SANTA BARBARA, Calif., Sept. 23, 2016 /PRNewswire/ -- Momentum stock-picker BotTrigger has concluded that the stock market is on the precipice of a massive rally that is forecasted to power higher in a multi-year bull market. The following evidence will be presented by BotTrigger to highlight why the path of least resistance for the S&P 500 (SPY) is to the upside.
1) Major Support Levels Held
2) Inverse Head & Shoulder Breakout
3) Macro Pattern Cultivation
4) Year Long Bull Flag Breakout
1- Major Support Levels
In image (A) we see that the SPY bounced off the $213 level, which acted as significant support right where 2 major support lines converged. What's more, we also have an authoritative bounce off the 21-week moving average, which has historically been respected in bull trends.
2- Inverse Head & Shoulder Breakout
In image (b) we can see a clear-cut inverse head & shoulder, also known as a "Head & Shoulders Bottom (Reversal). This formation is one of the most credible reversal patterns there is.
This pattern is statistically superior when considered within a larger macro sample of data. The larger the time frame of data, the more accurate the win-rate is in forecasting the outcome. The win-rate is much lower when examined under shorter time frames such as hourly, & daily time frames, which tend to yield more false signals or fake-outs. What BotTrigger largely focuses on is identifying pattern cultivation on weekly, monthly & even quarterly time frames.
Why? Because Mr. Market is very noisy & full of sly hands. That's a post for another discussion. Point is, betting on short-term direction is precariously riddled with liabilities. As Bill Ackman ,founder & CEO of Pershing Capital, recently said:
"Short-term market and economic prognostication is largely a fool's errand, we invest according to a strategy that makes the need to rely on short-term market or economic assessments largely irrelevant."
3- Macro Pattern Cultivation
As we can see image B (original here) this inverse Head & Shoulder has been cultivating for nearly a full year. So this is not insignificant. It's a breakout that cultivated from a large sample of data.
What's more, we have the following checklist of behaviors that further reinforce the legitimacy of this breakout. This is how you know you have a real breakout underway:
- Breakout of Neckline
- Retest of Breakout
- Reversal of Retest
As we can see in image (B), we have a breakout of the neckline, followed by a retest of the neckline & ultimately a reversal of that retest.
This is pattern cultivation at its finest. When you get these 3 consecutive behaviors react in such a sequence, then you have the setup for a monster move on the horizon.
4- Year Long Bull Flag Breakout
This is all setting the stage for higher prices in this coming market.
The text-book target on this bull flag is approximately $240. Make no mistake about it, $240 is not beyond us.
That's what BotTrigger models for: statistical probability based on a formulaic set of conditions & rules that when achieved, suggest with a high degree of certainty that an asset class is on the verge of a major rally, or potentially looking toppy.
This market is notorious for shenanigans and the regular circus of volatility. The big picture is in understanding that the trend has cultivated a series of higher highs & higher lows. Until then, the benefit of doubt goes to the buyers.
BotTrigger will update Members with the appropriate trade alert when & if there is change in the analysis.
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