Stocks Gearing Up for a Breakout??

Stocks appear to be coiling up for a breakout. We had some wild fluctuations the past few trading days, but we are currently seeing a consolidation just under the upper bound of our pseudo-megaphone pattern. Recall that this is not technically a megaphone pattern which requires higher highs and lower lows. However it does obey the spirit of the pattern which is an increase in volatility. We are currently hugging the trend line at the moment, and may form a bull pennant before another breakout. It is also possible to see one more test of lows, so watch what the momentum is doing at open. This will give you a hint. If we reject those highs, 3867 will provide support and then 3848. If we break this level it is likely to test the lower trend line of the pattern again. The levels 3927, 3938, and 3962 are targets to the upside.