The Wedgie Update
September 4th 2008 19:21
On August 12th at Mover Mike, I raised the issue of rising wedges, a pattern after a fall, that may signal further downside. I was writing about rising wedges in the Dow Industrials, Trannies and Utilities. Frankly, I expected the downside would have commenced before today, but the DJIA has clearly broken down from its wedge and even from a small head and shoulders top today, see chart.
The DJTA, see chart, is not as far along and may break lower. And what has happened to the utilities. No longer are they tied to interest rates. The DJUA has dropped over 4% this week and clearly has dropped out of a massive top that can be seen in this weekly chart. Now look at the chart of the 30-year treasury. The rate on the long bond has dropped from 4.60% to 4.30% The utilities are falling not because interest rates are rising or rising fuel prices, but maybe for an economy that is sliding.
As my friend Bill said, when I asked him, "Why?"
"It's a BEAR Market!
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