Wednesday, April 22, 2009

Head & Shoulders, Knees & Toes

Although the market retraced Tue & Wed as anticipated, I gotta admit I was getting a bit discouraged seeing the market, apparently unfazed by Monday's smackdown, march as high as it did yesterday (esp. the RUT and NDX). But just as I began to wonder why sometimes dang trendlines get no respect...

... my head & shoulders buddies came in and denied the bulls by smacking the 60 minute into a potential H & S pattern.
Remember a head & shoulders is a topping pattern portraying a shift of control from the bulls (higher pivot highs) to the bears (lower pivot highs). At this point, it is still a potential H & S pattern, but keep an eye on 828 (key support) and 861ish area (right shoulder). A clean break of 828 could confirm the pattern and signal more downside to come.. On the other hand breaking above 861ish would render the pattern moot and we'd have to reassess things.

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