Wednesday, July 08, 2009

The Head & Shoulders Top

The chart above was posted on today in reference to the technical "head and shoulders" top formation that so many traders are talking about.

I see it pretty clearly, and it could come to fruition in the near-term, but first I think we will see an oversold bounce from the SPX 870-875 level which was tested today. If the SPX is unable to get above its 50-day average and hold there, then we could see another leg down in the SPX 845-850 area.

But I think these technicians are missing a bigger pattern, and that is the larger head and shoulders bottom that is developing on the charts. Tomorrow I will try to post what I think is a potential H&S bottom formation in the making, and this pattern has longer-term bullish implications.

Have a good night--


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