Many are suggesting that the recent bull market is over and the time to sell is here. Let's let the charts do the talking…
The Dow Industrials MAY be in the process of forming a potential Head and Shoulders Top as shown below. A break of the green support line opens the door to a potential drop to the red support level, but remember the market makes that call.
Moving on to the OTC Composite...
We first notice how the OTC is out of synch with the Dow. That's because the OTC is leading the way. And that's why all the money made last week came from OTC stocks.
While on the subject of the OTC Composite, let's take a quick look at the program traders favorite best stock.
Look familiar? If the OTC tops, AAPL will top with it.
Last week we saw just about every recent screamer hit its 50-day average or trendline and bounce hard, especially the Chinese stocks. So now it's some of those same names that you'll want to keep on eye on for topping action.
Change in Trends
If you are long at market peaks you need to know when to get out as all uptrends eventually end.
There are two Change-in-Trend patterns we are always on the lookout for: the Double Top and the 1st Thrust Down.
Below are a few examples. First up is the Double Top pattern:
Next is an example of a 1st Thrust Down:
What a great chart this is! It's got everything going for it:
5 Waves Up
The Double Top
The Trendline Break
The 1st Thrust Down
Snapback Rally
All of this is wrapped up into one chart. This is what you want to be on the lookout for with regards to Change-in-Trend patterns from up to down.
Next week is a holiday-shortened week and by Wednesday the volume ought to be really dropping off from that point forward.
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