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SPY about to correct?

|Includes: JNS, SPDR S&P 500 Trust ETF (SPY)

Everything is looking extremely toppy right now, and with the fundamental aspect also suggesting a correction (Goldman's troubles, continued Greece problems etc.) Now seems to be a good time to enter into some low risk, high reward trades. 

First on our list is the S&P 500, or more precisely, the S&P ETF, SPY. Here's a chart:

Now, let me explain the lines I've drawn. First of all, the large white line is the primary bull that we are currently in, and have been since March. I do not expect this to fail, but rather keep going. The sky blue line was a secondary bull trend that culminated in the small January correction when it broke down. Obviously, that trend is no longer valid, I just left it on my chart for posterity. We then have the purple trend line, which is another secondary bull that we are in. This looks about to break, and I believe if it does, it will precipitate said correction. Nothing super complicated here, it appears the purple will not hold, which I expect will signal the profit taking. Here's a zoom of the trend.

You may also see another small white line near the top of the purple trend.

Now, you may also see the small white line near the top of the purple trend line. That is a pattern I see possibly developing which will confirm the downtrend, and that is, of course, the ever popular Head and Shoulders pattern. It's tough to see on the candlestick chart, so here is it on a line chart with all the noise smoothed away.

You can clearly see the head, along with the left and right shoulders. The confirmation line is clearly marked by the lowest lows of each shoulders (which I call the 'armpits') and if it breaks the confirmation line, (which will also obviously necessitate the breaking of the purple trendline) I would look at that as confirmation of a move down over the next 3-6 weeks. So the plan here is to enter into a small short position after the purple line breaks, with tight stops. Upon breaking of the confirmation line, Short in earnest.

I'm also seeing a textbook H&S pattern forming in Janus Capital (NYSE:JNS). For those of us who look for these things, you know that H&S can be very messy, and almost never look like they do in the textbooks, all neat and tidy. This one is about as neat as there is in the real world, and as above, should it break the confirmation line, look for a selloff.

(NOTE: As I just finished typing this as the market opened, the pictures I took of my charts show the confirmation line broken in both the SPY and JNS. You can see the time of the chart is 9:31 AM. When I began typing, neither of the confirmation lines had been broken. By the time I finished, the markets opened, and they both had been. Commence shorting)

Disclosure: Short SPY, JNS