Exposing Ideas to the Envelope of Serendipity

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Wednesday, July 29, 2009

Charts of Interest

While doing some routine chart analysis the other evening, I found a few charts particularly interesting, and present them below for perusal at your leisure. 

The first chart is a monthly chart of the S&P 500 going back to 1928, nearly to the index's inception, and arguably presents a strong case for the March 2009 low being at or near this bear market low. Note that since these are monthly bars, a few hundred points one way or the other is nearly negligible on the graph, leaving considerable wiggle room in the precise trendline placement.

The next two charts are a deconstruction of the 2002 bear market bottoming process from a chart pattern perspective, and are of interest from a present day comparison standpoint, as they illustrate two inverse head and shoulder reversal patterns, one nested inside the other. Neither of these patterns could be considered textbook in their formation, yet both played out in textbook fashion. In each case, targeted projections from the identifiable patterns were met with uncanny precision. The first of these two is a long-term, multi-year pattern with a high, shallow right shoulder not unlike the one formed in recent weeks to complete the inverse head and shoulders pattern that many are currently watching and evaluating closely. The last chart focuses on an interior pattern, which was also less than classic, but provided valuable clues as to market direction.

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