Last Monday I told you that the 545 to 550 level on the SPDR S&P 500 ETF was critical.

On the one hand, if markets failed to retrace to that level, we’d see further bearishness.

But, if we could break above that level, markets could resume its long, slow melt-up into the election and through the end of the year.

Exactly as we’ve been predicting for months.

In today’s Five Points video, I’ll update you on what’s happened in the week since we zeroed in on that 545 level – and what’s next for stocks, bonds, and commodities.

However, before we get started, there’s something you should know…

Try This “Three-Pronged” Approach to Trading

On today’s charts, you’ll see an indicator I’ve never shared before to help us make some predictions about the future price of the S&P…

It’s called Andrews’ Pitchfork – because it was developed by trader and educator Alan Andrews – and because it looks like this:

Chart

Andrew’s Pitchfork is a technical indicator that lets us identify trends and potential reversal points in a stock’s price.

Here’s how it works: to create an Andrew’s Pitchfork on a chart, you start with three key points:

  1. Point A (the pivot point): A significant high or low where the trend direction changed. This is the starting point of the pitchfork.

  2. Point B and Point C: The next two points, representing another significant high and low after Point A. These points capture the general trend direction.

Once these three points are selected, a straight line (the median line) is drawn from Point A to the midpoint of Points B and C. Then, two parallel lines are drawn from Points B and C, respectively, forming the pitchfork’s upper and lower lines. (Note: most modern charting software includes Andrews Pitchfork as options, so you don’t even have to draw the lines yourself.)

The median line suggests the most likely path the price will follow. The parallel lines act as potential areas of support and resistance.

  • Above the median line: The upper parallel line may act as resistance, where the price could struggle to move higher.

  • Below the median line: The lower parallel line might serve as support, where the price could find a base and possibly move upward again.

Now, to see the Pitchfork in action, click below to check out today’s video.


Good trading,

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Tom Gentile
America’s Pattern Trader