S&P 500 - Bullish Continuation for 2024

2023年11月3日

█ OVERVIEW
Since 2022, the S&P 500's consolidation efforts seem to be coming to a clear Head and Shoulders pattern, completed by a recent 3 bullish drives pattern. While it would be naive to think a straight beeline to 5000 is in play, the current price of 4350 is suggesting a return to new highs in early-mid 2024. This is likely to be in sync with the Federal Reserve rate hikes and the resulting market adjustments made at each announcement by Chair Powell. Sharing this as an educational/informative learning opportunity of technicals playing in sync with fundamentals.

█ CONCEPTS
Head and Shoulders
The inverse head and shoulders pattern is a widely recognized technical chart pattern seen on analysis across this platform. Primarily, many see the pattern used in potential trend reversals in various types of markets, particularly in stocks, currencies, and commodities.

The iH&S pattern consists of three main components:

1. Left Shoulder: First phase that occurs during a downtrend. Represents a temporary low - selling pressure starts to weaken and buyers start to enter
   
2. Head: Central and most important component of the pattern. The head forms after the left shoulder and becomes the lowest price level reached in the downtrend
   
3. Right Shoulder: Similar to the left shoulder in that it represents another temporary low point in the price
   

Three Bullish Drives

1. First Drive: The first drive occurs after a prolonged downtrend, during which selling pressure has dominated the market. In this phase, the price of the asset starts to show signs of stabilization or slight recovery.
   
2. Second Drive: Following the initial recovery, there is often a pullback or consolidation in price. This is the second drive, during which the asset's price retraces to some extent but doesn't make new lows.
   
3. Third Drive: The third drive is the final and critical phase of the pattern. It occurs when buyers make a strong push to drive the price higher, surpassing the previous resistance levels and confirming the trend reversal.