Happy Friday the 13th everyone. Yesterday we looked at an interesting bullish path that, given the price action overnight, is in serious danger of fizzling. This morning, we’ll turn to the bearish case that represents the more obvious scenario to play out.
Setting aside everything else, the two H&S Patterns we’ve been watching have confirmed, and still point to SPX 1755-1760. Even what’s left of the overnight rally won’t get prices back above the neckline.
As we discussed yesterday, this is the obvious case. Yet, I can’t tell you how many times over the past 8 months the obvious bearish case failed to play out. Normally reliable patterns have been beaten silly by overnight ramp jobs, etc.
In fact, if the market holds these levels, there’s still a legitimate path to our Butterfly Pattern targets. And, did anyone happen to notice the USDJPY made a new high yesterday?
The key for equities is SPX 1780 — the neckline. If it acts as a lid on this little rally, watch out for 1755. If the market pushes through and negates the pattern, then all is well in the Fed’s Fun House.