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July 5, 2009- Market Summary
In this week's report we'll take a look at a common reversal pattern, known as a head and shoulders, which is starting to form on the charts of several major indexes. For those who need a quick refresher, you'll find that this pattern must go through four main steps to signal a reversal.

The first step is the formation of the left shoulder, which occurs when the security reaches a new high and retraces to a new low.
The second step is the formation of the head, which occurs when the security reaches a higher high, then retraces back near the low formed in the left shoulder.
The third step is the formation of the right shoulder, which occurs with a high that is lower than the high formed by the head, but is again followed by a retracement to the low of the left shoulder.

The pattern is complete once the price falls below the neckline, which is a support line formed at the level of the lows reached at each of the three retracements.