This is probably one of the most disturbing developments for the bears on the S&P and that is an inverse head and shoulders formation that is nearing completion. For the bulls to confirm this pattern, it will have to breakthrough the 1130 level, which is something it hasn’t managed to do since April and repeated attempts to do so has resulted in failure. However, if they can push through this critical level, it will be game over for the bears, and a likely retest of the April highs around 1220 will then be in order.
The pattern can also be seen on the daily charts, but there is some noise on the chart itself that keeps it from being as well-defined as it should. But when you look at the weekly chart below, the pattern is much more identifiable and weekly charts, in terms of trend, always brings more legitimacy to the table.
Here’s the Inverse Head & Shoulders Pattern.