Michael Douglas, in the movie “Wall Street” shares that Bulls make money, Bears make money and Pigs go to a BBQ…well not exactly, yet you get the point. Did some harvesting of gains recently due to the situation you see in the chart below.
Game plan…Harvested of late… Am NOT GOING TO TAKE POSITIONS to score on defense at this point in time! Why? Other pattern breakouts…. in High Yields, Nasdaq 100 and numerous International markets.
If some big decline is about to happen, the bottom of the wedge has to go first and if it does, will pick up the inverse positions.
For those that want to take positions to score on defense, I understand why and feel free to right now!
Suggested to pick up EEM and EWZ in the “early bird” posting, due to the “power of the pattern” …breakout of the 3-year falling channel. Nothing to do with the dollar or anything else.
That has happened and will happen based upon a falling line!
Chris – so based on this chart, if the NYSE Composite simply moves sideways for a time, that would be constitute a breakout (since resistance is falling?). I ask that because it seems the market (S&P500 anyway)is moving sideways.
Chris,
While EWZ broke the long-term trend line, the Bovespa itself doesn’t seem to have. I think the difference is that there was a big run up in Brazilian real in 2007/8 that is reflected in EWZ, then when the &%^$# hit the fan, it fell back to near where it was in early 2007.
You can see that in this chart:
http://finance.yahoo.com/echarts?s=%5EBVSP+Interactive#chart1:symbol=^bvsp;range=5y;compare=ewz;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
So in a sense, you are betting on further falls in the dollar as much as gains in the Brazilian market.
Does that matter, or do you just accept that whatever EWZ is valuing is what is going up?
Mark,
Always concerned with any rising wedge if long. EPI, THD and others have broken flat resistance lines, which is good. On a longer-term perspective, 3-year falling resistance has been broken in EEM and EWZ,, which I like the looks of. The longer the line the more important it becomes.
Thanks for both the tips and the explanations and pattern illustrations. I’m new to this but it’s all very helpful!
When I look at general international and emerging ETFs I also see rising wedges… with the top resistance only going back to January 2010, but still there. Is this a cause for concern?