SPX Daily Chart Textbook H & S

The SPX chart shows a textbook head and shoulders pattern playing out. Typically, an H&S will not meet its lower targets as quickly as the SPX did over the last few days, so the quickness of the pattern was somewhat surprising. Note how once the neckline broke at 1250-ish, price even came back up for the expected back kiss of the neckline before rolling over and collapsing.

The dark blue lines and light blue lines show two different H&S's; one that uses the close for the left shoulder dip, at 1260-ish, the other using the LOD at 1250-ish.  Taking the head at 1370 and 1250 neck line, that is a 120 difference, thus, the target below is 1250-120=1130, where the SPX has been spending much of its time this week. The target zones are achieved so the pattern played out in textbook fashion. Typically, you add shorts once the neck line is broken, if you are not already short, then you add as the back kiss occurs, then you sit back and enjoy the ride lower. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or on any links to or from this site. Consult your financial advisor before making any financial decision.