[3catsanadog]

The Dow broke through support at 8200 to complete a head and shoulders reversal. Confirming earlier warnings, from breakout below the rising trend channel and from bearish divergence on Twiggs Money Flow (both 21-Day and 13-Week), the pattern signals a down-swing to test primary support at 6500.

Forgive me but I'm not savey when it comes to things and jargon financial. I have absolutely no clue as to what that statement means. --------------------------------------------------------------------------------

[ABQHispConservative]

I think it means, take your money out before it goes up in smoke. Of course by announcing such a lower limit, it becomes a self-fulfilling prophesy.

[Attention Surplus Disorder]

1: A so-called “head and shoulders” pattern is considered among the more reliable technical indicators of price action in a market.
the model:
http://www.chartpatterns.com/headandshoulders.htm

the DJIA:
http://finance.yahoo.com/echarts?s=DIA#chart1:symbol=dia;range=3m;indicator=volume+stochasticfast(50,20);charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

look similar?

2: (one form of) “Divergence” in markets is based upon the observation that “volume confirms price”, or stated differently, “volume MUST confirm price”, or stated differently, “price [rising] UNconfirmed by increasing volume is suspect.” When we see price rising [upslope] but money flow falling [downslope] then we look at the chart of price vertically aligned with volume and see a “<”. This has been occurring verrrry slowly, very sneakily, over the past several weeks in the stock market, and has been flagged as a warning sign that the rally from the March lows has gotten “tired”. (Oh, gee, it was only only up just shy 40%, the biggest or second biggest “rebound from a suspected capitulation low” seen in history.)

[Attention Surplus Disorder]

If the Yahoo DJIA chart doesn’t look so nicely-formed H&S to you, try this one, for SPY = Spyders = proxy for the S&P500:

VERY clear on this one.

http://stockcharts.com/h-sc/ui?s=spy&p=D&b=5&g=0&id=0

[Arguendo]

That’s because it’s BS. If there was anything to these technical “indicators” anyone who knew them could make millions (for a short time) and they would quickly cease lose their predictive power.

[Huck]

It’s called “technical analysis.” Certain market experts study chart patterns to understand market trends in a historical context. Different shapes appear on charts that have contextual meaning. They track highs and lows, how many times these numbers get “tested”, etc. Louise Yamada is a noted technical analysis. Be interesting to see what she’s saying right now.