Lots of overhead resistance for SPX today: SMA20 at 1952, SMA50 at 1956, .618 retrace of the drop from 1991-1904 at 1958. But, it does have that IH&S going for it.
And, there’s something else that no one seems to be talking about — maybe, for fear of jinxing it? If breadth can get up to the .615 mark by next Tuesday, we’ll have a Zweig Breadth Thrust on our hands.
It goes without saying that head & shoulders patterns have been miserably unreliable for the past 8-10 months. Normally 70-80% effective, I’d rate them at about 10% lately (on par with other chart patterns, harmonics and, yes, even moving averages.) But, bullish IH&S have certainly been more effective — especially with all the tools at TPTB disposal to nudge the markets higher and trample bears. So, this bears watching.
Last, I had a very interesting conversation with a high-powered institutional broker yesterday. He works with many major hedge funds. Top takeaway: performance is tough across the board for active traders, lots of losses and lots of redemptions. I don’t need to explain to our readership that a market which is dominated by algorithms and government intervention is no longer a market. I suppose there is some comfort in knowing I’m not the only one incredibly frustrated by the direction things have taken.