The other day we looked at one possible short-term development in the S&P 500 (SPY) which could lead to a price break (lower). The head-and-shoulders formation we were eyeing saw the right shoulder turn into a double-top (so far), but in any event the market is turning lower from the 8/15 peak and as of the late cash session yesterday, the S&P is trading below the trend-line off the 8/2 low we had penciled in as short-term trend support.

This exposes the low 2170s, upper 2160s area where the market found sponsorship on 8/10, 8/17, and then yesterday, briefly.

A break below 2168 could usher in a move towards the 8/2 swing low at 2147. It’s a choppy summer trading environment, a theme we have been discussing frequently in recent weeks. With that in mind, this is certainly not the environment to be chasing price action. Breaks of key levels are more likely than usual to be false, and with that, the safest strategy for executing is not on breakouts but rather on fades of support and resistance levels. In this case, if the S&P can find support around the 2168/2172 area, then the risk becomes skewed towards a bounce, even if unsustainable.

But, the bigger interest on this end lies in a break of support (neckline of double-top) and subsequent bounce back into that old support (new resistance) for a move towards the 2147 mark.

Tomorrow, Fed Chairwoman, Janet Yellen, will be giving a speech at the Jackson Hole Symposium, and markets will certainly pay attention to what she has to say. It is uncertain, though, as to what, if any, indications Yellen will provide regarding the Feds intentions. In any event, traders will want to stay on top of their game.