by Chris Kimble
CLICK ON CHART TO ENLARGE
Is the NYSE creating a "Giant Topping" pattern? Rising wedge patterns lead to lower prices around two-thirds of the time. At this moment, a top is not proven! For sure I do respect the potential that a rising wedge pattern could have some impact in the near future on this key broad market.
The upper left chart line (1) is based upon monthly closing prices starting with the 1987 lows. Notice that several key lows took place along this line and 2011's highs touched this line as well.
The apex of the rising wedge is narrowing, meaning this pattern should end fairly soon. The NYSE is a fraction below this line as of last night close, as the index has traded sideways for the past 6 months.
Last month SPY may have created a Doji Star topping pattern (lower right chart) at the 161% Fibonacci extension level based upon the monthly closing high in 2007 and monthly closing low in 2009. This "Doji Star" at this time has NOT proven that it is a topping pattern. Should the broad markets grow weak from here, the odds do shift higher that last months SPY pattern becomes more important.
CNBC Pro covered the potential Doji Star topping pattern earlier this month (see here)