SPX 28/11/22

Just took a quick look at the ‌$E-mini S&P 500 - Dec 2022(ES2212)$  ‌chart and I noticed something quite interesting that has been forming for the past few days or so - a giant head and shoulders pattern on lower and higher timeframes. Here is the 30 minute chart: 

I see a top at 4,050 or so and a right shoulder forming that is currently holding above the 4,000 level. If we can't hold above this level or break above and fill the gap at 4,030s then I think there will be a huge retracement back down to the 3,940 area. This will tie in with the cycle lows that are coming in and the failure to break above the 200SMA. 

Possible play would be to get puts on ‌$SPDR S&P 500 ETF Trust(SPY)$  ‌if it opens above 400s, and if it fails to break out of the right shoulder that it is currently forming. Would recommend getting longer dated puts (at least 2 weeks out to protect against time decay), and to hedge with a small call position in line with the Santa rally and/or in case the pattern gets invalidated. Either ways, I would be bearish in the lead up to economic events (i.e. FOMC, CPI etc.) but bullish into the events, as we have seen good prints for CPI, PPI and FOMC in the past few weeks. CPI and inflation data is expected to improve in the coming weeks (partly due to the new method to measure service inflation), which could signal a huge move either direction depending on market sentiment and delta hedging.