Broken Shoulder
15th July 2009
All that talk last week about the formation of a Head and Shoulders pattern in the stock market fizzled on the opening bell Monday. The SP 500 bounced off the neckline at 875 taking off like a rocket. This looks like an attempt to set a new rally high while confounding those (including myself) that would say this market has gone too far too fast.
A closer look at a stock chart and you will see a bullish divergence between the price action and several indicators, like momentum, stochastics, and MACD to name a few. It should not take more than a day or two for the market to decide if it is going to break through its June highs.
JD
