We have an interesting pattern developing on the chart of the New York Composite. And while astute watchers of the NYSE Advance/Decline Line may note that this indicator today went to a new, all time high, the index on which this data is based – the New York Composite – did not.
On the chart at left I have labeled the touch points on the downsloping 1 X 4 angle as “1-2-3-4.” It’s been a while since I’ve spoken of this pattern, but what appears to be developing was a pattern first observed (to my knowledge) by W.D. Gann. He called this pattern his “Rule of Four.” Simply stated, the Rule applies when we have four consecutive touch points on a trend line or Gann Angle. The fourth touch point is make-or-break. If the market breaks through (in this case, to the upside), we usually see a very sharp rally on the breakout. On the other hand, if the market fails to break through, we should see a sharp reversal to the downside. Decision-time coming early next week….
I also note continuing lethargy in the chart of the XIV ETN (page 2). Higher peaks in the S&P, lower highs in the XIV.
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