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.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.