Last month Chris Kimble created a fascinating chart showing twin head-and-shoulder formations in the Dow (clearly "fraternal" not "identical"): Twins in the Dow? Today he gives us an important update.
Chris comments: On June 17th I pointed out that a potential "Twin Head & Shoulders" pattern was in the making that dated from the 2007 highs. My suggestion was to "harvest or score on defense" at that price point. For those that harvested, they have saved 7% of their account values. For those who looked to score on defense, some nice gains have materialized over a fairly short period (pun intended).
Looking back, the "peak of the right shoulder" appears to be fairly important, yet most likely not nearly as important as the support line the Dow is now resting on.
The last time this support line broke, the Dow declined over 4,000 points in a matter of months.
As in prior postings, I endorse the Boy Scout motto: Be Prepared if support should give way.
