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I think I have posted this chart before, but I find it fascinating in it's simplicity and and it shows how important the Dow level is right now.
First of all, it seems like the reversal Diamond pattern really IS a reversal pattern, since we have been unable to take out ONE single top since Jan 2000.
>From the Jan top we can see how the 78,6% retracement level have stopped (1, 2, and 3 in the chart) any suggestion of a new top. It's always been the 78.6% level.
[0,786= square of phi (0.618)] that stopped the movement.
Right now we have DECLINED to the 78,6% retracement level (4) of the last rally. And if that level is taken out we REALLY are in trouble and my break out scenario is looking more certain.
The reason I find this level interesting is because it's a DOW level.
The first thing I learned about Bearmarkets, was that the first stocks to go was the speculative stocks (in this case Nasdaq). The last ones were the Blue Chips (a term we never hear anymore) in other words the Dow stocks.
Of course nobody believs that anymore. the rules have changed - right?
However, in my mind, if the 78,6% support level is taken out the Bear market WILL START!!
Now take a look at the S&P chart from 1950 in my earlier post and feel the potential of the next Bearmarket......:(
In the enclosed gif, I also explain why I think the next bottom will be in medio April ISO now. Of course we could invert as Norman explains, then this week is the bottom and the top comes in April. Let the charts show the way.
On a funny note, I have noticed I mostly post at bottoms (except with Gold...), so place your bets!
Stig
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