Threatening Head-and-Shoulders Pattern May Be Forming in the S&P 500

Analyst: Further strength in the yen is bad news for stocks

by Anora Mahmudova
Market Watch

There may be ominous signs lurking in stocks for U.S. investors, already anxious by a dearth of healthy corporate results to underpin a rise in the S&P 500.

Since Feb. 11, the S&P 500 has risen more than 13%, but over the past several weeks the large-cap benchmark has stalled as it approaches the first anniversary of hitting its record high of 2,130.82 on May 21, 2015.

The S&P 500 was off 1%, to 2,064.46, on Wednesday, after three consecutive days of gains.

In fact, the most recent trading moves have begun to create a bearish reversal, typically described by technical traders as a “head and shoulders” pattern. The pattern is formed when three successive peaks are reached in a charted security. Those peaks are described as the left shoulder and right shoulder, the head representing the highest peak in the middle, and a neckline linking two low points.

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