The “left shoulder” was the February high, while the “head” was the multiyear high in late April, he explained, adding the pattern would be complete if the index trades up to around the 1,340 area for the “right shoulder,” then sells off.
The session high for the S&P 500 was 1,340 on Friday.
“Obviously, this pattern may not complete, but it is certainly something to watch,” Rubin said. “Currently, sentiment has gone from very bearish to very bullish and many market participants are looking forward to a strong second half. While the downtrend has been convincingly broken, the head and shoulders pattern developing is something to watch.”
The head and shoulders pattern is a common trend-reversal pattern, according to Investopedia.com.
On the other hand, the S&P 500 is sending bullish signals by bouncing at its 200-day moving average. This week’s rally also pushed the benchmark over its 50-day moving average. [S&P 500 ETFs Survive Tests]
SPDR S&P 500 ETF
