Saturday, December 22, 2007

Have We Seen This Pattern Before In The Dow?



A few months ago the Dow Jones Industrials formed a head and shoulders pattern which helped push the dow to new highs. If you look at the above chart, you will see that the same pattern is forming right now. The dow still has more room to rally before the pattern is confirmed, but I just wanted to share this observation with all of you right now so that you can plan accordingly.. It may or may not be of any value to you, but I know I'll be watching this pattern very closely.

5 comments:

chiu said...

Kevin,

I look at the chart that you have posted, it seems to be forming a multiple month complex H&S. It will take a while for the right shoulder to be formed !

Chiu

Sandro said...

I think it will make a fake break-up through inversed head-and-shoulders, get very close to October hights, soak in all the bulls and traders and then crash way below 13,000 and below August lows.

C is about to write-down the next (but not the last) $10 billion, which will be too heavy for a Dow. The crash scenario if C writes-down $15b or more.

khiem said...

Hi Kevin!

mega rally on gold stock begin now! + 50% in this leg for 4-5 months!
dow will follow +20% in this leg too!

parakeeps said...

Sandro,

I don't believe writedowns will create the market impact you are predicting. Writedowns are a non-cashflow item. As far as I understand, it is lack of liquidity and capital (credit crunch) that is moving the markets in extremes and as you can see, central banks across the world are committed to providing capital and in effect, stability, which works against the end of the world bear market scenario.

In time the writedowns will be generating profits, and hedge funds and other institutions (GS) could be covering their massive short positions in the CMO, CDO, etc markets some time next year.

wxman said...

Looks more like a head and shoulders..head are peaks in october..shoulders in july and now..if so then this could crash very soon..
I agree more with Sandro..since its the Xmas rally time we likely go higher until January then drop again as reality sets in.
The fundamentals in the economy are horrible..this will be reflected at some point in the charts..there is a lot of denial out there.

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