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Hunchback head & shoulder pattern developing on Dow

  • #1
  • First Post: Apr 19, 2016 5:29am Apr 19, 2016 5:29am
Dear traders, allow me to draw your attention to what I consider to be a potential major top approaching on the Dow, now just 400 pips away. I have good reason to believe that around 18,500 could be a major top level for the Dow, a top which could, and I emphasize could, be the top for a market that from here could drop by as much as 50% through 2016 and into 2017.

What got me foxed about this pattern though is that the head, which is represented by the Nov/Dec highs, is lower than the shoulders if shoulders they turn out to be. For this reason, I have called it a ' Hunchback Head and Shoulders pattern.

I welcome any thoughts on this, and feel as free as you like to disagree/criticize, or merely to offer your own analysis, because I think we can all agree that sooner or later, the stock market is going to turn south big time, and the better we are all prepared, the greater chance we have of profiting from it.

Yours purringly,

cat.
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  • #2
  • Apr 19, 2016 6:06am Apr 19, 2016 6:06am
I have the same view towards the Dow and all indices, been waiting for a top to form for a while now. Hoping to be able to catch a massive move down sometime this year. Been riding the trend upwards in the mean time.

I think fundamentally we really should be a bear market by now, but for now its still going up. But yes everything seems primed for a massive sell off imo.
Also if you look back to 07/08 dow looks almost exactly the same to me. Talk about de-ja-vu.
Even higher levels than before too, the bigger they are, the harder they fall.
  • #3
  • Apr 19, 2016 6:28am Apr 19, 2016 6:28am
Quoting Revorocks
I have the same view towards the Dow and all indices..... Also if you look back to 07/08 dow looks almost exactly the same to me. Talk about de-ja-vu. Even higher levels than before too, the bigger they are, the harder they fall.
Regarding the comparison to 2007/8, to me they differ, especially on the monthly chart which then was giving a very bearish signal. But I don't have this on the current Dow monthly chart, which is looking very bullish, with, this possible top which is the subject of this thread. It remains to be seen what will happen if and when this 18,500 level is reached. It could blow through it, or, it could send the price down perhaps 2-3ooo points, or more. What I'll be doing with this thread is adding updates as things develop, especially if this level is hit.
  • #4
  • Apr 19, 2016 6:32am Apr 19, 2016 6:32am
Dow Jones has a W pattern formed on Daily, which can be bullish given now that we've broken the down trend line since April/May 2015.

I reckon we are in the last phase of the major bull cycle we have been in. So yes, 18,500pts will probably be broken, but there is a good chance that after we hit a new All-Time-High it will be shortly followed by another major drop... I'm trying to look back for key dates, and most times its usually in August or September, but April and May tops have also occurred in the past too.

US Equities are quite high on a historical level, so yes, we are in over-valued territory.
http://www.multpl.com/

We have an inverted Head and Shoulder pattern on the Dax currently, which is bullish also, so if we close above the 61.8% Fib of 10,377pts, then 10,500pts BRN is the next target, followed by the 76.4% at 10,774pts is the next target. This later target is very close to the down trend line in play since April 2015 (see below). I do not think the Dax will go to All Time High's this year or even next year, as there is too much risk to VW and German Banks.
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  • #5
  • Apr 19, 2016 6:38am Apr 19, 2016 6:38am
[quote=PariCovek;8881102]..... but April and May tops have also occurred in the past too.......

Sell in May and go away
  • #6
  • Apr 19, 2016 6:42am Apr 19, 2016 6:42am
It is going to break.Up
It may come back to take some more orders,but unless a new LL is printed I don't see it dropping...
  • #7
  • Apr 19, 2016 6:44am Apr 19, 2016 6:44am
[quote=cat;8881113]
Quoting PariCovek
..... but April and May tops have also occurred in the past too....... Sell in May and go away
Yeah, if 20/21 April doesnt produce an interim high on US Equities, the next key dates are 10/11 May for possible reversal.
  • #8
  • Apr 19, 2016 6:52am Apr 19, 2016 6:52am
And here's my weekly Dax chart. The trend line cuts right through the 76.4% fib retracement. This level should be more or less in correspondence to the Dow 18,500, so at present, with both Dax and Dow looking every bullish, this is the level I shall be watching closely on the Dax.

