Technical Signals

Market Tracing Out A Bearish Head & Shoulders Pattern


While going through my normal after market analysis, I noticed that several of the popular equity indexes appear to be tracing out a bearish “Head & Shoulders” topping pattern (annotated charts below). Today marks the third day of their current rally attempt which means the window is open for a new “follow-through day” to emerge (which will confirm this current rally attempt and negate this ominous H&S pattern). However, if the markets rollover here and close below their respective necklines then another leg lower will most likely follow.
It is also important to note that several of the popular averages encountered resistance near their respective 50 DMA lines before turning lower today (SP500, NYSE, RUT, Nasdaq 100, Nasdaq Comp, & the mid cap S&P 400).

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