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The broad market was doing rather well at the end of 1999, experiencing a 100% rally in the Wilshire 5000 in a matter of 3 years. It was a heck of time to party for sure!!! Then what took place after the 100% rally in three years?
The Wilshire peaked as it hit a steep resistance line at the end of the first quarter 2000 and struggled for a few years to come.
Turning the page to the last 3 years, the Wilshire 5000 has rallied 100% off the 2009 lows and ran into the same level as it did in 2000, at the underside of a steep resistance line. At the same time the NYSE, which has been lagging the S&P 500 and the Wilshire 5000, hit the top of its flag/pennant pattern and broke below a steep support line at (4) last week.
These chart don’t mean a top has to be in place…. many times though, market can turn at price points that were key highs and lows in the past, so keep an eye on how the broad markets handle the 1999 price level in the Wilshire and how the NYSE handles the top of its flag pattern.
Last week the Power of the Pattern reflected that many of the worlds markets are looking very much like the did at last May peaks (see Look alikes, Dominoes and Slippery Slide post here) Last years highs didn’t happen in a split second, it took a while to form key highs…if the same thing is to happen again, odds are high it will take soem time again!