SPY Head and Shoulders Chart Pattern, Watch 875 Neck Line

The S&P 500 has been in the 880-950 channel since early May and SPY (S&P ETF) could be setting up for a head & shoulders breakdown if it can't hold above the 50 and 200 day moving averages. However, in order for this to occur there needs to be a negative catalyst to force a technical breakdown. If there is no catalyst this could be a "pause that refreshes". The 50/200d golden cross is STILL in effect to the upside. Once these averages are violated and neckline is broken on strong volume, 800-875 could be the next trading range. This action would also set up the ULTIMATE inverted head and shoulders pattern on the long term chart if the 666 S&P bottom sticks.

The head and shoulders pattern is a failed breakout of the left shoulder on the chart (see below). The lower high from the head to right shoulder confirms that the uptrend is dying. It usually, but not always, shows a pending reversal of the recent trend. There are a variety of signals that must confirm this action. You can read more about the head and shoulders chart pattern at Investopedia.

It is something to keep an eye on.... If I saw that $SPY broke below the 50d again, imo it could be a risky entry point w/ stops and/or hedgies to play a break down below the 200d and neck. No recommendation. Watch out for the SPY botz. What if the head and shoulders pattern turns into a crowded technical strategy and becomes contrarian???


SPY Potential Head & Shoulders Set Up (Stockcharts.com)


S&P 500 Potential Head & Shoulders Set Up (Stockcharts.com)


S&P 500 Potential Inverted Head & Shoulders Pattern (Stockcharts.com)