Many Stock Charts Show Three White Soldiers Suggesting A Market Downturn Is At Hand

Three White Soldiers is a bullish reversal pattern consisting of three consecutive long white bodies. Each should open within the previous body and the close should be near the high of the day.

A number of stocks have manifested the three white soldiers trading pattern, suggesting that a market downturn is at hand. The stocks have been in bullish sectors such as energy producers, consumer discretionary, gaming, basic materials, retail, as well as in safe haven destination countries, such as Singapore, and carry trade destination countries such as Chile.

The large number of soldiers suggests across a number of sectors suggests that a terrific down turn is at hand.

The three white soldiers in mortgage-backed bonds, MBB, and in short term US Government Notes, communicates that the bond traders have strongly anticipated QE2 and now that it is coming in, bond vigilantes will sell the very investment that the US Federal Reserve is promoting through its ambitions money printing operations.  

Exxon Mobil, XOM,

Las Vegas Sands, LVS,

Singapore, EWS,

Chile, ECH.

Metal Manufacturing, XME,

China materials, CHIM,

Tiffany, TIF,

Mortgage Backed Bonds, MBB,

Short Term Bonds, SHY,

Longer Out Tips, LTPZ,

Emerging Market Bonds, EMB,

We are transitioning from the age of investment liquidity into the age of credit illiquidity now that the promised QE II is coming in as bond investors view the Federal Reserve’s actions as monetization of Government debt. Monies that have flowed in small cap financial shares, XLFS, such as Nicholas Financial, NICK, a subprime automobile lender, will quickly be flowing out, rewarding those who turn from investor to short seller. 

The chart of the interest rate on the US 30 Year Government Bond, $TYX, shows very much the inverse, it has been declining now for three days. A breakout is imminent, which will cause bond, TLT, PICB, BWX, to fall and currency values, DBV, and CEW, to fall as well, causing an unwinding of yen carry trade investment globally.

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