The “Power of the Pattern” highlighted back on November 30th,  that Basic Materials ETF (IYM) had created what looked like a Bullish Head & Shoulders Pattern(see post here)  Did any of you laugh or say NO WAY, that a bullish pattern was taking place at that time?  I fully understand if you did!!!

I remain of the opinion that IYM is very important to portfolio construction and what the broad market does going forward. Below is a 60-day performance snapshot, reflecting the strength of a few sector plays, since the bullish inverse IYM pattern took place.  


Since the Bullish IYM pattern took place the S&P 500 and NDX 100 are up 10%, Financials (XLF) up 15%+ and Homebuilders (XHB) up 20%+. Below is an update on these leading sector ETF’s and what key technical situation they are facing at the moment.


These leading sector ETF’s are all facing key resistance lines at the same time, as is the 500 Index (800 Pound resistance line), the S&P Railroad index (see post here) and the NYSE Index (See Respect post)

Last week the “Power of the Pattern” ask if Apple could reach $500 per share (see post here) as it remained inside of its quality rising channel, as it was facing short-term resistance.  Well this morning Apple reflects evidence what can happen when resistance get taken out!

Rodney Dangerfield made a living on the “I Don’t Get Respect” theme… The “Power of the Pattern” suggests to respect resistance in these leading ETFs and see if “weakness happens to unfold in these leaders!” 

I might beat the drum too often per the importance of the currency markets as these patterns have been much more helpful per portfolio constuction of late, compared to the Dollar/Euro’s action.  These performace numbers for sure reflect it has paid to follow the patterns of these leaders 60-days ago and I suspect it will pay to follow the upcoming action of these leaders again. 

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