Last week I shared the chart below, suggesting that the process of making sausage and new laws wasn’t pretty, nor was the pattern in the Wilshire 5000 index (see post here).
The “Power of the Pattern” was suggesting that investors lower broad market stock exposure/lower risk, due to the key resistance was at hand.
Since that post the broad market has declined over 6% in less than a weeks time, pretty much wiping out 2011 gains.
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If the read was correct a week ago, per a “right shoulder” was forming in a rather bearish pattern, the real test is at hand right now, due to the neckline of the bearish “H&S” pattern is being pushed on in a big way, in the chart below.
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Line (2) at this time looks to have been broken to the downside, yet keep in mind this is a weekly chart, so we have 3 days action to add to this chart. If line (2) endS up not holding, odds are high a ton of sellers will come into play.
Suggested to lower exposure at the highs, if line (2) is taken out, reduced exposure to stocks will really pay off.
Thanks Chris. Even though I’m not able to take advantage of all of your suggestions, this is precisely the type of info that will keep me from losing ground. Power of the Pattern!
After the close – could the day be seen as a bullish wick?