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The Classic Head & Shoulders Pattern is History

Because of the fact that the classic H&S pattern is too well known my the media and Johnny Retail, we may never see a larger scale textbook pattern again. Instead, we may get stuck with messier formations like these where we see unbalanced shoulders, severely sloping necklines, and fuzzy necklines that will create plenty of false breaks. This is the way Mr. Market will deal with all the new technical trading software that is empowering the Retail traders.

REPRINTED from an 11/09/2009 digital missive on market patterns

Dollar Index Daily - Head and Shoulder Bottom?

-e-?

I began this update with an older idea--that any realized head and shoulder developments would be non-classical and a little messier than we would like to see. In that light, please observe the potential huge head and shoulder bottom in the U.S. Dollar Index. The target of this pattern, if the neckline breaks and holds, would be 90+. It would be a significant move that would severely damage the U.S. Stock market. Its a move that would likely coincide with headlines like: Spanish Sovereign Debt Default or Greece Exits Euro.

Neckline

-c-

-a-

-d-? Right Shoulder

Weve been thinking the pattern off the lows was a triangle. At this point it would have to be an expanding triangle. Gulp.

Left Shoulder* -b* The Left Shoulder of this pattern is what would make this H&S a little odd as it was formed within a larger down leg.

Head

Andys Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Double Head and Shoulders Top?

REPRINTED from 5/13/2012


Left Shoulder

Left Head

Right Head

Right Shoulder?

At the risk of jinxing things for the Shorts out there, I must highlight the developing complex Head and Shoulder Top**. It would have a doubleheaded look about it and it would also amplify the importance of the 1338 levela level that weve been talking about for several weeks now.

** Please note that weve seen plenty of failed head and shoulders tops on the way to 1422. So, dont put too much faith in this pattern, especially if the blabbering bobbleheads of CNBC starting mentioning it.

Andys Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Daily -- Small Head and Shoulder plays out


Head

Right Shoulder

Left Shoulder

Silly meI was looking for a more classic H&S top last week. This pattern suggestion might be a little controversial in technical circles, but this formation certainly has the spirit of a head and shoulders top. The left shoulder is a little small relative to the right, and the neckline is positively sloped, but it sure did act like a H&S top. According to this idea, the target of this pattern has been achieved, so maybe we get some kind of bounce to begin the week. Afterall, the sheeples confidence must be restored after that punk Facebook IPO.

Andys Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ 240 Min. with Support/Resistance


(B)
z?

(B)
z? e c

REPRINTED from 5/13/2012

1422

In the last update we suggested that the S&P500 would probe the 1408-1414 area before any kind of decline. Indeed, the market hit 1415 and then ran into some difficulty. The wave count up from 1202 is, admittedly, difficult to decipher. Whats not difficult to decipher is the fact that the tenor of the market has changed in the last several weeks. Its difficult to know whether or not the (B) concluded at the 1422 or 1415 high, but in either case, this market should not be able to retrace a 61.8% if it has truly peaked.
1202

This looks like a sell rally market. 1388 should be used as a stop loss level for any near or long term short sells. We last cited 1392 has a good stop loss for any daredevil longs--that was a good level to have left this market. If youre still long and holding on, then use any break of 1338 to get out.

Andys Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Daily with Weekly Support/Resistance


(B)

Highlighted in the picture are first and second weekly support and resistance points for the week ahead. Notice how well the 38.2% retrace of the entire advance from 1075 coincides with a previous important peak in the market. The S&P 500 seems destined for some sort of early week recovery. Though, the trading posture must be to sell rallies. This looks like a sickly market. Shorts/bears should consider the 23.6% retrace as a stop for some % of their short positions. A break back above 1321 would probably mean a further bounce and a better opportunity to re-apply short positions. A break above 1368 would force a total reconsideration of the bear position.

Andys Technical Commentary__________________________________________________________________________________________________

PLEASE NOTE THAT THERE IS ADDITIONAL INTRA-WEEK AND INTRADAY DISCUSSION ON TECHNICAL ANALYSIS AND TRADING AT TRADERS-ANONYMOUS.BLOGSPOT.COM

Wave Symbology "I" or "A" I or A <I>or <A> -I- or -A(I) or (A) "1 or "a" 1 or a -1- or -a(1) or (a) [1] or [a] [.1] or [.a] = Grand Supercycle = Supercycle = Cycle = Primary = Intermediate = Minor = Minute = Minuette = Sub-minuette = Micro = Sub-Micro

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This report should not be interpreted as investment advice of any kind. This report is technical commentary only. The author is NOT representing himself as a CTA or CFA or Investment/Trading Advisor of any kind. This merely reflects the authors interpretation of technical analysis. The author may or may not trade in the markets discussed. The author may hold positions opposite of what may by inferred by this report. The information contained in this commentary is taken from sources the author believes to be reliable, but it is not guaranteed by the author as to the accuracy or completeness thereof and is sent to you for information purposes only. Commodity trading involves risk and is not for everyone. Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading: Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.