{"id":31122,"date":"2012-07-25T14:43:09","date_gmt":"2012-07-25T18:43:09","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=31122"},"modified":"2012-07-25T14:43:09","modified_gmt":"2012-07-25T18:43:09","slug":"how-to-position-yourself-for-a-10-year-pattern-breakout","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/07\/25\/how-to-position-yourself-for-a-10-year-pattern-breakout\/","title":{"rendered":"How To Position Yourself For A 10 Year Pattern Breakout"},"content":{"rendered":"
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By Chris Vermeulen, GoldAndOilGuy.com<\/a><\/strong><\/p>\n

As mentioned last Friday<\/a><\/strong> just before things took a dive on the weekend, a look at the major market indices did not look promising.\u00a0 If we take an even longer term look and examine the monthly charts we can see that The S&P 500 as well as the Dow Jones have been approaching multi-decade rising channel resistance lines.\u00a0 Further, they also appear to be forming bearish rising wedge patterns.<\/p>\n

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Monthly Long Term Chart Analysis & Thoughts:<\/strong><\/h3>\n

\"Monthly<\/a><\/p>\n

As many of my longer term subscribers can attest to, I always preach that technical analysis is one part\u00a0 art and one part science:\u00a0 you can never be completely certain on what the outcome of a pattern is going to be.\u00a0 However, we can use historical analysis to make better investments. The great American Novelist Mark Twain probably said it best in that \u201chistory does not repeat itself, but it rhymes<\/em>\u201d.\u00a0 Regarding a rising wedge pattern, we know that roughly two-thirds of the time they will break to the downside.\u00a0 This also means that one-third of the time they break to the upside.<\/p>\n

In accomplishing our goal of capital growth we must do a number of things.\u00a0 We must make returns on our investments, we must protect our investments, and we must limit our losses.\u00a0 While all three aspects work in tandem with each other, there are times when focus must be allocated to one specific approach.<\/p>\n

Regarding the current technical setup, I\u2019m not so focused on the 67% chance that these wedges will break to the downside, but more so the impact of each outcome on the average Joe\u2019s portfolio and mom and pop businesses.\u00a0 The S&P 500 and the Dow are approaching long term resistance lines that have been in place for decades.\u00a0 If we do break to the downside, which I suspect we will, there could be a very significant sell off with consequences that no one can predict at this point though I mention some things in the chart above.\u00a0 Alternatively, there is significant overhead resistance in the various indices, and I don\u2019t believe an upside break would be too monumental.<\/p>\n

That being said, I always like to keep an open outlook and wait for the right opportunity.\u00a0 I\u2019m trying to think of scenarios that would prelude further upside action and I really am not coming up with much.\u00a0 As evidenced by the completion of the recent 5 wave uptrend on the S&P that coincided nicely with the various quantitative easing policies, Ben Bernanke and the fed have had less and less impact.\u00a0 I truly can\u2019t see many fiscal developments that would prompt any significant bullish action.<\/p>\n

The only scenario I really think that could pump up equities is a series of positive earnings announcements.\u00a0 A lot of expectations, earnings numbers, guidance, etc\u2026 have been revised downwards over the last couple of quarters, so there is the opportunity for some positive surprises that could lead to some bullish price action.\u00a0 In absence of such a scenario, I really can\u2019t think of much else that would prompt a run up.<\/p>\n

Look at these charts of positive and negative earnings surprises\u2026 and the dates and remember what happened following this negative data\u2026.<\/p>\n

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Positive Earnings Surprise<\/strong><\/h3>\n

\"Earnings<\/a><\/p>\n

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Negative Earnings Surprise<\/strong><\/h3>\n

\"Earning<\/a><\/p>\n

That being said, I am recommending two courses of action.\u00a0 For those steadfast bulls, lock in some profits and\/or buy some protection.\u00a0 Missing out on some of the upside is a lot better than losing some of the gains you have fought so hard for over the past couple of years.\u00a0 For the more aggressive traders and investors, start following my updates a little more regularly as I foresee many shorting opportunities coming up in the future.\u00a0 As many of you know, sell-offs are often quick and abrupt, and timing is extremely important when playing the downside.<\/p>\n

Further, trading could get very volatile in the near future.\u00a0 Historically, and even more so looking forward as August and September have been very costly for the average investor.\u00a0 Our focus will be in taking the highest probability trades that offer the best risk to reward scenarios.\u00a0 There will be times when we miss trades, and times when they\u2019re not timed perfectly.\u00a0 But, as those who have been with me for a while can attest to, patience pays off in the long run\u2026<\/p>\n

Join my Free Market Analysis & Trade Idea Newsletter Now:\u00a0GoldAndOilGuy.com<\/a><\/strong><\/strong><\/h2>\n

Chris Vermeulen<\/p>\n

 <\/p>\n

 <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By Chris Vermeulen, GoldAndOilGuy.com As mentioned last Friday just before things took a dive on the weekend, a look at the major market indices did not look promising.\u00a0 If we take an even longer term look and examine the monthly charts we can see that The S&P 500 as well as the Dow Jones have … <\/p>\n

Continue reading “How To Position Yourself For A 10 Year Pattern Breakout”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-31122","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/31122","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=31122"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/31122\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=31122"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=31122"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=31122"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}