INDU 5 21 2010

 

Just a quick observance and one can see a head and shoulders pattern forming on a long term monthly cart.

A) Could trade between 9 and 11k for the next 2-3 years and maybe even 4-5. As one can see we've had a humongous run over the decades.

B) IF, IF, IF this head and shoulders pattern plays out, as this is one of the most bearish chart patterns, then we can expect a crash of EPIC proportions.

C) 1st scenario: If the DJ recuperates the recent highs and then the next level to test would be 12k. If it tests and then overcomes then 13 and 14k will be the next targets and the H+S pattern is done.

2nd scenario - DJ trades sideways 1-3 years then tests the neckline, 7k, and if it, if, if, it breaks then expect all heck to break out.

Conclusion:

Because of the financial situation in the US and worldwide I am swaying towards a continuation of the H+S pattern forming and perhaps even breaking... I am preparing for this. If I am wrong the investments I will be in should still do well regardless.