Tuesday, 4 June 2013

S&P 500's 3 and Dow's 16 year old megaphones ultimately bearish but indicate higher prices possible

The S&P 500 and Dow Jones Industrial Averages may both be forming long term bearish megaphone top patterns. The S&P's megaphone is three years old while the Dow's is sixteen years old. Both patterns are ultimately bearish but suggest more upside is possible in coming months. Food for thought is all. As I have said previously (for example here), so long as the S&P 500 remains below 1785 or so, I don't believe it has escaped the gravitational pull of its arguably sixteen year old trading range. Further upside within these megaphone patterns could occur without breaching that 1785 level on the S&P.

The S&P's three year old megaphone is illustrated first.

Now the Dow's sixteen year old megaphone.