If you take a look at the bar charts i’ve added, there’s “Rising Wedge” technical patterns (red trend lines) that have developed from the March lows, in both indicies. Also, there’s “Broadening Tops” (yellow trend lines) within the Rising Wedges as well. Both patterns are “usually” very reliable reversal patterns. I think the Broadening Top within the Rising Wedge is very significant. The S&P has already broken through the wedge’s support and now is resting on the Broadening Top’s support. On the other hand, the Dow is in opposite. The Dow is resting on the Broadening Top’s support, but has yet to make it to the wedge’s support. Neither index has been able to reach their 50% retracements of 10,334.03 (Dow) and 1121.44 (S&P). Another “red flag” as well.

Here’s 2 Point and Figure charts of both indicies. As you can see on the Dow P&F, it is breaking out of a “Descending, Triple Bottom” breakout. The horizontal measurement across the peak puts the target at 9450. Well below trend and wedge supports and coming up on the October lows of 9430.08. But at the same time, Friday’s close is sitting right on trend support as well. It needs to close below that support. A close below the P&F trend support (going back to September, 09), will be another sell signal as well. In this case anyways, as a breakout pattern has already happened. The bearish breakout pattern would be canceled if prices close above 10,000, as a bullish breakout pattern would be put in.

Here’s a “scenario” for the S&P, as it has yet to breakout of a pattern and too is sitting right on trend support going back to October, 09. If this scenario plays out, this would put the measurement at 985. Well below trend and wedge supports on the bar chart and below the September lows of 991.97. Now this is just a scenario and would have play out just as I have it doing on the chart in order for the measurement to be correct.

If buying occurs, i’ll be looking for the trends of both indicies to stay within the patterns on the bar charts. If trends break the resistance of both patterns on the bar charts rather well and close there, then this technical analysis will be flushed down the toilet. I think the upcoming fundamentals will come in and support the technicals though.