We never really know which way the market is heading in the near-term future (like in the next few weeks/months). But, there are some "patterns" that tell us where to start looking.
In this blog, we are concentrating on "triangle patterns" (aka TP). Like other patterns, TP comes into play after the market has made a long-term run, and has run out of steam. Because the bulls/bears are not willing to make a stand one way or the other, the TP acts like most other "Consolidation" pattern (sideways, but with defined, squeezing limits up and down). See below...
The good news is that, most of the time, the market makes future big moves in the direction that the market breaks out of the pattern. And, my experience shows that the market usually breaks out in the direction that it was moving before the pattern was formed (and, this time it was moving up) !!!
- Warning: that is just my opinion and has nothing to do with MIPS.
Graphs of the current state of the Dow (DIA), the SPY, and the Nasdaq (QQQ) are shown below.
1) DIA - hitting the tops and bottoms to near perfection - with the upside looking stronger
2) SPY - following the pattern and struggling to move to the upside, and
3) QQQ - has already broken out to the upside.
DOW / DIA
NASDAQ / QQQ
Paul Distefano, PhD
CEO / Founder
MIPS Timing Systems, LLC