UPDATE: I realized I experienced a brain f@rt when labeling the chart for the head and shoulders measured distance. I meant to label the measured distance for the head and shoulders as the distance between the head and "neckline" vs "shoulder".
I know this is getting way ahead here but I just couldn't ignore this (let alone stop myself from posting this).
So let's just assume P3 is under way and assume Minute [i] (green) takes us all the way back to 978.51 (a pretty strong support level now). Then say Minute [ii](green) retraces Minute [i] 61.8%.
Not only would this make for a nice retracement, but Minute [ii] tops out at 1040 (new resistance). This level would just about equal the left shoulder. As a result of this move, the beginning of right shoulder is formed.
This price action is certainly plausible. A drop to 980 may bring in a new round of dip buyers since everyone is talking about and expecting a 5-10% correction. 10% of the 1080 high would get us near the 970 level (972 to be exact).
All this would be followed by a nasty Minute [iii] following a poor Q3 earnings session and a sell off in November just like November 2008.
Two interesting points on Minute [iii]. If one takes the measured move of the H&S pattern, the expected move would take the index down to the 880 level (a very strong support level). If we assume that Minute [iii] = 1.618 times Minute [i], Minute [iii] lands right on the nose in the same area.
Now that is some eerie stuff.
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