SPX Daily Chart H&S Pattern Distribution

Lots going on for the SPX daily chart. The blue H&S is in play, head at 1420, neck at 1340, target 1260-ish, the starting number for this year.  The thick red line is the bull-bear line in the sand at 1292-1295. Think of it as the point of no return that begins a bear paradise and a bull H*ll.  Price bounced off this level a couple days ago which is typical for important levels for support. Price will try to stab thru a couple times before it either succeeds, or the bulls fight back and prevent the failure. The red lines show a weak and bleak posture for future price action, lower lows across the board with the lower low in price from April to now. This action says that lower prices are needed and at that time the indicators can be watched for positive divergence forming.

With all that negativity in place, price bounced a couple days purely due to support holding and the falling wedge pattern that enabled the lift.  Yesterday's candle is a doji indicating a potential trend change so two days of up may lead to a spank down now, and the futures appear to be obliging. The 150-day MA at 1315 will play a pivotal role today. The flatish nature of the 200-day MA is not a healthy market sign. The slope of the 150-day MA is very important, watch to see if it flattens and rolls over signaling secular bear markets ahead.  The 20-day MA crossed under the 50-day MA, bearish. One plus for bulls is that the indicators are oversold hinting that much of the pain off the top has already occurred.

Price printed over 1328 yesterday, still 12 points or so short of a back kiss of the H&S neck line that ruptured, so that leaves an open target for the SPX above at 1340-ish.  The maroon circles show the increasing distribution days over the last three months and how the smart money dumped shares into Ma and Pa's laps March thru May as they pumped the markets on television and in the media. Every market move higher needs a bag holder.

Projection is for the 1260 target to occur in the days and weeks ahead. The question now is whether or not the 1340 back kiss occurs.  The importance of the 1292-1295 line in the sand cannot be underestimated, the robots will kick in once 1292 fails and the markets should tumble significantly from that red line.  Pre-holiday buoyancy is at the door step for markets for tomorrow and Friday so perhaps a second test of the red line occurs over the next day and then markets recover to salvage a happy weekend. The higher volatility encourages more active trading since profits can disappear in a blink of an eye as markets jut up and down in large moves. Ride the waves. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.