A Little Bit of History Repeating

Having studied the stuff extensively I will be the first to admit that I'm a technical analysis skeptic, but as an open minded investor I can't help but notice an opportunity setting up in the U.S. equity indicies.

On December 11th the FOMC is due to make its rate policy decision, which many expect will involve an interest rate cut. The timing of this decision will correspond very nicely with what could be the completion of the technical pattern known as an 'inverse head and shoulders bottom'.

The same phenomenon took place on September 18th: a major sell-off, a wave of bearish sentiment, the formation of an inverse head and shoulders pattern followed by a huge rally on FOMC day that completed the 'pattern' with the break of the so called neck line.

Take it for what you will, but there is no doubt there are striking similarities in the price action and you can bet that a lot of technicians have their eye on this phenomenon. A break of the neck line before or on December 11th should send a lot of people piling back into equities. Whether or not this pattern will ultimately fail is anyones guess, but for the short term at least, it looks like Shirley Bassey was right.

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