US Equity Sector Rotation Maintains S&P500 Within A Triangle And Offers Buy The Dip Opportunity

Last month, we mentioned that even in case of a break of support at 2950 on S&P500, we thought that “Buying the dips” is correct if the S&P500 develops a symmetrical triangle till Q1 2020 holding above 2850 along our Red path on the chart. 2850 support was expected to hold, because of the strong Breadth signal occurring at the end of August, which gave a signal confirming so far a major US Equity low near 2825. Right now on the S&P500, we are close to the resistance trendline of the triangle for the third time after late July and mid-September 2019 and momentum indicator is rather overbought, while B-bands are flat. Thus there is a risk of pullback toward the center of the triangle near 2950. If the triangle holds, a decline should not break rising trend support between 2925-2900. Then later a rebound should be able to break the resistance 3000, as a triangle pattern is considered a continuation pattern, ie a pause within the longer-term uptrend, Bruno Estier, Independent Market Strategist.

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