Taking a longer-term view of the S&P 500 Index

The inverted head & shoulders pattern has proved to be a potent trading signal for me in the past, second only to the double bottom signal in effectiveness(which has been exhibited by many equity markets, including the Hang Seng Index & many stocks in Bursa Malaysia, where I customarily trade).

For instance, it could have been used to predict the exact top in 2000 of the Kuala Lumpur Composite Index after the pattern formed from late '97 to early '99.





The S & P 500 has arguably formed this pattern, and, if one were to strictly follow the plan, this formation calls for a medium to longer-term target of ~ 1 225 points.