Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market - The Sky IS Falling

Stock-Markets / Financial Markets 2015 Aug 24, 2015 - 10:26 AM GMT

By: Rambus_Chartology

Stock-Markets

Before we look at some charts I just want to second Sir Fullgoldcrown’s Friday night post at the forum. We created Rambus Chartology so we could have a community of like minded investors who want to learn as well as share what they have experienced in their own investment world. We are all equals when it comes to the investment world which can humble even the most experienced traders on the planet. That’s the nature of the game we’re playing. Sharing ideas in which everyone can benefit from is the corner stone of Rambus Chartology. I know we have a lot of lurkers at the forum and if you have any good ideas you would like to share with the rest of the members please feel free to post what you have without fear of ridicule or embarrassment. As Sir Fully likes to say, “It’s all for one and one for all.”


Last week was a week that doesn’t come around very often in the stock markets. After chopping sideways for all of 2015 it now looks like we’re finally getting an intermediate term move down as some important support zones have given way. Until this past week it was still uncertain whether this horizontal trading range was going to be a consolidation pattern or a reversal pattern. Thursday and Friday’s price action confirms for me that we have a 5 point bearish flat bottom expanding triangle reversal pattern in play now. The bottom blue rail of the expanding flat bottom triangle, which gave way on Thursday at 17,100, finally broke critical support. That bottom trendline will now become resistance on any backtest. The next big question will be whether we’ll see a backtest to 17,100 before we go lower? I’ll try to answer that question a little later.

Next lets look at a four year weekly chart for the INDU which shows the smaller red 5 point bearish expanding flat bottom triangle as part of a much bigger blue expanding rising wedge. As you can see the DOW closed right on the bottom rail last Friday which is showing us it’s hot. A break of the bottom blue rail of the expanding rising wedge at 16,460 will give us an even bigger topping pattern.

This next very long term weekly chart for the INDU goes all the way back to the 2007 H&S top which reversed the bull market at that time. That strong decline ended with an inverse H&S bottom which was the exact same height as the 2007 H&S top and led to our 6 1/2 year bull market rally. On this weekly chart I’m showing the bottom rail of the expanding rising wedge as a black dashed support and resistance line. That line is now the most important line on that chart. It will be interesting to see how the price action interacts with it.

This last chart for the INDU is a 30 year monthly chart which shows how the blue expanding rising wedge fits into the big picture at the top of the chart. Keep in mind this pattern won’t be complete until the bottom rail is broken to the downside. That will be the confirmation we’ll need to see that says this stage of the bull market is now over.

Now I would like to show you a few charts that may shed some light on whether we’re going to see some follow through to the downside or if we’ll get a backtest to the 17,100 area before the INDU moves lower. Below is a daily chart for the $RUT which is now showing a double H&S top, not a very pretty one but the pieces of the puzzle are there. Notice the blue bearish falling wedge that formed right on neckline #2. As I’ve stated countless times in the past when we see a smaller consolidation pattern form right on top, below, above and below or right on an important trendline, it’s usually a pretty good indication that the pattern is valid and the breakout will occur. Also I have shown you many times in the past when we see a small consolidation pattern slope in the same direction of the trend, in this case down, we usually see a pretty strong move. This looks like the case with the $RUT.

The long term daily chart for the RUT shows the damage that has occurred when the price action broke below the one year top black rail of the expanding flat top triangle. As you can see it held support on three separate occasions but now with the H&S top and the red bearish falling wedge in place significant damage has been done to the original flat top triangle. The red bearish falling wedge is strongly suggesting that we’ll see lower price dead ahead before we get a counter trend rally.

The daily chart for the $SOX shows it broke down from a bearish falling flag and still has a little ways to go yet before it reaches its price objective shown at the bottom of the chart.

The monthly chart for the SOX shows why the 545 area may offer some decent support in the short term or even the long term. We just have to see what happens when the SOX gets there.

The daily chart for the SPX shows it has broken down from a blue 5 point bearish falling flag at the end of its almost nine month parallel 5 point bearish rising flag formation. We can now call it a bearish rising flag formation because the price action has broken below the bottom rail confirming the reversal pattern for us. The failure of the price action to reach the top rail, which would have been reversal point #6, now tells us the bulls were weak. It’s hindsight now but it still helps confirm the bearish price action from last week. Clues, it’s all about getting clues.

If this decline takes off to the downside the monthly chart for the SPX shows the previous highs made back in 2000 and 2007 should offer some strong support at 1550 or so.

I’ve been showing you this daily chart for the $NYA for awhile now which finally gapped below the neckline this past week after testing it on four separate occasions.

The daily chart for the EEM, emerging markets, broke below the bottom rail of its own bearish falling wedge a week before the US markets.

The weekly chart for the EEM shows it’s now just breaking out of a blue 5 point triangle reversal pattern. The only question is will we see a backtest to the bottom rail?

