Last week Art Cashin mentioned the possibility of the S&P 500 forming a “formidable” head and shoulders top pattern. Only by pushing to new highs can the index avoid fulfilling the pattern and despite the recent string of positive trading days the index has yet to do so.
And I’m seeing the pattern form in a few other indexes and stocks, as well. The cleanest pattern is probably that in the Dow Transportation Average:
The Russell 2000 is another vulnerable index:
There are also a few bellwether stocks that are susceptible to the pattern right now:
There are others but these are the ones I thought most notable. Pay attention to how all this dandruff works itself out. I’ve rarely seen it this pervasive.