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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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DISCLAIMER:
THIS CONTENT IS FOR INFORMATIONAL and EDUCATIONAL PURPOSES ONLY, and is NOT INTENDED AS INVESTMENT ADVICE!


The information contained in this article reflects an analysis of market trends and conditions, and nothing contained in this article, or on this website should be interpreted as, or deemed to be, a recommendation to any investor, or category of investors to purchase, sell or hold any security.

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As a matter of law, INVESTMENT ADVICE may only emanate from members of the government-created monopoly of federally-registered brokers and investment advisers. The author falls into neither category.

In contrast, what you just read is simply INFORMATION, that was obtained from what are believed to be reliable sources. It is ALWAYS wise and prudent to undertake investment positions only after considering a wide variety of information and opinions, on the subject, and after consulting with those who are authorized to give INVESTMENT ADVICE, if so desired. Although consultation with "experts" may be helpful, everyone should do their own DUE DILIGENCE regarding ANYTHING that may affect their financial well being.

The author is an active participant in the markets, and may trade the securities that are discussed in this article, both before and after publication, and/or may have a long-term position in such securities. In other words, the author usually has a financial interest in the subject of the articles on this web site.

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