TQ, thank you for taking the time for the tutorial. Very worthwhile reviewing. I do understand the technical nature of pennants, flags, triangles, etc…., but I tend to follow them in the context of many other patterns and indicators, very few of which I rely very heavily by themselves. But you give some excellent examples pennant/triangle formations that are very convincing, some of which have been right on target (Bear Stearns, WOW!)

Currently I am thinking that most markets are very very close to putting in a short to intermediate term bottom. We have some extremes on the sell side of which we haven’t seen in many years and all with the background of the most horrific news “sound bytes” we have heard in a very long time. Friday was a perfect example with news of the bailout for Bear Stearns leading one to believe that a crash was imminent. Maybe it still is, but it seems to me that the bears had a great opportunity to let it all out, but yet could not take the DJIA, S & P 500 or NASDAQ to new lows.

But don’t misunderstand me. At the same time that I believe an advance is about to get underway I also think that it will be nothing more than a huge bear trap. It may even be a very vicious rally, as it is often the case in bear markets, leading many to believe that the “correction” or “mini bear market” is over. But I believe that just as we are in the mother of all bull markets in the precious metals, nonferrous metals, natural resources, etc….., I also believe that the worse bear market in at least 80 years is already underway for all general stock markets worldwide.

Many non-confirmations and some extremes in indicators not seen in years have been leading me to believe for weeks now that a temporary bottom is at hand. Let’s take a look at the Wilshire 5000 index here in the USA. It is, to my knowledge, the broadest index and includes more stocks than any other index we can study.

sc9.png

In the weekly chart above we can see that the index has now closed at a new weekly low:

1) MACD is at an extreme not seen in years and very very oversold. This tells me that, at least, a “dead cat” bounce is in order soon.
2) RSI is not confirming the new low just made and this is bullish in my opinion, at least for a short to intermediate term advance.
3) “On balance volume” has been going sideways for nearly a year now. This is another indicator that I respect and it, neither, has confirmed the new low just made by the index.
4) The index is now down about 18% since the October ‘07 top, very typical of a first wave down in a major bear market. Further more it appears to have been subdivided into 5 waves and may have already been completed.

More later, partner. I need to take a break and give you and others a chance to weigh in on my BABBlE so far. :lol:

I always appreciate your posts, ideas, suggestions, tutorials, etc…, TQ.

Don’t let up, friend.

JBI