Head and Shoulders patterns abound. The neckline (support) on one has been broken, and the other is still in play.
Here is the short-term head and shoulders pattern that was broken on Monday…
But even more importantly is the long-term head and shoulders pattern that has formed over the past year, that had been violated back in late June, only to result in a bear-trap, that resulted in a nice 12% rally for the markets. Let’s hope that doesn’t happen again. We did dip below the long-term pattern this morning after the New Home Sales report came out, but has since rallied back some to where it is now – trading in a nice wedge pattern (intra-day) above the neckline.
