The chart of the SP500 index shows US stocks are in a short-term precarious position. After getting rejected at October 2018’s prior highs, the index has fallen 5% from its peak, made a lower high and now lower low and sits in between the 50 and 200-day moving averages. The head and shoulders pattern is just way to obvious, but if it should break the pattern’s neckline (2800) and not find support at the 200 dma, it’s first downside target is T1.
In the short term, investors need to be aware of the potential for a bigger drawdown, while traders should tighten stops and/or have a hedge(s) for the high probability of continued near-term weakness
