On 5/14 I ran a post discussing “Look Alikes, Domino’s and Slipper Slides.” (see original post here) Below is an update to the prior Global 6-pack, which at that time, was reflecting that key global markets had created “bearish rising wedges” and each market was setting support.
Since the original post, the Shanghai index has broken support and the 500 index is pushing very hard on support dating back to the 2009 lows.
CLICK ON CHART TO ENLARGE
The “Power of the Pattern” is suggesting (rising wedges decline in price around 65% of the time) a high degree of caution is due right now because…All these markets “look alike”…with correlation so high, if one breaks a “Domino effect” could take place and if support gives way prices could resemble a “slippery slide” very quickly!
Support is still in place in 4 of the 6 charts. With Global correlation running at 90% plus, risk is high because if one key stock market breaks support, odds are very high more will follow!
If you are a long-term/ 401k investor, would harvesting some values up here hurt? The worst case if you harvest up here and the market moves higher is… lost opportunity, which is much better than lost capital!