A potential Reverse Head & Shoulders patterns is emerging in the S&P 500. It appears to logically fit when we connect the various convergence signals:

  • The Upward Trend Line going back to the reversal bottom in the early spring,
  • The Head & Shoulders pattern projection for a broken Neckline,
  • 3050 YE target for the S&P 500,
  • Expectations of a YE Santa Claus Rally.

Too much of a coincidence?

Some other thoughts from CNBC:

Todd Gordon, founder of TradingAnalysis.com,

  • One technician now sees signs that a bounce could be coming."The thing that's been driving me is sentiment. Everyone I'm speaking to is so bearish that it forces me to take a pause here," Todd Gordon, founder of TradingAnalysis.com, said Thursday on CNBC's "Trading Nation."
  • One chart formation in particular, the inverse head and shoulders, has Gordon feeling bullish."This inverse head and shoulders, you get a test, you get a lower low, you get a higher low, sellers try to punched it this [Thursday] morning, they couldn't," said Gordon.
  • The longer-term S&P 500 chart suggests the upward trend is still intact, said Gordon. He said the S&P 500 has managed to stay within its upper trend channel and above its 200-week moving average, both bullish signals.

Gina Sanchez, CEO of Chantico Global

  • Gina Sanchez, CEO of Chantico Global, said the recent sell-offs have unlocked value in the market that should bring the bulls back."For a time it was very overvalued, but, in fact, we're starting to get into attractive territory for some stocks, not all," Sanchez said Thursday on "Trading Nation." "There are going to be buyers in this market at these valuations."The S&P 500 trades at 15 times forward earnings, down from a 17 times multiple just two months ago. Its price-earnings ratio hit a peak of 18.7 times earnings in late January."If we can get some added certainty you could actually see some support coming back into the market," added Sanchez.