The chart below was posted on 11/18 reflecting a “possible bullish inverse Head & Shoulders” pattern in the Basic Materials ETF (IYM), similar to one that took place last summer, resulting in a 50% rally in IYM in a matter of months…(see post here)

I remain of the belief that the action of this sector ETF is very key to the broad market….the 500 index needs IYM to rally for it to get out of this boring back and forth choppy action.

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Below is an update to the chart above, shared with Premium Members two days ago…

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The “Right Shoulder” was not ideal in that it dipped a fraction below the left shoulder, yet that can happen in these type of patterns.  From a bigger picture perspective you can see that the dip did not break channel support and IYM at (1) was facing key resistance.  As shared with the Members, a break above resistance at (1) could see IYM pick up a quick 10%.

Yesterday an example of the “Power of the Pattern” reflected the impact on Americanan Airlines after a head & shoulders top formed. (See post here)

This pattern has taken months to form and the right shoulder has needed the past month to form. While they are forming, frustration for both the bulls and the bears is common!   These patterns need to be respected for their potential and this pattern formed long before the news broke of the Worlds central banks getting together this morning to boost liquidity!