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Prices Plunge Through the "Head and Shoulders" Neckline: What's Next?
This Classic Pattern Reveals Today's Market Trend

By Bob Stokes
Thu, 04 Aug 2011 13:15:00 ET
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NYSE Composite prices have plunged through the "neckline" of a classic "head and shoulders" pattern.
 
Here's a brief description of the "head and shoulders":
 
The high of an initial upward move is the Left Shoulder. After a decline, another upward move takes prices to a higher high, or the Head. A second decline follows the head. A third rally then takes prices to a peak below the high of the Head, and becomes the Right Shoulder. The Left and Right Shoulders are often similar in duration and extent. A trendline connecting the two lows is called the Neckline.
 
On July 20, the Short Term Update offered this analysis:
 
"This leaves the last main option...the blue-chip NYSE Composite Index is completing the right-side of a head-and-shoulders-type top."
 
Here's the chart that subscribers saw:
 
 
 
Now that NYSE prices have sliced through the neckline, what's next?
 
The August 3 Short Term Update says: "Sometimes the size of the ensuing decline can be approximated." This issue of the Update provides you with a price target and up-to-the-minute charts.
 
Plus, you'll see how the dramatic price action relating to the "head and shoulders" pattern fits in with an eye-brow raising Elliott wave pattern.
 
The Short Term Update keeps you on top of the questions: What kind of stock market trend is unfolding now? And where is this trend going? 

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