I will go with 1280, which gives us 50. We then add that to the breakout at the neckline -- which would be 1330 from a more conservative view, or 1335 for a more aggressive method. I'll go conservative again and add 50 onto 1330. That gives us 1380 as a first target....332 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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