SPX has been tracing out a channel over the past several months, but its RSI has clearly formed a rising wedge. The divergence begs the question: “which will prevail?”
Regular readers know I’m a fool for chart patterns in general and RSI chart patterns in particular. But, that’s a solid channel that’s withstood some pretty nasty headlines. And, as we’ll see below, it is exactly parallel to the channel that guided the Dec 2011 to May 2012 ramp. We’ll see if we can find some corroborating evidence to guide our forecast.
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