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Author Topic: What is a Megaphone Top Pattern - More importantly - What does it mean?
Relentless.
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Chart I grabbed a while back on the macro scale:

 -

When looking at charts, always start with the largest time frame possible.. See the pattern forming over the last decade and a half?
No?
Let's zoom in a bit then:

 -

Ahh, there it is. With nice trend lines thrown in to help the eye.

I really started looking at this maybe a year or more ago. I knew I'd seen that pattern somewhere before but just couldn't put my finger on what it was, or what it was called. I had a gut feeling about what it meant, but needed confirmation.
So I went searching and searching. Sometime last December I finally figured it out.

Finally found what it was called.

Megaphone Top Pattern

What is a megaphone top pattern you ask?

A Megaphone Top is a relatively rare formation and is also known as a Broadening Top. Its shape is opposite to that of a Symmetrical Triangle. The pattern develops after a strong advance in a stock price and can last several weeks or even a few months.

In this case we are looking at a monthly chart, so the longevity of the pattern is expanded much further. In fact it has taken well over a decade to form.

What are the implications?

Well that's why I'm posting it here in the off topic board.

Has the $DJIA ever had a true trend reversal?
Not based on that chart.. and that's the entire life of the index.

What does a trend reversal mean to us?

What is in the news currently which might aid the completion of this pattern?
Russia, China, Iran, all starting to trade in currencies other than the dollar.
That's one
The FED starting to talk about finally raising rates.
That's two
Banks in the states starting entertain the notion of negative rates on deposits, thereby ensuring a bank run nation wide.
That's three
Bammy opening the borders to an influx of minimum skill, illiterate invaders right when real unemployment is at an all-time high.
That's four
Shall I go on?
Nah, you get the idea.

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Relentless.
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http://www.trending123.com/patterns/reverse_symmetrical_triangle.html

"Underlying Behavior

The creation of the pattern reflects a period of time when bulls and bears are battling to gain control of the stock. The pattern occurs after the bulls have been charging and driving the stock price appreciably higher. During the formation of the Megaphone Top, however, bears are exerting increasing influence on the stock and causing it to set a series of lower lows. The increasing volatility eventually creates a sense of uncertainty, leads to profit-taking, and deters some of the bulls from making any further commitments.

The bears eventually triumph.
"


Does that sound familiar? It should because it explains the last decade and a half of the DJIA. We will call the "Bulls" in this case The FED. The ever-printing Fed...
The "Bears" would be just about everyone else.

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glassman
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quote:
Originally posted by Relentless.:
http://www.trending123.com/patterns/reverse_symmetrical_triangle.html

"Underlying Behavior

The creation of the pattern reflects a period of time when bulls and bears are battling to gain control of the stock. The pattern occurs after the bulls have been charging and driving the stock price appreciably higher. During the formation of the Megaphone Top, however, bears are exerting increasing influence on the stock and causing it to set a series of lower lows. The increasing volatility eventually creates a sense of uncertainty, leads to profit-taking, and deters some of the bulls from making any further commitments.

The bears eventually triumph.
"


Does that sound familiar? It should because it explains the last decade and a half of the DJIA. We will call the "Bulls" in this case The FED. The ever-printing Fed...
The "Bears" would be just about everyone else.

i am thinking about Costa Rica......

--------------------
Don't envy the happiness of those who live in a fool's paradise.

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Relentless.
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lol.. Hey pal, did I explain what I was hinting about earlier correctly?

Nah, good ole MS is the place to be when TSHTF.

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glassman
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quote:
Originally posted by Relentless.:
lol.. Hey pal, did I explain what I was hinting about earlier correctly?

Nah, good ole MS is the place to be when TSHTF.

yeah i realise that it can't get much worse here, right?

the Delta is not like the rest of MS. maybe i can make a few extra bucks (and get fist crack a the gleanings) guarding the fields whne the TSHTF.... I won't live here without AC... I've lived in planty of hot places without AC, but not the Delta, that's just crazy....
i have to admit that i was able to do alright when the housing bu tthat's only cuz they been in a permanent state of collapse here since about 1860.... funny thing is? i ain't no yankee, but they take rebel to whole new level here

--------------------
Don't envy the happiness of those who live in a fool's paradise.

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Relentless.
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Yeah, the delta is a whole nother animal.

