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Monthly Flag in the S&P 500

January 21, 2011

I see that we may have formed a flag in the monthly S&P 500 chart.  I wanted to write this post back in December, but next you know, here we are in late January, and I just need to get this out. With corporate profits looking strong and a fragile economic recovery, who knows what might happen.  The stock market is viewed as a leading indicator.  When I read the bearish stock market commentary, I see the logic as being demolished by this  post by Joe Weisenthal: Here’s The #1 Most Clichéd Piece Of Conventional Wisdom That Everyone Believes Right Now. Everbody thinks that things are ok now, and will be screwed in the future.  What if this isn’t the case?  Then this stock market goes to the moon, and this flag takes us to near the all time highs.

1219 – 666 =  553  is the length of the flagpole.

553 + 1219 = 1772 for a target. I’ve also seen the target measured as from the lows of the flag part of the formation, and in this case the target would be

553 + 1010 = 1563

That is very close to the old highs.  Thought I would push this out to everyone as something to keep in mind when thinking about the stock market.
Read more: http://www.businessinsider.com/heres-the-1-most-clichd-piece-of-conventional-wisdom-that-everyone-believes-2011-1#ixzz1BgmMpYA8

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