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Preferred Stock ETF (PFF) has performed very well over the past 12 months (nice Capital appreciation along with a high income stream). Anyone who has been an owner of this ETF should be pleased with its NAV almost matching the S&P 500’s gain!
Since last August PFF has remained above a rising support line, until about a week ago, when PFF broke below the support of a rather large bearish rising wedge at (1).
Did selling pressure take place in PFF because investors are concerned that their dividend stream will be taxed at a higher rate? Will investors want to take profits before 12/31/12? I don’t know!
What is known...two-thirds of the time rising wedges like this suggest lower prices are in store. Odds are above average that this support line break will see a few more investors step forward and “harvest their gains!”
Would you say the monthly chart of the SPX looks like an extremely large rising bearish wedge which has transpired over many years?