A Negative Start

February started with a negative tone. The SPX ended the week by losing 60.19 points or -3.1%. New low still outnumber new high, but the advance/decline is holding up while the index is making lower low. This slight positive divergence could be signaling a near term bounce.

SPX (daily)

(click on the chart to enlarge)


Looking at the intraday chart, a head & shoulder pattern has been formed with the neckline near 1872. Although the A/D line signaled a potential bounce might be coming, but the head & shoulder pattern could make a break to the Fibonacci 127% extension before the bounce. Therefore, one should be prepare for these two possible scenarios for the near term. Upside back to 1900 and the downside is 1852.

SPX (intraday):