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Could the Entire Post-2011 Move Be Just One Big False Breakout?

Phoenix Capital Research's picture




 

And DOWN we go again.

 

One of the most critical issues investors need to be aware of in today’s markets is the pattern of a “false breakout.”

 

Most of the most famous technical patterns (head and shoulders, triangle pattern, a rising wedge, etc.) are in fact consolidation patterns. That is, there is no guaranteed outcome in terms of direction: the market can break either up or down out of them.

 

The key issue is what happens after the initial breakout. If the move is sustained, then it’s the real thing. But if the move is short-lived, and the market reverses… then it’s called a “false breakout.”

 

False breakouts matter a lot because typically they are followed by VERY rapid VERY VIOLENT moves. The reason for this is that the investors who took bets on the initial consolidation pattern resolving a particular way quickly discover they are wrong and rush to the exits.

 

Consider the market today. The S&P 500 broke out of a massive megaphone pattern to the upside. However, rather than going parabolic, the market has struggled to rally. And we’re now falling back down to retest former resistance… indicating that this may in fact be a false breakout.

 

 

Why does this matter? Because if we do not hold here, we could easily go to a downside target of 1825.

 

Looking at what’s happening to Oil… I think we could see something even worse happen.

 

 

Indeed, what if the $9 trillion US Dollar carry trade REALLY blows up and we see the Dollar move up to 110 or even higher? What happens to all the trades that are based on a “cheap dollar”?

 

Indeed, what if stocks as a whole staged a massive 3 years false breakout of a wedge pattern in 2011? What happens if the market reverses this?

 

KA-BOOM.

 

 

Could the whole move post-2011 be one massive money fueled false breakout?

 

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

 

You can pick up a FREE copy at:

http://www.phoenixcapitalmarketing.com/roundtwo.html

 

Best Regards

Phoenix Capital Research

 

 

 

 

 

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Thu, 12/11/2014 - 06:58 | 5539671 Not Goldman Sachs
Not Goldman Sachs's picture

All lines point to Clearasil...no moar false breakouts.

Thu, 12/11/2014 - 07:15 | 5539680 El Hosel
El Hosel's picture

Well, , If its not a false Breakout.... That would be about the only thing about "the Market" that is not False lately. I'll take false for $10,000 Alex.

Thu, 12/11/2014 - 06:53 | 5539670 Not Goldman Sachs
Not Goldman Sachs's picture

Yellin this from my Megaphone - I think the Head and Shoulders Blowoff just got a Wedgie.

The Lines in the Palms of my Oija board operator are predicting a Black Queen on my next Tarot card flip as seen through her Crystal Balls.

This time its different.

Thu, 12/11/2014 - 01:27 | 5539474 MGA_1
MGA_1's picture

Im waiting for phoenix to finally throw in the towel, the  we'll know were at the top.

Thu, 12/11/2014 - 00:11 | 5539355 Glass Seagull
Glass Seagull's picture

 

 

The answer to your question is:  no.  Ultimate target is 2300 S&P cash, then one starts looking for the bigger exit.  Bumps along the way as usual.

 

 

Wed, 12/10/2014 - 23:27 | 5539260 Prober
Prober's picture

Maybe it was, but it increased my net worth by 50%, so please send another one ASAP !

Thu, 12/11/2014 - 01:34 | 5539481 indygo55
indygo55's picture

Prober, has that been going on for the last week and a day like how long you have been here?

Thu, 12/11/2014 - 08:38 | 5539772 Prober
Prober's picture

I sold out before the sell off, spent some of the real spendable fiat on a spectacular cruise around the world on a luxury yacht, was mind-blowing awesome, returned end Nov.

Now that I am all cash I have enough time for ZH - thank you corrupt immoral politicians and central bankers  for the net-worth multiplier :-))

Wed, 12/10/2014 - 22:17 | 5539049 didthatreallyhappen
didthatreallyhappen's picture

I love all the names for these:

megaphone

head and shoulders

ascending triangle

falling wedge

 

could they add a new one:

major league bj

Thu, 12/11/2014 - 03:13 | 5539558 cheech_wizard
cheech_wizard's picture

economic rectal feeding?

