Here's a new picture of the nasdaq price action:
The head and shoulders pattern was thwarted and left incomplete. The neckline stood as support--that level has been taking a beating, though.
Yes, the pattern didn't complete, but this is still a bearish signal. I quote the textbook:
"There is one thing that can be said and is worth noting about Head-and- Shoulders Formations that fail completion or produce false confirmations. Such developments almost never occur in the early stages of a Primary Advance. A Head-and-Shoulders that does not “work” is a warning that, even though there is still some life in the situation, a genuine turn is near. The next time something in the nature of a Reversal Pattern begins to appearon the charts it is apt to be final." Page 62.
This will be especially true if today's action rolls over. A nice, sloping downtrend is starting to form on the most recent peaks in the 'daq and in the S&P:
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