S&P500 Comment. - 'They don't ring bells at tops'.

'They don't ring bells at tops' is an old market adage. However, there are sometime pointers to tops or temporary tops. US equities may just have produced some pointers.

The first chart below is the weekly S+P500. Note how yesterday we hit the key Fibonacci 76.4% retracement. Also notice how momentum ( RSI and MACD) have failed thus far to confirm the recent high. This is at this stage a warning flag, rather than a clear sign of a correction, however warning flags are usually the best one ever gets, or as the saying goes - well I'm not going to repeat it, just see the headline.

The second chart is the Daily Candle chart, this too has some interesting developments - See below:

• Firstly the 3 trading days, prior to yesterday saw a rally with progressively smaller candles. This formed a pattern called an 'Advance Block'.
• Yesterday 'Bin Laden' day, may have been one of those euphoric 'blow-off' type days, and interestingly left a 'shooting-star' candle in its wake.

Neither of these signals alone are usually major reversal signal, however combined and occurring at a major Fib retracement, they may well provide a stronger signal than normal.

One final note: the pattern formed over the past 3 months, appeared to be a 'Cup and Handle' Pattern. Readers may have noted that I am very fond of this 'not-so-well-known' pattern. However, I have remained highly cautious of this particular pattern on the SP500, mainly because of the sharp 'V' shape of the cup. The literature on 'Cup and Handle' patterns warns one to be cautious of 'V' shape cups.

Also for the record, I have personally been thinking that the SP500 may start to struggle around 1370/80, thus it will be interesting to see how this unfolds from here. If a reversal does unfold from here, I am guessing it may initially move back towards 1330/40ish. In the bigger picture 1330/40 may prove to be a pivotal area. On the other hand a meaningful move beyond 1370 could mean significant further highs to come.