SPX Head & Shoulders pattern negated, at least temporarily
In what may be the least surprising market move of 2025, the SPX Head & Shoulders pattern has reclaimed the neckline on the daily chart. This, after some happy CPI inflation data (in what may be the least surprising economic news of 2025.
Per the NFTRH trade log, I covered my shorts on SPY and QQQ yesterday, but am tempted to short again. I hold several long positions (along with dominant cash & equivalent positions), after all.
SPX is having a big, happy day that includes good earnings from the banks. With the once and future president and chaos-maker set to assume office, it’s all good! America = great again, according to the stock market at least. Unless of course SPX fails to take out the right shoulder and declines anew.
As suspected might be the case, SPX tanked the neckline and filled a nagging gap before bouncing back. That actually gives me some pause about shorting because getting that gap out of there is a positive. And an alternate play has been for a big rally into/through “Great Again” day next week. So I have to think about this a bit.
As to CPI, you of course are factoring that CPI is backward-looking to the last vestiges of the lame duck Biden administration. So it has nothing to do with the forward inflation fears that have permeated the market as Trump prepares to impose tariffs and leverage more debt. Here is a graphic from the BLS link to CPI above.
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