S&P Wrecking Havoc On Bears
Today Mr. Market has been utterly ruthless on the bears. We gap way down on not-so-great earnings from Goldman (GS), IBM (IBM), and Texas Instruments (TXN), and despite those efforts the bulls manage to, once again, go on a buying spree off of the lows. I warned of a possible gap fill from this morning's trading plan, and while major gap downs (like today's) are always exciting, they often wreck havoc on the trader's positions for those whose portfolio's benefits initially off of the gap. For me too, getting that blasted upgrade from UBS on one of my short positions this morning was like adding insult to injury more than anything.
But this whole morning started to look bad when the S&P e-mini's (futures) formed a nasty inverse head & shoulders pattern outlined in the chart below. Notice the neckline (yellow), and how the price action seemingly just takes off right after the yellow line is breached. From there it is determined to fill the gap (the difference between yesterday's closing price and today's opening price). Once that occurs - direction is anyone's guess.
Here's the Chart...