Groundhog Day: What Do the Markets See?
August 25, 2010  Analysis from Chris Kimble 

I just spotted this excellent post on Chris Kimble's blog, which I've reprinted below.

It initially caught my eye because Groundhog Day is my all-time favorite movie (much deeper than most people realize). But more to the point, this trio of chart annotations captures a potential market turning point of major proportions. I've reprinted Chris's analysis below.

The top chart was published on August 8, reflecting a bearish situation for the 500 index ... facing Fibonacci resistance at the peak of a rising wedge. At (1) the post suggested to "harvest at resistance or take positions to score on defense. The "Power of the Pattern" won this battle as the 500 index didn't find the energy to break resistance at (1) and has fallen roughly 7% in the following two weeks. If you harvested, you protected your investments. For those scoring on defense, a nice two-week gain has taken place.

Click to View
Click for a larger image

In the movie "Ground Hog" day, actor Bill Murray found himself repeating the same day over and over again. Speaking of repeating over and over again, the 500, Nasdaq 100 and Russell 2000 find themselves back at the bottom of their trading ranges — AGAIN!

Click to View
Click for a larger image

For those that are scoring on defense, bring stops down to protect gains, right now! Why? Potential short-term "inverse H&S" pattern is at hand. I do not feel this will override the larger pattern, but one must respect the bottom of the trading range and short-term oversold conditions.

FYI, I am of the opinion this pattern WILL END! For those scoring on defense, the Russell looks to be the most vulnerable in the above chart. Of course if the Russell breaks support, the other two will as well!

Here's Check out Chris Kimble's new blog: Kimble Charting Solutions.