Is a very broad stock index of late creating a pattern similar to the 2000 highs? Possible!
This chart looks at the Wilshire 5000 on a monthly basis over the past 35-years. The index has spent the majority of the past 30-years inside of a bullish rising channel.
In early 2000 the index created a bearish reversal pattern at (1). Months later it tested the old highs at (2), where a double top ended up taking place and stocks fell hard.
Turning the page to this past year, the index tested the top of the rising channel again, where it looks to have created a monthly bearish reversal pattern at (3). The rally off the December lows as the index testing the highs of last year at (4).
If this broad index breaks above last years highs, the chance of a double top will be eliminated and sharing this chart was a waste of your time.
The bullish case for stocks would receive a negative message if a month from now stocks are much lower, which would increase the odds that a double top formed.
Keep a close eye on this broad index over the next month as we enter in the seasonal sell in May time frame.