I definitely wouldn't want to be there. The coast isn't too bad, but it is still somewhat depressed economically.

I've been watching the pattern in the dow for some time. Since about December it has been sliding up the ascending trend line. Waiting for the inevitable...

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CashCowMoo
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DJIA closes at 16,900+. Unbelievavle, this thing gonna go pop soon and it will probably be worse than when Bush was in office. Especially with the surge in the border crisis.

--------------------
It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so.

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Pagan
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quote:
Originally posted by CashCowMoo:
DJIA closes at 16,900+. Unbelievavle, this thing gonna go pop soon and it will probably be worse than when Bush was in office. Especially with the surge in the border crisis.

Just curious...but was the "Border crisis" have to do with the DJIA in your opinion? I don't see the connection.
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Happy Valley
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quote:
Originally posted by Pagan:
quote:
Originally posted by CashCowMoo:
DJIA closes at 16,900+. Unbelievavle, this thing gonna go pop soon and it will probably be worse than when Bush was in office. Especially with the surge in the border crisis.

Just curious...but was the "Border crisis" have to do with the DJIA in your opinion? I don't see the connection.
Curious to this as well...You think the "Border Crisis" is the catalyst to crack a market that is reflecting coordinated, global central bank printing???
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Relentless.
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The border crisis as it's being called now... I would say the effects on the market would be long term more than near term.

I'm not sure what the catalyst will be... I thought maybe Syria almost a year ago, but the pattern wasn't mature then.
Kinda figured Ukraine now that the pattern is mature..
Derivatives implosion maybe?

Crap I'd be willing to settle for a good ole fashioned asteroid at this point.

The anticipation is killing me lol

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Happy Valley
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quote:
Originally posted by Relentless.:
The border crisis as it's being called now... I would say the effects on the market would be long term more than near term.

I'm not sure what the catalyst will be... I thought maybe Syria almost a year ago, but the pattern wasn't mature then.
Kinda figured Ukraine now that the pattern is mature..
Derivatives implosion maybe?

Crap I'd be willing to settle for a good ole fashioned asteroid at this point.

The anticipation is killing me lol

First off...Your initial post is one of the best I have seen here in a long time. Seriously, well done...I wish there was more of this here...

As to the catalyst, I think you hit it earlier...Once rates go up, the music stops jmo...With margin debt levels near all time highs, I think most will be surprised at just how small and crowded the exit door is gonna be...They will use the Mega caps to mask the initial distribution but the high betas and Russell will tell us when the party is over...Jmo

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Relentless.
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Thanks HV, I've missed me posting here on good ole Allstocks as well. More so, I've missed an Allstocks who understood what I was saying.

I think it's rates, possibly, but I'm watching what Russia China, Brazil, India, and Iran are doing with their trade. All of them are moving away from the buck. For us here at home this can be a horrible thing. Hell we've conquered almost the whole middle east because of it. All wars fought in the last two decades by us were directly related to that supposed "enemy" making any move towards trading, primarily oil, in something other than the dollar.

Well now we're faced with supposed "enemies" (which we cannot defeat militarily) who are doing the same. The threat is huge.

Add the inevitable, yet ever witless, rate hike?

To add further clarification

With or without the dominance of the dollar worldwide, what we are about to see is the first real cycle of a fiat currency's life. Fiat currencies are inherently evil in that it is pure bondage. Only those who make the currency own anything.
Are there any pro's to a fiat currency?
Yes, actually in it's infancy it furthers massive economic growth. The "American Dream" of the last century is a prime example.

That expansion can only continue for so long before the saturation that you hinted at occurs. This is the point at which the controlling authority retracts the flow of currency, via rate hikes in this case, and the currency implodes. Only to be renewed again.

So what am I saying?

I'm saying..
It's the perfect storm.
All of the BRIC's are ACTIVELY moving to dump the buck.
Our own satanic/criminal FED about to raise rates/restrict currency flow.
Unimaginably hot flashpoints for WWIII are about to blow i.e. China/Japan, Russia/USA-Ukraine, USA-ISIS/Middle-East... The list goes on.

Add all of this together?
Yikes


Edit to Add:

I intentionally did not add North Korea.. No one likes that little pygmy pot bellied pig, and we don't care how mad he gets about it. That little idiot is not allowed to start anything major.
Little prik.

