A Bold Prediction

Licia Leslie

Hi Shoppers,

I have a bold prediction to make.

But first a quick charting lesson.

The head and shoulder formation is considered one of the most powerful reversal signals in technical analysis.

This formation can be found at the top or the bottom of a trend and it signals the end of that trend.

This is what it looks like at the top of an uptrend:

The reverse, a head and shoulders at the bottom of a down trend:

Once the underlying breaks through the neckline, the price target is the distance from the top of the head to the neckline.

Continue here to see where I am seeing this formation. This could be huge.

Heads Up

I am predicting the market is going to rally from here and I can give you price targets because I am seeing the head and shoulders formation on three major indexes: S&P 500, Nasdaq and the Russell 2000.

The head and shoulders signals a trend reversal, and as you all know, the trend has been down.

First up, here it is in SPDR S&P 500 (Ticker: SPY):

The target price is determined by the distance between the top of the head and the neckline.

In SPY that is $382-$348 = $34. So, from here SPY can trade back up to $429 (breakout from neckline $395 + $34 – $429) which coincides pretty closely with the previous high made on August 16th.

Now there are resistance levels between here and there. There is the 200-day moving average at $407 and I see resistance at the $417 level.

Here is the formation on the Invesco QQQ Trust (Ticker: QQQ):

The target price takes it right up to my resistance level area: $284-$254 = $30, $284+$30 = $314. There is some resistance around the 200 DMA at $310.

And finally in Ishares Russell 2000 Index (Ticker: IWM):