Kimble Charting Solutions Blog

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Several times the Power of the Pattern has shared that Eiffel tower patterns can be very important to your portfolio construction & management. At the time when most investors were in love with Gold & Apple, I shared that Eiffel tower patterns looked to be forming in these white hot assets.

Gold could be forming an Eiffel tower pattern on 8/23/11 (see post here)  Results....Gold declines over 30% in value. Apple looked to be forming an Eiffel tower pattern on 11/7/12 (see post here)  Results....Apple declines over 30% in value.

The above 5-pack reflects the Gold & Apple Eiffel tower patterns and that three other assets could well be forming similar patterns. Eiffel tower patterns are dangerous because when you experience the left side of the tower, you often experience the right side as well!

The S&P 500 looks to have formed two Eiffel tower patterns since the mid-1990's...100% rallies followed by 50% declines.

The best way for SPY, XLV & XLY to break from these Eiffel tower patterns is to continue to break overhead resistance.  Concern for these assets would come into play in support is taken out!

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Penny stock volume as a percentage of Nasdaq volume became a very large percentage back in Feb of 2000, reflecting that a high level of speculative trading was taking place. In the next few years the Nasdaq 100 lost over 80% of its value!

Recently Penny stock volume as a percentage of Nasdaq volume took a very sharp increase, surpassing the highest level ever, which took back in 2000 at the Dot.com highs!

Is this the holy grail of indicators?  No!

I do feel investors should be aware of this, especially when Margin debt levels are at levels only seen one other time in history, which happened to be at the same time Penny stock volume hit highs back in 2000!!! (See debt levels here)

Will it be different this time?  I suspect it will!  Even if its one third of the issue it was last time, that might be enough for a few investors!!!

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The Australian Dollar is often looked at as the "Risk On/Risk Off" currency. Back in 2008 the AU$ formed a bearish rising wedge which suggests a two-thirds chance of lower prices.  Once the breakdown took place risk assets around the world tanked (stocks & commodities)!

I shared with Premium Members last Thursday that the AU$ was breaking support as EEM was breaking down from its pennant pattern.  Premium Members established a Short Emerging markets position in EEV last Thursday.

The last time AU$ broke support investors had few place to hide (not stocks or commodities).....Will it be different this time?

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