Last December I slapped a couple of upside targets as well as a downside target on the NYSE index and pretty much forgot about it [see: Update on NYSE Dec 29, 2015.] I’m not a fan, as it regularly ignores chart and harmonic patterns.
But, at the time, a large H&S Pattern promised significant downside if NYA wasn’t able to break out.
If… it can’t break out of the red channel, then the bottom of the rising white channel could be called upon to support it a third time in only 4 months (about 9940) with the neckline of a huge H&S Pattern (in yellow) waiting below at about 9640. The H&S targets 7800, but the more likely target is…9040. It would allow NYA to put in a higher low that’s in line with the falling red channel bottom.
Five sessions later, NYA plunged through the white channel bottom, followed in short succession by the yellow neckline. By the time the dust had settled, NYA had reached 9040, and even overshot it a bit. All in all, it was a 21% correction from the May 2015 highs.
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