SPX Daily Chart Triple Top H&S Channels

The neon green circle shows the dramatic confluence test that occurred on Friday morning. The 20 MA, 50 MA and price all converged at 1435-ish, and price failure resulted. The chart above looks like spaghetti, you may have to bring up a fresh daily chart to study the 20 and 50 MA's closer.  Price fell thru the 20-day MA about nine days ago and did not yet back kiss this key moving average. Seven days ago price fell thru the 50-day MA and also did not yet back test this critical moving average. On Friday price killed two birds with one stone, coming up to back kiss, and it was a successful back kiss for bears, resulting in collapse. This is a bearish signal since price has now decided it is happier with staying under these important moving averages.

We watched the triple top form and roll over the last two months. The triple top can also be considered a Head and Shoulders pattern.  The left shoulder is a bit taller than the head in the center, but, think of it as the Quasimodo H&S pattern.  For the purposes of setting downside targets the triple top and H&S provide the same input.  A top, or head, at 1465-ish, and baseline support, or neckline, at 1430-ish. This yields a 35-handle difference.  Thus, when 1430 was violated to the downside, this places the lower target in the 1390's (blue line) in play. 1430-35 = 1395. So if price would fail the critical 1403 level a print at 1391-1396 would satisfy the triple top, or H&S, patterns and forecast a recovery move.  If 1391-ish fails then a whole new can of worms is opened that would send price down to test the 2000-day moving average now at 1379-ish.  The pink line highlights this strong support area at 1375-1385.

The indicators are weak and bleak wanting to see lower lows for price as time moves along. Interestingly, price has a sideways vibe to it currently as shown by the black lines, so price may move thru the 1403-1419 red sidewasy channel as it funnel into 1413 for a decision up or down. This may be on tap into the presidential election since Monday and Tuesday will trade without the States knowing who won. Price may sit at 1413 come Tuesday afternoon and then either launch or collapse once the election results occur. However, the triple top and H&S patterns remain in play, and price has now also back kissed the neckline failure level, and moved lower, so the 1391-1396 appears very much in play right now.

Projection is sideways with a downard bias and then we will see once the election results are known. The chart wants to send price lower. The thin black square at 1400-1403 is the bull-bear line in the sand now representing that lower trend line. Bad things will happen if 1403 fails. The 1391-ish level would be the last ditch effort to stop the downward slide, after that the bears will be performing serious and long term damage to the broad indexes. If Keystone's SPX Monthly Chart with 12 MA Cross Indicator fails, now at 1372-ish, all hop is lost since the markets will be in a prolonged cyclical bear for many months forward. The bulls are going to have to come to play this week to stop the negativity. 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.