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This Technical Pattern Could Spell Doom for Stocks

Wednesday, October 12, 2016 6:41
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(Before It's News)

Arrow downThe S&P 500 is flashing a technical pattern that suggests a big move is coming — and the result could mean big losses for investors soon, says one prominent analyst.

Carter Braxton Worth, a technical analyst at research firm Cornerstone Macro, recently sent a note to clients pointing out a so-called “symmetrical triangle,” which you can see in the chart below.

spx-factset

Typically, technical analysts would see the above pattern as bullish, but Worth sees the exact opposite. “We believe the current formation is a setup for a move lower,” he said.

“It is a circumstance where buyers and sellers are matched off so evenly that purchases being made by those who like a particular security are in the same order of magnitude as the selling being done by those who dislike the security,” noted Worth. Such conditions are typically followed by a sharp move to one side or the other.

Yesterday’s big market drop actually broke through the triangular chart pattern, as you can see below, which may well evolve into a much larger breakdown:

spx-factset2

While stocks could also bounce back into a new bull market, Worth feels a crash is much more likely. And investors are likely to find out soon. “Time will tell,” Worth writes, “and not a whole lot more time, we suspect.”

DIA-2016-10-12

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was mostly flat in premarket trading Wednesday at $181.20 per share. Year-to-date, the only exchange traded fund that tracks the Dow Jones has risen 4.14%.

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  • Wow…

    the technical data has arrived, to save humankind from it self.

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