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Weekend Stock Market Analysis

(10/12/13)

There are two chart pattern to watch for during the next few weeks.  As I have alluded to before the S&P 500 is exhibiting a potential Wedge pattern as the latest bounce would be the final 5th Wave up with a target in the 1735 to 1740 range.

Meanwhile the second pattern to watch for is a Head and Shoulders Top pattern.  The target for the second Shoulder would be in the 1710 to 1715 range.

  

Keep in mind during the last Budget and Debt Ceiling Fiasco back in the Summer and Fall of 2011 a similar pattern occurred with an upward sloping Neckline.  Back then the S&P 500 had to drop 22% before Congress came to an agreement which has taken us up to the current Fiasco.

 

Finally despite all the rhetoric coming from DC on a possible default Moody's came out this week and said there was no chance of that happening based on their statement below.

We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact.  The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.”

 

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