Mega Phone Pattern breaks to the upside, bullish for Dow!


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John Melloy, CNBC's investing editor, discusses the Mega Phone pattern in this Video and goes into more detail in an article he wrote (see here).

The one things that continues to get my attention is this....The Dow created the second largest monthly bullish wick in the past 10-years, last month at the top of the megaphone pattern. 

When did "THE" largest monthly bullish wick in the past 10-years take place? At the bottom of the megaphone pattern in 2009! (see post here) 

This pattern remains bullish for the Dow as long as it remains ABOVE the top of the pattern, which is now a long-term support line.


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Bullish wicks signaled big rally ahead, says Joe! New ones forming? Looks like it!



34 days ago the S&P 500 was up 2% on the year and the German Index (DAX) was down almost 6%. At that time Joe Friday shared that the DAX appeared to be sending a bullish message to global stock markets, as it looked to be creating a bullish wick at dual support at (1) above and that it could help push the S&P 500 higher (see post here).  

At the same time the inset chart which was shared on 10/15 (see post here) reflected at (2) that the S&P 500 looked to be creating a bullish wick as well. 

The chart below reflects the gains in the S&P and DAX since they each created the bullish wicks.



The above chart highlights the performance since the wicks were created and the DAX was hitting dual support. The vast majority of the years worth of gains have taken place since the wicks started to form 34 days ago!

Today the DAX is up almost 2% and many will say it has to do with China lowering interest rates. From a technical perspective, the rally looks to be a continuing process that started 34 days ago at dual support as the bullish wicks were being created!

Joe Friday just the facts.... Underestimating the Power of a bullish wick at support can lead to portfolio under performance.

Any other new bullish wicks being created at support that can be taken advantage of? Yes! I will be doing a separate post on this subject later today...Hint on the asset class....Lone Ranger


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Coffee could get much cheaper if this fails at (2)!



I've enjoyed sharing chart patterns and sentiment over the past 18-months on Coffee. Coming into this year, Coffee had done poorly and few investors were bullish the product. Then BAM....Coffee shoots up 100% in a couple of months.

I was deeply honored when co-founder of Stocktwits, Howard Lindzon, gave a shout out standing ovation for our Coffee calls/ideas on stock twits after the huge rally. (Standing Ovation) 

That is all the past now, lets take a look at the current situation. Coffee's 100% rally took it up to the bottom of channel resistance at the 61% Fibonacci resistance level at (1) in the chart above, were the rally stopped on a dime!

Now Coffee may be forming a bearish rising wedge with sentiment almost the polar opposite as it was the first of the year according to Sentiment Trader. 

The current take from the Power of the Pattern....if support breaks at (2), a ton of traders could be caught on the wrong side and Coffee could become a good deal cheaper!

If Coffee falls a good deal, will Starbuck's drop their prices???  ;)


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