They say if you like Sausage, “you shouldn’t watch it being made, due to its an ugly process.” Speaking of Ugly, the Wilshire 5000 had created an ugly pattern, first published on 7/27 (see post here), prior to a very Ugly month of August.
The chart below reflected that a “Head & Shoulders topping pattern looked to be in place at channel resistance.”
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Below is an update to this key broad market index… “Should we be surprised by the last 5 weeks?”
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Downside action coming off a “Head & Shoulders” topping pattern should not come as a surprise. Don’t be caught off guard or surprised by the downside action if the 11,700 level is taken out either!
The “Power of the Pattern” was suggesting that a “Look Alikes, Dominoes and Slipper Slide” situation was at hand back in May, reflecting that the world had created bearish patterns, and if one went a they would all fall like Dominoes and then the majority of investors if they remain long, would endure a slippery slide event in the equities markets. (see post here) .
The August 19th low in the Wilshire remains as a key support test, which at this time REMAINS IN PLACE!!! If the 11,700 support level can’t hold the odds go through the roof that a “Great Escape 2″ has arrived!
Chris…something big happening right now with W5K. No? Waterfall if it closes below 11,700 today????
Bryan… First support was at the 50% level and then the next support was lower as you noted, being the 61% level…Not sure we want to ruin anyone’s early Monday morning by discussing a lower support level do we? 😉
I have found over the past 30 years, it helpful for me to every once in a while look at multi-decade charts, to keep things in perspective. As I shared this morning, the first short-term key level is the 11,700 support line in the Wilshire 5000, which remains in place. The market has to deal with this line first, before the 50% and 61% Fib supports come into play.
Looking at your 30 year chart with Fib lines …. double top looks obvious but what seems to stand out to me is the potential HS formation with this last move up and now lower being the right shoulder…. since first resistance was at 50% Fib and last resistance was at 61% Fib (and now the nnew long term neckline?), would that imply this next resistance would be ???
Draft…Great eyes and question! This is a “Weekly line” chart of the Wilshire (which reflects closes only) and yes the key to this chart is a close below the 11,700 level. Later today I will be posting an update to the “look alike, dominoes and slippery slide 6-pack. In this 6-pack two key markets the FTSE-100 and the Shanghai Index, both have broken some very key lines in the sand of late!
Thanks for your viewership and this question,
Is the 11,700 support test on the weekly rather than the daily? Does that mean we could see a dip below 11,700 this week and still not technically break the support line you’ve drawn?