Head and shoulders top on S&P?

The S&P 500 is approaching the neckline of a potential head-and-shoulders top, according to Brian LaRose, Technical Analyst at United-ICAP. If the neckline is broken (at the 1840 level for January) and the pattern is confirmed, he says the minimum downside target is 1620.

LaRose, however, says there is a precedent for this not happening: In 2011, the S&P was facing a similar potential head and shoulders top, but the launch of monetary policy initiatives (QE III and Operation Twist) meant a nosedive was avoided and, instead, the S&P embarked on a rally from 1382 to 2134.

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