The U.S. stock market’s “buy the dip” mentality is very much still alive. The S&P 500 gapped down significantly on yesterday’s open, but then rallied for the rest of the day.
In other words, the S&P opened below the previous day’s LOW and closed above the previous day’s CLOSE. This is called a bullish engulfing pattern.
Here’s the S&P 500’s bullish engulfing pattern.
Here’s the NASDAQ’s bullish engulfing pattern.
The S&P 500 has only made 11 other bullish engulfing candles before. Here’s what happened next to the stock market.
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As you can see, bullish engulfing patterns = a medium term bullish sign for the stock market. When this happens, the S&P 500 tends to go up in the next half year.
There were 2 loss cases (2007 and 1983), and both of those losses were small (-2.5%).
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