The last time the spread between the 10, 20, 50, 100 and 200-day moving averages was this small (22 points) was on January 3, 2008. It’s the sort of consolidation that almost always precedes a significant move — whether higher or lower.
Back in 2008, it obviously occurred in the early days of the crash. But, the previous instance in 2004 came at the tail end of an 11-month consolidation that eventually broke out, yielding three more years of the bull market.Coiling doesn’t tell us which way the market will go when it breaks out/down, just that the consolidation’s days are numbered.
Of course, HFT and algorithms have become so effective at manipulating prices these days that we hardly need an excuse for a breakout. I’m looking at you, CL.
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