Looking at the S&P 500 Stock Chart, we noticed that the S&P 500 ($SPX) may be within a bullish Bottom Triangle Wedge Pattern.
According to the Trending123 website, a Bottom Triangle/Wedge is a possible bullish reversal pattern.
"These patterns have two converging trend lines. The pattern will display two highs touching the upper trend line and two lows touching the lower trend line.
This pattern is confirmed when the price breaks upward out of the Triangle/Wedge formation to close above the upper trend line.
Volume is an important factor to consider. Typically, volume follows a reliable pattern: volume should diminish as the price swings back and forth between an increasingly narrow range of highs and lows. However, when the breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about decisions based on this Triangle/Wedge."
As the website suggests, the reversal won't occur after a successful breakout with good volume above the upper trend line of the Triangle/Wedge Pattern.
As of Wednesday, October 22, 2008, we are at the bottom end of the triangle, and if the pattern holds, we may eventually get a breakout on the upside.
But as with all patterns, patterns are not guarantees and patterns can fail.
For more details of the Bottom Triangle Wedge Pattern, see the Trending123 Article on this.
Today's S&P 500 Stock Chart