November usually one of the best months for stocks, has only been a down month in 3 years of past 20; those were in Bear Markets...
Some very fine textbook chart formations appearing over past few months. The Correction has led to what appears to be the end of the Great Bull.
Fed will hike again next month and if they hike twice more we will get a recession starting in 2019. have already passed their halcyon days, look at Apple and NVidia , IBM and many other issues already entering bear markets. The power to drive this market to new heights has leaked out of the balloon, I'm afraid.
Spent a weekend reading Murphy's of Financial Markets, Chapter 6: Continuation Patterns is a lovely read, quoted for your reading pleasure:
"The Broadening Formation is an unusual variation of the triangle and is relatively rare.... looks like an expanding triangle... also called a 'Megaphone Top.' In other triangular patterns, the tends to diminish as the swings grow narrower; in the broadening formation, tends to expand along with wider price swings. This situation represents a market that is out of control and unusually emotional. Because this pattern also represents an unusual amount of public participation, it most often occurs at major market tops. The expanding pattern, therefore, is usually a formation. It generally appears near the end of a major bull market."
-Murphy, 1999 Revised Ed., pages 140-141.
"The flag and represent brief pauses in a dynamic market move. One requirement... is they be preceded by a sharp, almost straight-line move. They represent pauses in which that market 'catches its breath' before running off in the same direction. Flags and are among the most reliable continuation patterns and only rarely produce a trend reversal. ...Flags and are said to 'fly at half-mast' from a 'flagpole,' as they appear at the midpoint of a major move. and flags on downtrends are completed very quickly, often in only 1-2 weeks, after which the breaking of the lower in the signals the resumption of the downtrend. The break down will take place on heavy , and the magnitude of the move is estimated by measuring the vertical distance of the preceding move from the breakout point of the . Flags are small parallelograms that slope against the prevailing trend. resemble small horizontal symmetrical triangles."
-Murphy, 1999 Revised Ed., pages 141-145.
Well, this flag started flying on 14 Nov, I reckon it might snap off after the holiday week, maybe sooner, who knows? Expect it to fly a bit higher, to form a right shoulder which might be expected to occur around 25600 on Dow. We saw 25500 very briefly Friday on Trumptweet, another such tweet could top off the flag. Good luck!
As always this is an educational post for your amusement and does not constitute investment advice; trade at your own risk!
We have already formed the left shoulder, the head and are on the lower neck line breaking down before swing back up to right shoulder and then a classic drop afterwards.
I have drawn lines of support from historical lows and highs.
Basically, we are super effed, in short.
I fully expect a lower right shoulder than left due to many factors including rate hikes and especially the trade war with China and the new tarrifs officially start at the beginning of the new year. They are all significant factors for a much higher impact.
Our stock market has not been so hyperinflated since the 01 bubble that we never really recovered from since we started to print money instead of letting the market correct itself properly.
No corrections for almost ten years now... The right shoulder is as high as the DOW will get for some significant years to come.
Very well done !
O BTW, Rob is brilliant and I spent hours looking at his Youtubes but quite honestly I see inside bars in every chart that do not lead to reversals, so those are also suggestive indicators.
I think Rob is just a genius who 'sees' more than mere mortals like myself. Cheerio!