Bearish Rising Wedge in S&P Futures Still Intact

The ascending wedge pattern can be one of the trickiest, yet most rewarding patterns to trade. I pointed out this pattern in the S&P futures in my daily T3TV segment "Trades for Thought." Although we have seen the market rally since that segment, the ascending wedge pattern is still very much intact. The concept of a "retest" confuses many traders as it can cause second guessing and trader anxiety as retests sometimes lead to new highs (although rare as in this case). However, as long as broken rising trend line of this pattern highlighted in the accompanying diagram is not violated, the pattern is still very valid. I believe today's action is simply a beginning to the selling that should ensue in the weeks to come, ultimately leading to healthy 50% retracement of the market's move from the lows. While trading the S&P futures and/or individual stocks, you need to be cognizant of this pattern and where the important reference points are. Stay tuned for more insight as we continue to watch this pattern develop.