Updated Chart 2 weeks after the pattern busted
Quote:
Originally Posted by
Hoop
Hmmm...Some TA warning bells going off around the DOW's record top...
Indicators have a habit of crying wolf during the last stage of a bull market cycles thereby making investors believe the indicators are useless and proceed to start ignoring them and the whole discipline in general....It teaches investors bad habits together with complacency of piling $$$ in at the top with a sense that the market will never fall for any length of time..how many times now have we heard lately.. "I don't care if the price is dropping I'm buying now for the long term"
....anyway..... when a true correction (or worse) begins to happen the indicators will always fire warning signals..so as tedious as it is we should always be careful and alert..cry wolf or not.
On the chart is Martin Prings Special K indicator...this indicator helps detect (primary) trend changes..and can sometimes fire early (predictor)....as with the rest of the indicators it too can cry wolf...
The busted Head and Shoulder pattern creates some uncertainty..it can bust back and keep rising to its TA target (17950) or it can fall...If it breaks the short term support and MA50 area (16950) then expect the DOW to fall to the head price 16350 area (Bull Bear line) and yes perhaps breaking the MA200 too..............
Update as of the 10th October..
It didn't bust back, instead it failed to regain that short term support and on Thursday the DOW capitulated and Friday it broke the MA200 and on its way as expected to reach the 16350 head price support area
http://i458.photobucket.com/albums/q...OW10102014.png