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Patterns

By Jon Strebler

 

Technical analysis is all about identifying trends and pattern, and playing the odds that they imply.  Let’s look this week at some interesting and, in some cases, somewhat esoteric patterns, starting with the NASDAQ Composite Index.  It has outperformed the market as a whole for 2 ½ years, as this chart comparing it with the S&P 500, and the blue trend line, show.

 

With the ratio of the two near 2400, we are close to a sell signal of sorts.  Granted – “Close to” doesn’t really help us much, but the next chart shows a disturbing development, that of the NASDAQ finally following other major US indices in a Death Cross pattern that almost always indicates a serious change of trend.  Taken together, we have the strongest of the major stock indices now rolling over into bearish territory; that, in turn, suggests that the relative strength chart above may also ... Log in or subscribe to continue reading.


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