The media seems to be consumed with the details of ”Operation Twist” that will be announced this afternoon.
Operation “Old Twist” has been at hand for a good while, that more investors are now feeling in their portfolios. Long-term rising wedges, the majority of the time, send messages that major trend changes/reversals will take place and portfolio allocations shifts, should be taken.
Once the bottom of a multi-year rising wedge pattern breaks, years worth of gains often are erased.
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The above chart is addressing macro decisions/portfolio construction, not short-term trading! How can the above chart help you with Portfolio construction? Check the results below-
The Dollar broke below its rising wedge support line at (1) and what followed? Only a “Multi-Year Bull market in Commodities!” CRB broke support at (2) and what took place? Great Escape Part 1 (investors wanted out of almost everything back in2008) and a 60% decline in the CRB! Well that is the past and this times its different….right!?!?!?
Now another rising wedge support line broke at (3). What is taking place since the CRB broke support? How have the majority of “Risk assets” been doing since the support break??? Gold and Silver did not escape from Great Escape Part 1 in 2008 and odds are high they won’t escape from GE2 either!!!
Why did I share the following posts back in May, that all reflected the need to protect Capital/Risk Off trade was at hand? Look alikes/Dominoes and Slipper Slides, Great Escape and the Shoe Box indicator? All of these posts were created at the same time the CRB was breaking below its rising wedge support line!
So will the Fed come up with a “New Twist” this afternoon? I have no idea what they will do and what the reaction will be! Boring ole me is sticking with my “Old Twist” in that the “Power of the Pattern” has suggested since May that Capital Protection of assets is the main macro theme to understand at this time.