June 29th, 2009 | 
Author: How do we know when
to go against Bonzo (aka: the crowd)
and be a Contrarian Investor?
The Dow Jones Industrial Average is currently providing us with a classic case to use as a teaching tool. 
The Dow is telling us that it most likely will go DOWN. It is signaling this with a technical formation called a “Head and Shoulders Top“
Before you look at the current Dow chart please read from the classic description in Edward’s and Magee’s Technical Analysis of Stock Trends. Start with the paragraph below the titled – The Head-and-Shoulders.
Ok, now please read one more page and review the sample chart.
And now the Dow
And how do we know
that the Dow will probably break through the neckline
and enter an intermediate size decline?
WE can get a pretty good idea from the current message being telegraphed to us from the Dow Bullish Percentage Index (aka BPI).
As can be seen on the above chart the Dow has been selling in overbought territory for almost a month.
Watch for a breach of the 8200 Dow level. If the Dow penetrates the neckline at the 8200 level it will decline much further.
There are a wide variety of ways to participate in this opportunity ranging from the very conservative to the highly speculative.
BUT you need active guidance – Contact Us at Fibonacci Financial.
Do not get the idea that you can trade or make investment decisions from my blog entries. These are an introduction to my services and do not constitute investment advice.
Posted in Financial War Room | 
Tags: Asset Allocation, Bullish Percent Index, Dow, Fibonacci Financial, Head and Shoulders Top, INDU, Technical Analysis
6 Responses to “If Bonzo is Buying then You Should be Selling !”
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Thanks for the insightful article. I am curious to see if this current trend does complete the Head and Shoulders Top and then drop. Reading your articles makes me want to start investing. Exciting!
P.S. Your sign off will become legend…so that at a dinner party fifteen years from now, I will be able to say, MRS said that to me personally- “Save Often and Invest Well.” : )
And hopefully you will follow that with – “And that is how I became a became worth millions of silver dollars.”
You’re right. That is a great teaching tool! I’ll watch Bonzo more closely from now on.
Dustin and Bonzo go way back.
[...] “If Bonzo Is Buying Then You Should Be Selling” we learned about how to identify a Head and Shoulders Top. So did the DJIA complete a Head and [...]