Many traders and technical analysts have taken note of the similarities in market action over the summer months of the last 3 years. All of this has occurred since the Federal Reserve started their QE program to help prop up the markets.
Last Thursday I posted a chart (shown below) to chart.ly that showed the similar patterns from 2011 to now. We are right now at a crucial juncture where the market has to decide whether the troubles in the Euro zone can be contained and managed, or whether weakness there will ultimately lead to a worldwide global recession.
Here is a close up view from July of 2011 showing the head and shoulders top that lead to the 17.6% drop in late July and into August. Note how the 200 DMA was in a strong uptrend (as it is now) just as the market was about to fall off a cliff.
Here is my assessment of the current situation showing key areas of support. The similarities to 2011 are remarkable.
1 comment:
Very interesting. I think it will rollover as well. Just not til beg. of next week. I don't see us making a new higher high.
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