Serious Head and Shoulders on Dow Jones Industrial Average?

Question

Looking at the 5 year chart on the DOW from Google Finance, i see that the first shoulder ends Feb 16, 2007 and the three up dips after that is the head and the dip on May of this year is the final shoulder. a) is there better free charts than google and yahoo b) Is this a real head and shoulders?

Answer 1

I think this head and shoulders pattern is clear proof we are going into another depression caused by the New World Orderl  Population reduction is a plan the New World Order (Illuminati) has in plan for mankind. So, the question is why? Why is it necessary for there to be one? We can't feed everyone here with over six billion people on the planet, and we are not sure how many people the Earth can handle at a healthy amount. We only have to believe that the earth has a super conscious that is more powerful than ours. So, if you have any other answers to why, I would love to hear it

How? Well, this head and shoulders pattern is proof they are going to create a great depression that will make the depression from the 1930s look like a walk in the park. We are going to see $9.00 per loaf of bread and this inflation that will come due to bank failures will cause inflation to skyrocket. This will eliminate the lower and middle class over the next few years.

Answer 2

First off, Joseph (the other answer) is an idiot. And before I get into explaining why, the answer to your question is a) yes, www.stockcharts.com and b) yes, but there are multiple support levels to draw the pattern (such as the lows in summer 2006 being left shoulder support and the lows in Fall 2007 being right shoulder support).

Chart patterns are WIDELY followed on the street for areas of support and resistance with the market. And a Head and Shoulders Pattern is one of the most widely followed by CTAs (chartered technical analysts). And yes, CTAs are hired by all investment banks and are not just rogue traders.

The pattern has many important psychological underpinnings involved without most people understanding, but is mostly relating to supply and demand. The market had already been rising because of rising valuations and accumulation in the market. The left shoulder defines where buyers in the market stepped up their bid on a market pullback and were willing to accumulate shares at the time. As sellers (supply) dried up and buyers (demand) remained strong, it caused the price to rise which was now the second leg up. The "head" is then formed where investor sentiment is often at its peak. After a strong rise in the market and overvaluations likely too place, sellers jumped in. And because there weren't as many buyers as sellers at the extended levels, it caused the value to fall (excess supply). Eventually prices fell hard/long enough that stocks became oversold and valuations gave reason to buy. And so buyers then stepped up to support the market (creating the right shoulder). But as the buyers faded and sellers took over, oversupplying the market and taking profits, the market broke the support and fell. This is the HnS top and is psychologically sound in its thesis. The neckline in the formation is really just the inflection point of where the buyers in the market continually stepped up their bid to accumulate shares until they would no longer step up their bids (where valuations deemed the stock overbought). And when prices broke these levels, the buyers in the market just backed off and really became sellers causing the market to correct down.

Bottom Line: Don't be ignorant as to why the market is going up/down and at what levels. Because serious traders and intelligent investors don't just put together a DCF valuation and buy/sell a stock. They trade off of support and resistance levels in the stock (where others in the market are willing to buy/sell).

Answer 3

Chart patterns are utter nonsense.  The market is driven by opinion, not silly drawings.  Fortunately for us all, most people follow the underlying forces that drive the markets, not the graphs...

(Don't believe it? Do a "chart analysis" on Enron or Global Crossing, both clear "buy"s based on charting....)