Since we pointed out the head-and-shoulders pattern some analysts say has developed over the month of September, we’ve received a number of responses on other head-and-shoulders patterns that could be developing in the S&P right now.
Two other patterns — both long-term — could also be in the works right now, according to readers are into technical analysis.
First, one model (via Allan Dereniwsky) suggests the S&P has seen a head-and-shoulders forming since April 2009, with a shoulder developing in May 2010, and the model coming to a head around May 2011.
This version suggests that we’ll see equities rebound and another shoulder form, probably sometime late next spring if we trust the pattern. This belief runs contrary to the commentary we’ve been hearing heralding an imminent recession, since we would see markets pick up over the next nine months before plummetting.
A second perspective traces a head and shoulders all the way back to the 1990s, sent in by a Korean reader named Kim. We think this pattern is a whole lot scarier.
If we believe this pattern, then the S&P is already on its way down from its last shoulder, and we’re about to see a long and drawn out drop in equities over the next few years.
Anyway, it may all be nonsense over-reading into patterns. Just something to enjoy looking at.