This chart pattern not a good sign for stocks

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

It's bad enough the S&P 500 suffered some serious technical damage Monday, but now it looks to some like it's forming a scary head and shoulders pattern.

As stocks were pummeled, the S&P 500 failed to hold 2,078—its technically important 150-day moving average—and then plummeted to close with a 2 percent loss at 2057. That's 4 points above its 200-day moving average.

Meanwhile,'s Scott Redler said when the S&P failed to hold the 2,110 level last week, it created a higher right shoulder in the head and shoulders pattern.

"What that does, is induce some longs in thinking we will take out highs, and squeezes some shorts, creating a more (frustrating) dynamic vs. a lower right shoulder," he wrote in an email.

The S&P has now broken 2,070, another big area of support. "That looks like a neckline. Some also say 2,090 was the neckline that broke overnight," he added.

Next stop? Redler said in his afternoon email that regardless of where you draw the line, it now looks like the S&P heads to 2,046 to 2,054.

"If things get real ugly maybe 1,990-2,010 in time. My gut says 2,050ish holds, but we shall see," he added.