Wed, 12/10/2014 - 20:18 | 5538713 RECISION
RECISION's picture

COULD... it all be a criminial, counterfeiting/ponzi scheme...???

Is that what you meant?

Thu, 12/11/2014 - 08:28 | 5539757 Eyeroller
Eyeroller's picture

I'm shocked!

Wed, 12/10/2014 - 19:46 | 5538561 starman
starman's picture

I dont know, but any of these charts remind me of a hot hooters waitress spreading for me!

Wed, 12/10/2014 - 19:35 | 5538522 AdvancingTime
AdvancingTime's picture

The American and world economy is in uncharted water and weird crosscurrents are clouding our economic future. Last quarter America's GDP came in at a strong 3.5% but the fact that a 10% jump in federal spending, mostly on Pentagon hardware bolstered growth and was very much behind the numbers.

This "pre-election" spending was the biggest increase in federal spending since 2009 when the Obama administration put in place a huge economic stimulus package. Mix in an upbeat November number concerning job creation, falling oil prices and ever higher stock market prices and new record highs and many people have the impression we are on a roll. The article below delves into some of the many crosscurrents at work that could bring the economy to an abrupt halt.

http://brucewilds.blogspot.com/2014/12/crosscurrents-cloud-future-economic.html

Wed, 12/10/2014 - 18:32 | 5538266 spinone
spinone's picture

And monkeys might fly out of my butt

Wed, 12/10/2014 - 17:26 | 5537975 I Write Code
I Write Code's picture

I don't think you can call something three years long "a false breakout".

OTOH of *course* it's false, it's all fed printing and crazy federal debt.

The question is, is it false like a padded bra, or false like silicone implants?

Thu, 12/11/2014 - 01:05 | 5539429 Kprime
Kprime's picture

maybe it's real, like a drug induced hard-on.  A viagra breakout.  If your breakout lasts longer than three years call your local FED rep.

Wed, 12/10/2014 - 17:21 | 5537934 CHX
CHX's picture

Could??????  BaHAHAHAHAHAHAHAHAHAHAHAHAAAAA... Good one PCR. The abyss was averted in 09 buy creating lots of dollars out of thin air. Nothing was fixed, and today is still the same. Fubar held together buy an ever  dwindiling confidence in fiath. 

Wed, 12/10/2014 - 19:04 | 5538400 LawsofPhysics
LawsofPhysics's picture

"The abyss was averted in1971 by detaching fiat from reality" -- Fixed.

Wed, 12/10/2014 - 16:54 | 5537763 Son of Captain Nemo
Son of Captain Nemo's picture

March 11, 2011 Fukushima Japan

September 6, 2011 Precious Metals

False breakout or whatever the hell you want to call it they weren't mutually exclusive events and were very deliberate!

Wed, 12/10/2014 - 16:52 | 5537751 JRobby
JRobby's picture

Yes

Next Question

Wed, 12/10/2014 - 12:21 | 5536664 bbq on whitehou...
bbq on whitehouse lawn's picture

They keep saving the world by the skin of their teeth, its damn frustrating. How many angles can dance wildly on the head of a pin? Never enough for greeds sake.
The longer this goes on the more bitter the end. They simply cannot pay the bills they have. All the wonders, and tricks do nothing for the tally man. Who will get stiffed.

Wed, 12/10/2014 - 12:00 | 5536579 Urban Roman
Urban Roman's picture

The entire post-2008 move has been a false breakout. Nothing was fixed by handing cosmic amounts of credit to the TBTJ. Nobody (who matters) was prosecuted or jailed.

Now let that sink in ...

Wed, 12/10/2014 - 18:43 | 5538308 Jumbotron
Jumbotron's picture

Ever since we got off the gold standard in 1970 under Nixon and bank deregulation under Reagan in the 80's.....it's been a false breakout.

Wed, 12/10/2014 - 19:06 | 5538403 LawsofPhysics
LawsofPhysics's picture

Yes, much more concise.

Wed, 12/10/2014 - 18:02 | 5538121 RaceToTheBottom
RaceToTheBottom's picture

Deck chairs have been rearranged enough...

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