Technical indicators shed light on what's around the corner in equities markets

We're not alone in sounding alarms about the equity market rally losing steam. For example, Carl Swenlin of DecisionPoint has also charted out views on the S&P 500 market that are quite similar to the points we've reviewed here this week. He's also talking about not only the equity markets starting to point downward, but also our question, whether to expect a pullback or something more bearish? His parlance is to refer to a pullback as the possible formation of a bullish, reverse head and shoulders (H&S) pattern. That would probably correspond with Tony Caldaro's primary Objective Elliott Wave count that's looking for a wave B pullback that would form the upside-down right "shoulder". Then, if the head-and-shoulders pattern works out, the next rally leg could correspond to Tony's wave C up. It may also correspond with some of Andre Gratian's views about a possible wave 4. But ... are there possibilities that the markets don't just pull back, but continue down underneath the March lows? As Carl Swenlin states, first things first - "[T]here are probably a few more weeks of correction ahead of us. The appearance of some elements of a reverse head and shoulders offer some hope that a major bottom could be forming, but it is too early to turn up the optimism in that regard."

His article at DecisionPoint including his chart marked for a reverse H&S pattern may be found at http://www.decisionpoint.com/ChartSpotliteFiles/090515_rhs.html. Below is his general indicators chart, and you can also find his thoughts on those indicators in his article. His chart there only included data through yesterday. I've added a couple of additional charts below, one with NYSE McClellan Oscillator data and indicators, and the last one with the NYSE McClellan Summation Index. You can see that today's action didn't give much help to these. I still stand by my comments in my prior post - there will need to be a further break under today's low, whether or not we see any bounce from the trendline price tested today. My main point is to show that other analysts are recognizing these potential paths for the markets too. It can even happen that after an initial pullback, the market may start to chop upward again and have analysts guessing whether - or not - the reverse H&S or similar bullish potential is working out. When that time comes, we'll have to look at indicators such as these to help guide us in the right direction.