This information came from an old colleague of mine that I have known for the greater majority of my life on this rock. Unfortunately, I cannot copy
the same exact charts because it has his firms digital watermark(s), but I was able to recreate it almost exactly sans some unrelated items.
I originally came to this website for other purposes, but recently have had some *interesting* conversations relating to the world economy so I
decided I should pass this on.
Here is an almost verbatim copy of what is contained in the E-Mail, without names or profanity.
Monthly candle chart. Massive continuation pennant has made its 5 leg in addition to the retest of the breakout. When confirmation comes through
and nullifies the previous 3 year high I suggest you drop all hedges. First stop is 75, will reevaluate then.
I took some information out, but still tried to keep the important contents. Here is what he is saying, and after looking over this a few times and
drawing the charts myself I tend to fully agree.
- What is a pennant?
This is a pennant
This is a much better description than I could likely give you. What we are looking for though is a wedge pattern that forms with two things most
1. Lower Highs
2. Higher Lows
It comes from the theory that security prices act and react in some form like a coil. Compression leads to large moves in the marketplace. It really
all boils down to psychology if you ask me, but I gave up this part of my life a long while ago. I fully claim to be no expert.
- Why is this formation important?
When this pattern forms after a move upwards, it signals a continuation pattern. Sometimes this pattern will occur in a negative environment (fewer
occurrences). This is strictly a positive momentum phenomena relating to this occurrence as it is preceded by a large move upwards. A quick internet
search will yield many more instances I am guessing if you don't want to take my word for it.
- What will the results be?
Impossible to know for sure. There are no such things in life as a "lock". Statistically in an infinite world anything and everything is always
possible. When he says "75" without talking to him in further detail I am guessing he means the completion of the inverse head and shoulders
pattern that is about to be validated (possibly). If you ask me it is going to be quite a bit more than that over time if this pennant is legit.
Again, I make no judgments, I am just passing along information.
This is my best world macro view synopsis of what we have seen since 1990 relating to what you are seeing in these charts.
The technology boom was just that, a boom. Things became much overvalued for a couple of reasons. But mainly it was because no one knew what
valuation this new technology really should have or how exactly it would impact us.
Once this shift occurred and once things could be evaluated correctly the world economy fluctuated back to some sort of equilibrium level. This was
IMO 2002 -> present day. Technology now will only exponentially grow and mature, but one thing is much different. We know how to better value
technology and its impact on the world down the line.
Think about it like this. Did anyone really know what you could do with a computer in even 1995? How many of you knew how to even turn a computer on
in the early 90's? Hell, I still had a problem replacing my hard drive recently. The market doesn't see it like this though, it sees it in future
valuations and this is the most important part.
I know this websites composite as a whole really isn't interested in these things, but I am sure it will at least be something of interest to a few.
By the way, no, I am not selling anything. I am hoping someone will interpret these charts differently than I because it would be nice to catch him
off guard with a left-hook. Although, from all my dealings with him previous, he rarely makes mistakes. Nor did he get to where he is currently by
being wrong. But it would be nice to 1-up him for a change.
Here is what we are looking at.
The first image is a long term chart of QQQQ (proxy for Nasdaq, an ETF) since the early 1990's. Remember, the data is represented as 1 month per bar
of information and it is also in logarithmic format. This is just a fancy word representing everything is presented with equal weighting for
The second image is a close-up of the past 3-4 years, and it is also represented in the first chart. There were a couple of things I couldn't draw
correctly such as retracement levels, but that is deviating from the original message anyway.
Hope this helps.