Every once in a while, I come across an very interesting development in the S&P 500. Normally it is something within my software but today it is on the daily chart of the index. The chart shows an Head and shoulders pattern drawn with a 75 points range. Add 75 to the top of the range and one ends up with 1175...in other words a major breakout to the upside. Personally, I think the top of the range will be somewhere around 1170 as I think we are operating in a very wide range of 1025 to 1170 (previously I thought it was 1050 to 1150). In any event, Monday should be interesting. On the close Friday in the futures pits, someone made a concerted effort to make this breakout happen closing the futures above the fair value level relative to the S&P - meaning an arbitrage play would be to buy stocks and sell futures thus pushing it over the breakout level at least initially. I remain bullish overall and a breakout here would support such a thesis.
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