Head & Shoulders or Earnings, part 2

Editor's Note:

Unfortunately, nothing has changed since last week. The S&P 500 did break support at 880, technically confirming the bearish head-and-shoulders pattern. Yet there was no rush to sell. Investors would rather wait and watch for earnings season to begin and hear what corporate America has to say about how the economy is doing.

This will probably be a pivotal week for the markets. I strongly suspect we'll get a chance to open bullish positions much lower from here. Look for support on the S&P 500 near 850, 835 and 800. I will be very surprised if the S&P 500 breaks 800 again.

This is not a healthy environment to be launching long-term 12-to-18-month LEAPS positions. Investors may want to consider short-term (August) puts on your favorite ETF or market index.