Does history really repeat itself, or does it fake you out acting as though it may? That’s a million-dollar question. Instead of thinking it like an absolute or a formula for an answer, maybe it will help, if we think of it as a possibility. Because history does repeat, but sometimes it doesn’t; statistically though, there are more occasions that it does.
So, looking at this weekly-chart of the S&P 500 Index ($SPX) with week-ending candle today, we have printed another Hammer candle today which is very similar to what we’ve seen back in late-2011 (I examined and analyzed more in depth on this issue of similarities on my last video). So the question is, are we going to reverse like it did back in late-2011. Again, I wouldn’t take it as an absolute, but definitely a positive signal for the buyers in time being. Like any other signals, this potential reversal signal must be confirmed by seeing a follow through.
Here is my proposal: If we see a follow-through move next week, and by the end of Friday next week, if we see a strong weekly bullish-candle that gets near the price-level (or higher) of 2000 on the $SPX, I think that will be an initial confirmation that the S&P 500 Index ($SPX) is ready to reverse back up.
But follow-through is a must for this candle to be confirmed. If you look at the late-2011 action again below, after that second hammer was printed, we did see a strong bounce on the following week. We may not have exact same scenario playing out next week, but we may have something similar. It might take 2-weeks for it to see a follow-through, I wouldn’t know until I see the price-action next week, but buyers are definitely cooking something here.
Keep in mind, that looking at things in the long-term perspective, we are still in a primary-term uptrend: see last article here regarding this.