A New Upside Target

The highest yet.

Good morning - Here’s an excerpt from today’s Opening Look.

In addition, the full piece included a full breakdown of yesterday’s price action, comments on Crude Oil, the dollar, ARKK, MAGS, ETHE and two new stock trade ideas. So far in June, we’ve now provided 18 trade ideas. In May, there were 20.

Have a great Tuesday.

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Patterns

The same three bullish patterns remain alive, targets 6,120, 6,125 and 6,555, respectively… and there’s one more we’re adding to the list: a bullish inverse H&S pattern – target 6,745 – details are below.

SPX 6,745

This fourth pattern is by far the largest we’ve identified so far—and for obvious reasons. The height of the formation spans from the April 7 low at 4,835 to the neckline around 5,780. Using basic the measured-move strategy, it projects an upside target near 6,745. That’s roughly 12% above last night’s close and represents a 16% move from the breakout zone.

Now, of course, this may seem like an overly aggressive objective —but let’s not forget it took a near-20% move for the index to even return to the 5,780-mark. So, the current breakout’s projected move would actually be smaller than the one that preceded it.

We’ve seen this setup before. As long-term readers know, our biggest target in 2024 was 6,100, which was established after the SPX broke out above 4,800 in January’24. That move followed a 37% rally from the October 2022 low to January 2024—just to reclaim the prior highs from 2021. The ensuing breakout required a further, albeit, smaller, 27% advance, which ultimately took 11 months to play out.

I’m often asked about the timeline for a pattern target to be reached—and the answer is always the same: there isn’t one. As we know, as long as breakouts hold, the associated price targets remain valid. The reverse is also true—if a breakout zone is emphatically or undeniably undercut, then the target gets nullified.

So far, none of the breakouts that have occurred since late April have been negated. In fact, one of them already hit its target at 5,840, and now we have four more in play. And depending on how today plays out, two more could get achieved.

It’s worth noting that it’s rare to have four active bullish patterns at the same time—and even rarer for all their targets to be achieved, since that would imply none of their breakout zones get retested.

As is clear, this pattern’s breakout actually occurred on May 12—the same day the inverse head-and-shoulders pattern with the 6,555 target was triggered. The reason we didn’t highlight it at the time is because we wanted to see if there would be meaningful follow-through, especially given that we already had three other active patterns in play.

There was no rush to add another to the mix. Now that we’ve seen some extension, it will be both useful and important to monitor all four of these patterns going forward.