Wednesday, December 4, 2013
Long-Term stock market pattern, oscillator divergences point to immense market risk
I have illustrated here before the long-term broadening top chart pattern that appears to be taking shape in the Dow Jones Industrial Average. On Friday, November 29, 2013, the index hit the upper trendline connecting the 2000 and 2007 highs, briefly spiked over it, and then reversed back below it. This, along with long term oscillator divergences in the market, are warning of a major market top. One must understand, however, that divergences by themselves do not guarantee the timing of a market top. At times, markets will stay persistently in a trend, even with divergences. These divergences often grow as the trend matures, but price eventually gives way and the trend reverses. That being said, there is immense market risk here and it is time to get safe. Additionally, we have a potentially completed double-zigzag correction up from the March 2009 low, as well as a very small degree five wave impulse down from the top, suggesting a trend change to the downside.This does not by any means guarantee a long term market top is in place. But, if one is in place, it would start with a small five wave impulse down such as the market has just traced out. Again, if anyone is having trouble understanding what financial safety means, please do not hesitate to e-mail me.