Correction Warning

Harmonic Patterns aren’t perfect. But, when this many of them line up, all screaming the same warning, it makes sense to pay attention. In no particular order…

SPX has completed a large Butterfly Pattern.

DJIA has completed a large Butterfly Pattern and tagged the channel top that connected the 2000 and 2007 tops.

RUT has completed a large Crab Pattern from 2007, and another from the 2011 highs.

Transports are nearing a Crab Pattern completion.

AAPL has completed a Bat Pattern and is near a .618 retracement of its drop from 705.

The Nikkei 225 just completed a Bat Pattern 7 months in the making after reaching the .786 retrace of the drop from 2007.

The EURUSD has completed a Crab Pattern and Bat Pattern after reaching the .618 retracement of the drop from May 2011.

Gold is testing its June lows.  It should bounce here, with Fib/SMA targets at 1277, 1307, 1337 and 1380 before it breaks down to 1155.

And, interest rates are rising — but, are ripe for a sharp fear-induced reversal.


Correction Warning — 4 Comments

  1. One thing that can’t be manipulated is profit taking once the new year begins. The year 2013 has been a gonzo year for all stock markets and many of those holding big gains are likely to take profits early in 2014 instead of late 2013 in order to postpone capital gains taxes for another year. So there is a confluence of technical, sentiment and tax factors coming together over the next week or so to really kick off a nasty correction. I have a sense that those holding capital gains are so market naive that many won’t sell until they lose a significant portion of those gains. Stocks holders strike me as very complacent these days, they expect good times will continue.

  2. Just to add one more warning: the NYSE Composite didn’t break its all-time high back in Oct 2007. The high was 10,311.61. It’s currently at 10,283.

  3. You said we could overshoot by 10 points. So, here we are 1833.13. I think they won’t want the high ending in a 13 so we may still go a little higher?. The low was at 666 so anything is possible this being the high or to the 1900’s in 2014. I’m voting “no” to much higher though.

    At the end of last year i didn’t think we’d ever make it to 1733 so at least still a great call to get to these levels.

  4. I agree, however as you stated last week we live with manipulated markets, so we may not be playing on a level playing field and should beware!