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<\/p>\nWe’ve seen a lot of wild and crazy moves in the stock market so far this month.<\/p>\n
And there’s at least one more big move coming…<\/p>\n
Take a look at this chart of the S&P 500…<\/p>\n
<\/p>\n
While it sure seems as though the S&P has been all over the place the past few weeks, it has actually been confined to a trading range between 2840 on the downside and 2930 on the upside. All of the bouncing back and forth has created a “consolidating rectangle” pattern on the chart (the blue lines).<\/p>\n
The height of the rectangle is 90 points. So, that’s the move traders should be looking for once the S&P breaks out of this pattern.<\/p>\n
In other words, if the S&P 500 breaks out to the upside, then we add 90 points to the resistance line at 2930 and get an upside target of 3020 – which lines up quite nicely with the red resistance line at the all-time high in July.<\/p>\n
On the other hand, if the market breaks to the downside, then we subtract 90 points from the 2840 support line. That gives us a downside target of 2750 – which lines up nicely with the low at the end of May.<\/p>\n
The big question, of course, is… Which way will she break?<\/p>\n
I’d say the upside has a slight edge.<\/p>\n
Generally, I tend to favor the downside. But, the problem with that at the moment is it seems just about everyone else is favoring the downside as well.<\/p>\n
The market rarely rewards the popular opinion. So, maybe the market needs to shake things up a bit with a breakout to the upside – just to punish the bears and shift investor sentiment over to the bullish side.<\/p>\n
Either way, traders should respect a breakout of this pattern. A move above 2930 or so will likely set off a quick move higher. A break below 2840 will likely inspire a lot more selling pressure.<\/p>\n
It’s possible the catalyst for the next big move will come from the FOMC minutes – which are scheduled to be released this afternoon – or from comments made at the Federal Reserve’s annual meeting in Jackson Hole tomorrow.<\/p>\n
Best regards and good trading,<\/p>\n
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<\/p>\n
Jeff Clark<\/p>\n
In today’s mailbag, a new subscriber comments on the service…<\/p>\n
\nI’ve been a subscriber now for a few months and love your service. You’ve impressed the heck out of me and taught me a lot in a short time. My son and I are going to be lifelong followers… Thanks for what you do!<\/p>\n