SPX at Critical point

I havent seen anybody mention that the SPX is sitting at the breakline of a perfect head and shoulder formation on the monthly chart. If we dont find a bottom here it could get ugly.

 

That's cause we're too busy looking for a bottom...

 

easyrider-
actually, I've pointed out that head and shoulders for the last 3 months...and many people have commented on it in other threads.
looks likes death..but maybe we'll get a surprise....BTW way, did anyone read that article on Bob Prechter in this weeks BusinessWeek? might be a good thread topic.

uptik2000

 

I don't know if I would call the formation on the s&p a 'perfect' h/s top... actualy I wouldn't even call it a h/s...

Publias

 

Got a link to that article? I'm sure he's bullish .

It already looks ugly out there.

It's a mother of a head n shoulders.

 

I see a head and shoulders only when you go out to about a 5 year timeframe for the monthly SPX chart. That means that it could take quite some time before the SPX actually breaks down. I'd also be careful when a lot of people see/think the same thing, as the market has a funny way of doing exactly the opposite of what everyone thinks will happen. The SPX probably will break down at some point in the future, but before that I wouldn't be surprised to see a powerful wicked mindless rally that confounds everyone betting on the short side.

 

if this is a h+s top, what would be the target ? something about 400 or 500 pionts....

 

I think that one common way of measuring a H&S break is to use the Head to neckline distance and project that as a target on a break.

But I think the pattern on such a long time frame is dubious. It requires shareholders - institutions, individuals whoever - to act as their oiriginal long positions from 5 years ago are threatened or enter the red column with a break of the neckline now. Given shareholder turnover in a 5 year period, I wonder if this dynamic will exert much effect.

 

that's a good point about the shareholder turnover and the time period.

There is considerable reason to doubt that chart patterns over time frames like 5 years have any validity. Elliot wave has the same problem.

 

So ... the shorter the time frame, the better are technical charts ?
Maybe this means people have free will on long term, but react mechanically on short term ... ?