The daily chart for the RUSL, 3 X long the Russian stock market etf, broke below the bottom rail of a blue bearish falling wedge just three days ago which suggest there is more to go on the downside.

Lets look at one last bearish falling flag which has formed just below the bottom rail of a much bigger black bearish expanding flat bottom triangle consolidation pattern on the $XES. This area has been leading the energy sector lower.

The weekly chart for the $XES shows the bearish expanding flat bottom triangle which I’m looking at as a halfway pattern to the downside that is separating the first leg down out of the bearish rising wedge and our current impulse move down out of the expanding flat bottom triangle.

There are never any guarantees when it comes to the markets but I’m seeing several small bearish falling wedges and flags that usually lets us know that we’re in a strong move. Time will tell.

There is another sector in the markets that maybe showing confirmation of a strong move lower. The Transportation Average was one of the strongest sectors when the markets bottomed in 2009. The daily chart below shows it completed a H&S top last week when it broke below the neckline on Friday. The head is a 5 point bearish falling wedge with a blue bullish expanding falling wedge as the left shoulder and our most recent blue bearish expanding rising wedge as the right shoulder. A backtest would come in around the 8015 area.

The weekly chart for the Transportation Average shows you just how strong its bull market was by the formation of the two bullish rising wedge which is just the opposite of what I just showed you on the charts above with the smaller bearish falling wedges and flags. You can see the price action is just now breaking below the neckline.

The monthly chart for the Transportation Average shows the reason I had been so bullish on this sector for such a long time. This monthly chart below shows you one of the most beautiful H&S consolidation patterns I’ve ever seen. I’ve seen some pretty good ones but this one is right up there with the best of them.

The long term quarterly chart for the Transportation Average goes back about 100 years showing the really big patterns that have formed through the years. You can see the H&S consolidation pattern at the top of the chart. If this index ever declines down to the neckline it would probably be a very good clue that the correction or bear market or whatever it is we’re facing maybe over and a new bull market may begin.

Lets turn our attention to the US dollar as a lot of folks are becoming bearish which maybe the case in the very short term. I first showed you this long term monthly chart when the price action broke above the top rail of the massive bullish falling wedge. So far all the US dollar is doing is taking a well deserved rest after breaking through the top rail. As you can see it has had one backtest to the top rail so far and it might have another one where support should come in between 92 and 93.50 or so. Nothing is broken on this chart which shows a very bullish picture for the US dollar.

Below is a monthly combo chart for the US dollar and gold which shows the US dollar reversing symmetry back up as shown by the blue arrows and gold possibly running into resistance at the 1180 area. Once this consolidation period ends for the US dollar I expect it to rally up to the next blue arrow which comes in around the 108.60 area and then a time out to consolidate its gains. Remember a big base equals a big move which the US dollar has.

Lets take a look at some of the other most important currencies of the world and see what their long term charts look like because the big picture tells the truth. The $XAD, Australian Dollar, shows it still has a ways to go yet before it reaches in massive H&S tops price objective at a minimum.

The weekly chart for the $CAD, Canadian Dollar, shows a double H&S top and has recently broken out of a small H&S consolidation pattern.

The monthly chart for the $XBP, British Pound, shows it has been trading sideways since it crashed in 2008.

There are two separate chart patterns that we can look at in regards to the long term, $XEU, Euro. The first chart is the massive downtrend channel that began to form when the $XEU topped out in 2008. We’ve been watching this one for a very long time, well before it broke out from the blue bearish rising wedge. It did find support at the bottom rail of the downtrend channel and has gotten a bounce. Is it just a dead cat bounce or something more?

This second long term monthly chart for the $XEU is my preferred look which is showing a double H&S top. After putting in neckline #2 the euro has been in rally mode and it’s reversing back up to the brown shaded support and resistance zone which comes in at the 116.60 area which would be the high for the lower right shoulder for the neckline #2 H&S top. If the double H&S top plays out it will have a price objective down to the low made back in 2000 – 2001.

The 25 year chart for the $XJY, Japanese Yen, shows it has completed a double H&S top and has broken below the apex of its ten year triangle reversal pattern that launched the rally to its ultimate top in 2011 that shows a small H&S top that reversed the bull market.

From a short term perspective it looks like the Stock markets still have a ways to go down before we see a short covering rally. The many bearish falling wedges and flags tells us this is a strong move down right now. Be prepared tho for some high volatility as the bulls and the bears fight it for control of the trend. I promise I’ll have more on the precious metals complex this week but this move in the stock markets supersedes everything else right now. Big breakout moves don’t happen very often and when they do its nice to play the impulse leg until something changes. Again we should have a very interesting week ahead.

All the best

Gary (for Rambus Chartology)

http://rambus1.com

FREE TRIAL - http://rambus1.com/?page_id=10

© 2015 Copyright Rambus- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rambus Chartology Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules