For the past few weeks I have illustrated a pattern in the Dow Jones Industrial Average which I believe is a Bullish Descending Wedge formation. As expected the Dow rallied strongly off its low in the 6400 range to over 7500. Over 1100 points, when almost everyone said it would collapse. Strong rallies such as this are typical of rallies during a bear market. These are great opportunities to capture profit at a time when others are panicking. As you can see by the chart we are still in what I believe is the Descending Wedge formation. I expect this pattern to resolve to the upside. There are many reasons for this, mainly because almost no one expects a large upside move, but also because we are seeing signs that economic data is improving in real estate, retail sales, dry goods, etc. Also, from a subjective standpoint, and from following the market for years, "the market just doesn't crash in the Spring." (If this were the fall season I would tell you differently.) Regardless of the reasons, we are looking at what I believe is the best buying opportunity for stocks in over 15 years. There is always the chance that Washington will do something stupid like nationalize the banks, but (I dare say) even they would not make such a misguided move! The opportunities are there to buy some great name companies at bargain basement prices.
Note: The above information is for information purposes only and is not intended as specific investment advice for any person or portfolio. For decisions to buy, sell, or hold any investment, you must consult your own personal financial advisor.
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