Wednesday, 18 January 2012

S&P 500 tests H & S trend line, momentum flagging

Yesterday I posed the question, would the rally survive the US session? Well the rally survived, but didn't prosper. The trend line drawn from the Head and the right Shoulder was tested, and so far has repelled the market. The Head and Shoulders neckline is still in play. Daily momentum (MACDH) is close to flipping to negative. A move by the market below yesterday's low would be an aggressive bearish edge at this time frame. Of course with trend lines there are always two potentials. A break of yesterday's high should clear the way for new highs in coming weeks. We must be getting close to the last stand for the bearish case.