SPX S&P 500 Daily Chart; H&S Pattern

Here is another look at the SPX H&S (head and shoulders) pattern posted a few days ago. Price bounces directly off the 150-day MA at 4272 and prints the back kiss of the H&S neckline at 4340. The full moon peaked on Friday helping to buoy stocks. The bears win with a successful back kiss where price is spanked back down now at 4288.

If happy talk occurs overnight into the new week of trading, do not rule out another back test of the neckline. That juicy gap at 4370-4400 needs filled. Price has violated the lower band so the middle band, that is also the 20-day MA at 4409, and dropping sharply, is on the table. Note that the falling 20-day MA will meet the rising 100-day MA at 4386 at the 4370-4400 gap fill. The 4370-4400 area is a confluence and magnetic force that may want to pull price higher again especially on happy talk.

Friday's candlestick is negative since the bulls and bears battled all day but the bears won with the candlestick ending below the halfway point. Since the back kiss was successful (for bears), price now sets its sight on punching down through the important 150-day MA support at 4272. If this fails, the 200-day MA at 4199 is on the table.

The slope of the 150-day MA is very important for all of your stock plays since it differentiates a cyclical bull from a cyclical bear market. The upward-sloping 150 verifies the ongoing bull market this summer, however, note that the 150 is trying to level-off. It will spell major trouble for the stock market if the 150-day MA flattens and rolls over lower. By definition, for this to happen, the SPX price must drop below 4272 and print many days below to pull this critical moving average lower. The initial step, which would be very bearish, is for the 150-day MA support at 4272 to fail.

The H&S head is 46 hundo and neckline is at 4340 so the difference is 260. Taking 260 from 4340 sets a downside target at 4080 where there is strong price support.

The price levels at 4370-4400, the 4340 neckline, and the 150-day MA at 4272 tell you the path forward for the stock market. If price recovers back above the 4340 neckline, the 4370-4400 gap fill is on tap. If 4400 is taken out to the upside, the bulls will be throwing confetti for end of year fun.

Conversely, if price remains soggy, and falls through the 150-day MA at 4272, the 200-day MA at 4199 is on tap next, and the H&S downside target at 4080 will be on the table creating blood and carnage on Wall and Broad. This week we shall see if a Shakedown is on tap, as Ondara sings. 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.

Note Added 10/2/23, Monday Morning, at 3:50 AM EST: The corrupt US Congress agrees to avert a government shutdown on the weekend by kicking the can down the road for 45 more days. The sickening drama will continue through Halloween into just before Thanksgiving when another government shutdown deadline will occur. S&P futures rally +28 points on the happy talk.

Note Added 10/3/23, Tuesday Morning, at 5:05 AM EST: The 150-day MA is at 4274 with price at 4288. Bulls win above 4274. Bears win below 4274.