(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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