Studying the Repeat Pattern that Targets New Highs for SP500

I’ve been posting frequently about the potential “Repeat Pattern” in the S&P 500 that charts a price pathway straight up toward new highs.

With price mere points shy of that target, let’s step inside the price action (per reader request) and peek behind the scenes as to what happened during the prior two “Repeat Patterns.”

We’ll start with a broader picture comparison and then drop down individually next:

To get a sense of what we’re seeing in the three charts above, take a moment to start with the prior updates:

“Onwards and Upwards to New Highs for the S&P 500″

Planning a Breakout (from a Repeat Pattern) in the S&P 500

S&P 500 “Breaks on Through to the Other Side

Decision Point for the Dow Jones

With those as your backdrop, now we can look inside the prior retracements and rallies that took price back to the prior high and then beyond it.

All we’re doing is comparing the current (August) pattern with the two most recent patterns in April and January.

In fact, when we pull them apart, we can see the individual movement that created the patterns:

April 2014:

And our current pattern unfolding to the upside (August 2014):

I wanted to highlight a quick comparison both from a planning the near-term future (as we do in the Member Reports each night) and an educational example of how buyers and sellers create chart patterns that repeat (or at least are very similar).

As long as the pattern “holds” and plays out as it did in the past, it allows us to profit from the movement (while being on guard for any “pattern breaks” or unexpected reversals).

Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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