Here is a chart of the Dow Jones Wilshire 5000 Index. We see the same wedge formation that has become all to familiar (and frustrating) to traders over the past couple of months. Many people have been saying that once we break out of this formation we will get a big move, either up or down. That is not necessarily true. Once you get about 75% through a wedge, the breakouts become less reliable. This is because of the nature of the pattern. Since the two trendlines are converging, a breakout has to come eventually. A breakout that occours close to the apex is not very significant.
I think a more important move would be either above or below recent swing highs or lows. These levels are pointed out on the chart. The same goes for the S&P, Dow Jones Industrial Averge, Russell 2000, and the Nasdaq. The QQQQ's are the closest to taking out a swing high.
No comments:
Post a Comment