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David Stanowski
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Head & Shoulders Top?
by David Stanowski
13 August 2011

A massive Head & Shoulders Top seems to have formed during the 2000-2011 topping process in the Dow Jones Industrial Average. (see graph below) The right shoulder has just broken its uptrend line (up sloping solid red line), beginning the move to the neckline (dashed red line) that currently cuts through the 6,300 level on the DJIA.

Obviously, if the Head and Shoulders pattern proves to be valid, the second leg in the massive bear market that we have been expecting has begun, which would require a move some place below the March 2009 low of 6,440.08!

All valid Head and Shoulders patterns start with a move to the neckline, which currently runs through the 6,300 level. However, they eventually break the neckline as explained in the article accessed using the link below. The expected move below the neckline is calculated by subtracting the level of the neckline from the head, and then subtracting that same distance below the neckline.

Head =  14,279.96 (October 2007)
Neckline = 6,300 

Difference: 14,279.96 - 6,300 = 7,979.96

Since the normal price target, calculated by subtracting the difference from the level of the neckline is impossible; the bearish implications are chilling!

Only time will tell if this really is a massive Head and Shoulders top. Click on the following link and see what you think.

Head and Shoulders Top

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