Three Peaks and a Domed House - Pattern Recognition And Cyclical Stocks
The Morgan Stanley Cyclical Index is something you might want to watch closely for keys to the future. The companies included in the index may be found by clicking on the link above. It is important to realize economic and stock market movements are highly cyclical. Thus, there are companies whose fate is closely tied to good times and bad. ie, They tend to perform very well in good times and, well, not so good in bad times. These companies are typically very sensitive to economic turns and are labeled as cyclical.
The chart of the MSCI is a weekly chart starting in October of 2002 which is generally considered the start of this bull market. I have annotated the chart to show what I believe is a clear "Three Peaks and a Domed House" pattern made famous by George Lindsay, a famous forecaster of times past. Even the congestion before the Domed House is a perfect representation of George Lindsay's original work.
To learn more about a George and his pattern work, I would highly recommend clicking on the link above and visiting Carl Futia's blog. While I don't know Carl personally, he appears to have the ability and competency of finding visual patterns in trading. While some may discount pattern recognition, I would not be so quick to do so. Patterns are all around us in nature. They can be experienced through any of our sensory perceptors and include things as simple as your behavioral patterns.
So, if this pattern does develop, what would be the target price to the downside? Well, visualize an x-axis around the base of the peaks and flip the upper part of the pattern below. The x-axis is at approximately 650 and the peak is approximately 900. Thus, the downside target would be approximately 400 or a retesting of the 2002-2003 bear market lows.
The chart of the MSCI is a weekly chart starting in October of 2002 which is generally considered the start of this bull market. I have annotated the chart to show what I believe is a clear "Three Peaks and a Domed House" pattern made famous by George Lindsay, a famous forecaster of times past. Even the congestion before the Domed House is a perfect representation of George Lindsay's original work.
To learn more about a George and his pattern work, I would highly recommend clicking on the link above and visiting Carl Futia's blog. While I don't know Carl personally, he appears to have the ability and competency of finding visual patterns in trading. While some may discount pattern recognition, I would not be so quick to do so. Patterns are all around us in nature. They can be experienced through any of our sensory perceptors and include things as simple as your behavioral patterns.
So, if this pattern does develop, what would be the target price to the downside? Well, visualize an x-axis around the base of the peaks and flip the upper part of the pattern below. The x-axis is at approximately 650 and the peak is approximately 900. Thus, the downside target would be approximately 400 or a retesting of the 2002-2003 bear market lows.
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