S&P 500 – Head & Shoulders Still Intact?

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S&P 500 – Head & Shoulders Still Intact?


We will take a pause from oil, which seems to be trading with the overall market, to look at the H&S Top to which everybody has been pointing. Is it there? Did it fail, or is it poised to fail?

Thanks to bank analyst Meredith Whitney’s Goldman Sachs Comments today, the markets rallied, possibly interrupting what appeared to be the most well-formed Head and Shoulders topping pattern that a general short-seller could hope for.

S&P 500



Thomas Bulkowski provides us with a definition of Head and Shoulders Tops, along with answers to some of the questions we have about the current pattern unfolding:


Characteristic Discussion

Price trend                Upward leading to the pattern

Shape Looks             like a head perched atop two shoulders. A 3-peak pattern with the middle peak above the others.
                                 The pattern should look like a person’s head and shoulders, proportional, and not lopsided.

Symmetry                  The two shoulders should peak near the same price, be nearly the same distance from the head,
                                  and look similar (both wide or both narrow peaks).

Volume Highest          on the left shoulder followed by the head. Trends downward 63% of the time.

Neckline                      Joins the two armpits.

Confirmation               The pattern confirms as a valid one when price closes below an up-sloping neckline or below the
                                   right armpit when the neckline slopes downward.


This is what caught us off-guard:

Pullbacks hurt post-breakout performance.

If you are still a firm believer in the H&S top, and if you turn out to be correct, on this alone, you may want to be conservative in your measured move target!

See more on Bulkowski’s Head and Shoulders Tops Here.

A Couple of Thoughts:

(1) Volume seemed a bit weak for today’s move upward, did it not?
(2) Did Whitney’s comments truly justify a broad market rally, or perhaps only a rally in GS?

We shall see early tomorrow!

mary666

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