After the previous head & shoulders SPY pattern completed yesterday, I noticed the bottom yesterday formed a near horizontal neckline with the bottom of July 26. We have a left shoulder on July 22 just above 400. So I was thinking today would be a good day to have the right shoulder form especially with the 50 DMA at 401-ish.
Sure enough, SPY got rejected at the 50 DMA and now we have the right shoulder. To be clear, right now this is just a potential h&s pattern. To fully form, SPY now needs to drop significantly below 390 which may be where it is currently headed. To void the pattern, SPY would need to rise above 401 significantly.
Here's the exciting part, if the h&s forms, to complete the pattern SPY would have to drop below 350, a new low and a level a lot of bears have been watching. I'm sure this is definitely something technical traders, HFs and algos are watching.
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