ps, we're just a few pips short of the weekly 61.8% on the Dax now, and this could send this back down, albeit it temporally.
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  • #9
  • Apr 19, 2016 7:08am Apr 19, 2016 7:08am
Quoting cat
Dear traders, allow me to draw your attention to what I consider to be a potential major top approaching on the Dow, now just 400 pips away. I have good reason to believe that around 18,500 could be a major top level for the Dow, a top which could, and I emphasize could, be the top for a market that from here could drop by as much as 50% through 2016 and into 2017. What got me foxed about this pattern though is that the head, which is represented by the Nov/Dec highs, is lower than the shoulders if shoulders they turn out to be. For this reason,...
So you are in the 2016 crash camp? A lot people are saying that.
If you are good at something, never do it for free--Joker
  • #10
  • Apr 19, 2016 7:11am Apr 19, 2016 7:11am
For Euro traders out there, this is my long term take on the Euro for the rest of this year, strengthening against the dollar, and the dollar pretty much weakening right across the board. Concerning pound sterling, very much will depend on what happens in the EU referendum next month, but right now, sterling looks bullish to around 14,680 against the dollar.
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  • #11
  • Apr 19, 2016 7:15am Apr 19, 2016 7:15am
Quoting jmn5611
{quote} So you are in the 2016 crash camp? A lot people are saying that.
Not because of the rhetoric, only from what I see in front of me, and it's by no means certain that there will be a crash this year. What is certain however, is that thew Fed will do everything in its powers to prevent it from happening this year due to the November elections, and if that means rate cuts and another round of QE, then that's what they'll do.
  • #12
  • Apr 19, 2016 7:27am Apr 19, 2016 7:27am
Quoting cat
{quote} Not because of the rhetoric, only from what I see in front of me, and it's by no means certain that there will be a crash this year. What is certain however, is that thew Fed will do everything in its powers to prevent it from happening this year due to the November elections, and if that means rate cuts and another round of QE, then that's what they'll do.
It's a tricky year this year. Good for making money. I think the Powers That Be are waiting to see what our GOP is going to do with Trump. If they make him the nominee, then I think the markets will vote on that. It will be interesting to see. As usual, your posts are good reading for this bored trader.
If you are good at something, never do it for free--Joker
  • #13
  • Apr 19, 2016 7:29am Apr 19, 2016 7:29am
Quoting jmn5611
{quote} It's a tricky year this year. Good for making money. I think the Powers That Be are waiting to see what our GOP is going to do with Trump. If they make him the nominee, then I think the markets will vote on that. It will be interesting to see. As usual, your posts are good reading for this bored trader.
haha!...the only time I do post is when I'm bored
  • #14
  • Apr 19, 2016 7:40am Apr 19, 2016 7:40am
Quoting cat
{quote} haha!...the only time I do post is when I'm bored
If you are good at something, never do it for free--Joker
  • #15
  • Jul 12, 2016 9:01am Jul 12, 2016 9:01am
I originally posted this thread back on April the 19th. We are getting close to the level I was referring to on the Dow in the very first post shown in the image. If we can break above 370, which will be an all-time high for the Dow, then 500 awaits.

If I'm wrong, it'll blast through it, but if I'm right and it stalls at this level, or even breaks through it, before stalling and dropping, then watch it closely, as it could be the mother of all sell opportunities, and I stress could be, I am only going on what I see and what I have learned, and I could be wrong.

If this does prove to be key resistance, then I don't think it'll suddenly drop, but more begin to build a top. Put a trend line in to help you time your entry.
  • #16
  • Jul 13, 2016 2:39am Jul 13, 2016 2:39am
The Dow has found resistance at 18,373, which is the May 18th 2015 all time high. If this holds, this would be a massive double top, and could, be the high. Early days, but watching closely....
  • #17
  • Jul 19, 2016 11:21am Jul 19, 2016 11:21am
Hi Guys, You may want to read the following article:

http://www.businessinsider.com/sandy...recasts-2016-6
  • #18
  • Jul 25, 2016 11:14am Jul 25, 2016 11:14am
So an update on this potential market top. Last weeks Dow weekly candle finished as a Doji, which for me was very significant, and as we are coming down today, this top could be on. This week's pa will be crucial I feel, and we need to close the week above last weeks high. If we don't, then this really could be a fantastic sell opportunity for catching the top of a potential forthcoming Bear market. The monthly is still well supported, but I have that support at around 16,000 for the Dow, and there's no telling whether this support will hold if the selling really snowballs.

I hope I'm wrong, as I have family and friends invested in the stock markets. I called a bottom on Gold and Silver back in December, and whilst I may not be right with this, it's definitely worth taking note of.
  • #19
  • Aug 1, 2016 7:49am Aug 1, 2016 7:49am
Time for another update. Last week's candle, which closed significantly lower than the previous one, confirms, so far, that this level may be the top of this market, or rather, it is so far playing out as I would expect it to do if this is indeed a top. Originally I said 18,500 for the Dow, and it rose to 640, but that is insignificant, it was never going to be to the pip, it never is. What is important is that the pattern is playing out as I would have expected. Yes we can still push higher, but the longer we put in bearish candles and continue to come down from this level, the less likely this will be.

If I'm right, where do we come down to? Always difficult to know of course, but I would say initially, 16, 400 to 16,000 on the Dow could be on the cards.If this is the beginning of a big bear market similar to 2007-8, then considerably lower.
  • #20
  • Aug 1, 2016 8:34am Aug 1, 2016 8:34am
Quoting cat
Time for another update. Last week's candle, which closed significantly lower than the previous one, confirms, so far, that this level may be the top of this market, or rather, it is so far playing out as I would expect it to do if this is indeed a top. Originally I said 18,500 for the Dow, and it rose to 640, but that is insignificant, it was never going to be to the pip, it never is. What is important is that the pattern is playing out as I would have expected. Yes we can still push higher, but the longer we put in bearish candles and continue...
I am keeping an eye on it. I do think you're right with this one. All this debt fuelled growth from low interest, something's got to give eventually!

A friend of my thinks dow 14K is on the cards.
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