Spent a couple of days this past weekend working and enjoying the Balloon Fiesta in Albuquerque, New Mexico. If you have never been, it is well worth the trip! One of the balloons reminded me of a pattern the S&P 500 index has created of late. See Below!
As I shared in the chart, these patterns tend to frustrate both bulls and bears, due to the lack of direction. Flag patterns will end and when they finally do, the move is usually a huge one. These patterns require patience and time to complete. Follow the breakout when it takes place!
Why have I encouraged investors to own the Emerging markets and Brazil (EEM & EWZ)? See Early Bird Post. Both continue to push slowly higher and are not struggling with a pattern like this.
“The breakouts if owned, have made more in ONE WEEK than “buy and holding” the 500 index has made in 12 years… ”
heehee. That explains the persistent outflows from equity mutual funds (and ETFs, apparently.)
Wiles,
Thanks for the comment and quaility thoughts.
Ideal pattern on this weekly chart? NO! My attempted focus on this chart was…fairly long-term support and resistance were at hand and that investors should follow the breakouts. We invested at the Sept 1 lows and picked up 95%+ of the best September rally in years, based upon buying on support,the bottom line on this above chart… support worked. Now we have to deal with resistance, flag or not.
Breakouts in Gold, Silver, EEM and EWZ and many more smaller emerging market ETF’s have taken place of late and for those that bought the breakouts, very nice gains have taken place.
The breakouts if owned, have made more in ONE WEEK than “buy and holding” the 500 index has made in 12 years…
The upcoming move above or below these line, will present MORE outstanding opportunities.
Thanks again,
Chris
Hi Chris,
sorry but I do not agree with your chart.
1°, this is not a flag, MAYBE, just MAYBE a triangle, and not even a close one. There far too much white space in between to call it a good triangle. Please refer to Bulkowski Encyclopedia of patterns to understand your patterns right.
2°, I love this classics “WATCH OUT!! BIG MOVE AHEAD!! IT CAN GO UP OR IT CAN GO DOWN! BE AWARE!! or it can go sideways you know …”
3° Obviusly, it WILL have to break to of the sides of this “triangle” since you’ve draw a few days before the apex. And since time won’t stop, yes, it will have to break to some side.
William…BINGO!
Have attempted to share that the relative strength has been in the international markets for weeks… Highlighted in the early bird the breakout had already taken place. The breaking of the neckline of the head & shoulders pattern in the Dollar has pushed these markets and commodities sweetly higher. In todays charts the international markets have done really well.
Hi Yo Silver too!!!
While we’re all waiting for the SPYs to break out, don’t forget about EEM or other charts that already have. Just because the US markets are hobbling along doesn’t mean we can’t find opportunities elsewhere.
Chris how does this fit with the 70 year line as well as the downtrend sloping line? I know the suspense is a killing me too.
Joe
Louis,
I think not quite yet, but must be very close to that downward sloping line. Someone else I read predicting the rally would end on that line at 1163, or something like that.
If it now trends down to the bottom line, then back to the top line, etc., the suspense may kill me. 😉
Bob
S&P 500 currently at 1161… Breakout or not???
So are we at the top of the flag patter right now? If so we still have several days or week to continue the pattern?
Hi Chris,
Is it possible to touch on the relevance of the flag pattern compared to the rising wedge and falling price channel? Are these patterns still in play so to speak?
In terms of ewz and eem should one consider opening new positions or adding to existing ones?
Thanks,
cK
I think I just heard a snapping sound come from the floor of the NYSE, maybe it was resistance getting cut in two. I can’t tell by your charts, but by the numbers, I think the move ahead of 1150 means something for the S&P.