Head And Shoulders Pattern Being Painted On S&P?

The S&P 500 is close to painting a perfect head and shoulders pattern on the 6 month chart. The first shoulder was put in with the high made on February 18th, before the market swooned as a result of the Japanese earthquake and subsequent nuclear disaster. The head was put in when the S&P hit a multi-year high on April 29, when the S&P hit 1,363. We are now putting in the second shoulder after the furious rally this week. The pattern would complete if the S&P trades up to around the 1,340 area, and then sold off from that level. Obviously, this pattern may not complete, but it is certainly something to watch. 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.