thechez
Short

SPY Head and Shoulders

AMEX:SPY   SPDR S&P 500 ETF TRUST
Hi,

It looks as though SPY is forming a right shoulder right now to complete a H&S formation. On the right shoulder there was actually an inverse H&S forming inside of it (see smaller timeframes for better look) but was rejected at it's neckline (272.98). It's always good to look at the big picture because usually the formation in the longer time frames will trump (no pun intended) the formation on smaller time frames (ie H&S vs inverse H&S in this scenario). On the Weekly graph, the Stoch RSI and MacD have already had a bearish roll over which leads me to believe that there is a high chance there will be a move below the neckline. If this occurs, a preliminary target would be in the 262.50-262 range. Price action has been extremely volatile so I would wait for price action to break through the neckline (268.30) first as anything is possible in the market these days. Good Luck!
Comment: The inverse H&S pattern on the smaller time frame broke through it's neckline and price has been shooting up. However, on the larger scale, the H&S formation is still valid until the head is surpassed around the 280 mark. It looks as though this rally is running out of steam so we'll see what happens but I don't think we're out of the woods just yet.
Trade active: We failed to reach 280 and it looks like we're going down now. This would be a good entry price right now (277.54 at time of update) with a stop loss around 279.60-280 range.
Trade closed: stop reached: Madness has started. I'm not sure how much higher we can go here before a healthy pullback.

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