“Green shoots” is a term used to indicate signs of economic recovery.
If you look close enough, you’ll find green shoots all over the place. Unfortunately, most folks are focused solely on the bad news instead. And why not? The media does a damn fine job of positioning bad news front and center.
But there are green shoots, little points of promise popping up — like all those pesky weeds in my lawn. Here’s one.
This is a chart (courtesy of our friends at NASDAQ Dorsey Wright) of the ETF for the S&P 500, ticker symbol SPY.
Of course this isn’t a recommendation, it’s just one small example of green shoots. This chart (along with a much bigger chart for the parent S&P 500 Index) illustrates (perfectly) a “bearish signal reverse,” which is a very powerful pattern.
Notice the breakdown (that first red sell signal) up at $285. That was back four weeks ago around March 9 and was technically a spread triple bottom.
Since it was the first sell signal in a long uptrend we wait and see what happens. In a matter of days, three more sell signals were generated. The last was a sell signal down at 225 (which roughly equates to 2250 on the SPX).
That last sell signal took place on March 23rd. The reversal up generated a buy signal (green) on March 25th which initiated the pattern.
Keep in mind the first leg of the trip (first sell signal to 225) took 16 calendar days, an epic trip. The round trip has taken precisely one calendar month, about 21 trading days.
If you or I had acted, all we would have done was “whipsaw” ourself out (and then likely back in) over just a few days. Better, in this fast moving market, to let the chart unfold.
Now the pattern has risen to a point where there should (could) be some resistance, a stall, as I tweeted about yesterday (follow me here, on Twitter). It will be interesting to watch if the S&P 500 can move up and beyond 2800, and for this chart (SPY) to move up and past 280. The move alone, from 225 to 275-280 has been impressive.