For over three weeks equities have been pulling back from the high on April 20; a high that tested the same level seen in the S&P 500 at the August and November highs – 2,110. A break of 2,033 will confirm that the herd has turned. The 200-dma and horizontal support converge near 2,012-2021. However, a break of 2,040 will trigger a bearish head-and-shoulders pattern that measures a minimum decline to 1,970.

A 14month cycle low is due in May/June and should be pulling equities downward but in the eighth year of a Presidential term, following an April high, equities typically get a bounce from mid-May into early June. That bounce is followed by a long decline into Nov/Dec.

Try a "sneak-peek " this month at Seattle Technical Advisors.com

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

© 2016 Copyright Ed Carlson - All Rights Reserved

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