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Currently the Dow and S&P 500 are very near multi-decade rising channel lines and look to be forming bearish rising wedges.
Forecasting and chart analysis is an art, not a science. Even though rising wedges break to the downside roughly two-thirds of the time, I, nor anyone knows for sure, which direction investors will break these wedge patterns or how far it could fall! Keep in mind this pattern breaks to the upside one-third of the time too!
In my humble opinion the key to this situation is this- its not the odds of the market breaking to the downside that is important….it’s the impact to portfolios if it does!
Keep this in mind….both the Dow and S&P 500 are nearing long-term channel/resistance lines, that have been in place for decades. If the wedges should happen to break to the downside, the bottom of these rising channels is a large percentage away!
A very easy strategy with this pattern at hand is…. protect capital (in case a breakdown would take place) and then follow an upside breakout if that is the eventual outcome.
Missing some upside action is a ton better than losing capital!
If you would like to see on a Micro basis how were are attempting to stay abreast of these key patterns and current sentiment extremes, send us an email to [email protected] and in the subject line enter “Free Dashboard/Sentiment Extreme Update” and we will send you a free Dashboard/Sentiment Extreme update.
WITH WORLD DEBT CLIMBING INTO OUTER SPACE, AND ZERO PERCENT INTEREST RATES,A CRUSHED REAL ESTATE AND SOON,BOND MARKET,-THE STOCK MARKET IS THE ONLY CURRENT INVESTMENT OPTION……NOT SPECULATION, JUST SOUND COMPANIES THAT WILL ALL BE HERE IN THE NEXT 5-10 YEARS.
THE MARKET HAS BEEN TREADING WATER NOW FOR 11 YEARS…NO REASON IT CAN’T TREAD FOR ANOTHER 5 YRS..THE US GOVERNMENT IS BUYING MORE DEBT WITH THE HOPE THAT EVERYONE’S TAXES WILL PAY FOR IT AT SOME POINT. NO IT WON’T BE JUST THE RICH,EMPTYING THEIR POCKETS, IT WILL BE EVERYONE. THE POOR INCLUDED.OBAMA AND THE SENATE MUST GO.
Hambone…Great observation!
The mid line of the 70-year rising channel comes in around the 9,000 range, with the bottom of the 70-year channel around 7,000.
Time will tell if the bottom of the long-term channel is going to be hit, has to hit the median line first.
Thanks for your kind words and viewership…much appreciated!
Chris
Hey Chris – thnxs as always for your insight…out of curiousity, seems if the wedge is breached on the downside, the neckline of the H&S pattern is significantly below 9000? Thoughts?
I do a balancing reaction tech analysis method aside from the well known ones, which shows a very long term uptrend DJIA “way” above 15000, heading to 20000 within next two years, although chart technical noise and scares in between.
You may be looking at the wrong pattern. The megaphone
formed by the 2000 and 2007 tops and the 2002 and 2009
bottoms looks very ominous. If so, the Dow could fall
to around 5500
My humble guess is a consolidation at the multiple-year, multiple-peak region for sometime to come. Then it will go up again. The most indicative sign is the one-unit house starts data which is now developing a multiple-quarter consolidative base for the first time since 2007. If it can stay there to consolidate for another quarter or more, I think there is a good chance that the housing mkt contraction has run out of its course, something we are really hoping for.
Would you believe it… this is exactly THE chart that I was about to ask you to update… Thanks for doing it and for reading my mind!!!