The SPDR S&P 500 ETF (NYSE:SPY) which mirrors the S&P 500 has a classic head and shoulder pattern developing. A head and shoulder pattern is a bearish pattern. The neck line of the head and shoulder pattern must be broken to see this pattern play out. Note the neck line below in pink. If the market trades below, the SPY could easily fall to a $130.25 target in the coming days. Remember, it is only valid IF it breaks the neck line. That has not happened yet.
The markets continue to be under pressure after Ben Bernanke said it was unlikely to see a QE3. This goes in the opposite direction of what he said yesterday. As the markets whip up and down, a classic options expiration is playing out. Commodities have been going nuts today, with gold hitting a new all time high only to fall back down. The SPDR Gold Trust (NYSE:GLD) hit $155.24 before falling over a $1.00 off its highs. Silver continues to higher on the day but well off its high of the day. The iShares Silver Trust (NYSE:SLV) is trading at $37.73, +0.50 (+1.34%). Oil is falling sharply today on demand worries. A lack of QE3 could mean a slower recovery. In addition, Europe continues to be a horrible mess. The United States Oil Fund LP (NYSE:USO) is trading at $37.69, -0.66 (-1.72%).