S&P 500

The ratings agencies did little to help, with Moody's putting the US's triple-A rating on review for possible downgrade. The broad-based S&P 500 lost 2.1 per cent to close the week at 1316.1.

The market printed a lower high and lower low, which reverses the short-term uptrend that was in place. I mentioned last week that the S&P 500 may be in the final stages of forming a bearish head and shoulder reversal pattern. This looks to be the case following last week's reversal.

The right-hand shoulder has formed, meaning all attention will now focus on the rising neckline around the 1265 level. We would need to see a decisive break down through this level before the pattern has completed. If this played out then a downside target towards the 1150 level would be projected.

It appears storm clouds are forming on the horizon. The market is starting to get quite jittery over the US debt ceiling debate. With each passing day, the risk of US default rises, which many are now saying could trigger a precipitous plunge in equity markets. On top of that, euro zone concerns continue to bubble away, with Italy the latest focus.

Looking ahead, sovereign debt worries in the US and Europe and a pickup in Q2 US earnings data are going to compete for traders' attention.