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Relentless.
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DJIA just touched $17,000 on moderate to low volume. HFT algos all the way.

Still under the trendline though.

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buckstalker
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Nuff said about whats going to happen....inevitable IMO

Question is...how do we protect what we have? Gold...Silver...Bullets... What Else?

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Relentless.
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How do we protect what we have???
Wit
Buckstalker, you and I know this to be true.

Wit alone is the only thing we have.

It is the only thing we truly posses anymore.

Let's assume, as I have, we are far from repairing an already demonic system:

For me I carry a .45 at all times.
Wife is armed with a .40
My oldest is capable of firing both. The youngest.. well she'll fn question you to death if need be.. Holy fn hel with the questions.. ugh.


Yeah I know it doesn't make sense because a .40 has more "felt" recoil than a .45.. shut up I kmow, but for now it works.

Land.. Land is the real answer with all of my sarcasm aside.
Doesn't matter how much gold you have. No one cares about silver when they're hungry.
Land.. Ability to create food... That's all that matters.

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IWISHIHAD
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If it ever gets as bad as your suggesting, land will do you no good unless you have a super stronghold, with lots of big weapons and the manpower to handle them.

Good Luck.

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Pagan
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quote:
Originally posted by IWISHIHAD:
If it ever gets as bad as your suggesting, land will do you no good unless you have a super stronghold, with lots of big weapons and the manpower to handle them.

Good Luck.

Glassman said silver is the way to go if I remember correctly. Not that I agree. I would be more apt to stock food, ammo, and salt.
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IWISHIHAD
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Food,water,salt, video camers, generators, gas, mines, machine guns, droans, anti tank weapons, etc.

But if it doesn't happpen or if they find out you stockpiling these items, make sure you have a good lawyer at hand, the anti terroist guys will be by to arrest you.
Good luck again.

By the way, Have A Good 4Th Of July.

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Upside
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I'll be stockpiling women. If the chit really hits the fan they'll be a form of "currency" unlike any other.
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raybond
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stockpile woman it might not work but you will be happy for sure.

--------------------
Wise men learn more from fools than fools from the wise.

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Happy Valley
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quote:
Originally posted by Relentless.:
DJIA just touched $17,000 on moderate to low volume. HFT algos all the way.

Still under the trendline though.

Just another day at the office Relentless, smash the VIX and let the Algos take care of the rest...Saw some weakness in a few key names today though...We are close, short term anyways...jmo

VIX @ 52 wk lows (10.30's) and the SPY at the top of the channel. So much complacency out there. Still waiting for that blowoff top before loading long term puts...jmo

 -

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Relentless.
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Said this a while back (not here), volatility will drop to almost nothing as we nestle up to the trend line. Then poof.
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Relentless.
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quote:
Originally posted by Upside:
I'll be stockpiling women. If the chit really hits the fan they'll be a form of "currency" unlike any other.

You're not thinking this through, pal.

Are you honestly prepared to ALWAYS BE WRONG?

plus

You'll never see the inside of a bathroom again.

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Upside
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I already have one telling me I'm always wrong so what would it would matter if a gaggle of them told me the same thing?

I'll have to think about the bathroom situation though.

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Relentless.
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You can ignore one.

Not a gaggle

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buckstalker
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quote:
Originally posted by Relentless.:
How do we protect what we have???
Wit
Buckstalker, you and I know this to be true.

Wit alone is the only thing we have.

It is the only thing we truly posses anymore.

Let's assume, as I have, we are far from repairing an already demonic system:

For me I carry a .45 at all times.
Wife is armed with a .40
My oldest is capable of firing both. The youngest.. well she'll fn question you to death if need be.. Holy fn hel with the questions.. ugh.


Yeah I know it doesn't make sense because a .40 has more "felt" recoil than a .45.. shut up I kmow, but for now it works.

Land.. Land is the real answer with all of my sarcasm aside.
Doesn't matter how much gold you have. No one cares about silver when they're hungry.
Land.. Ability to create food... That's all that matters.

I carry a 45 myself...nothing better if you want to end a fight real quick...

My wife and kids are all excellent shooters and my 12 year old grandson shot his first buck last year at 120 yards with a 20 ga smoothbore

As far as food goes...I'm pretty handy at killing or catching whatever it is I need to eat...

--------------------
***********************

It's all in the timing...

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glassman
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quote:
Originally posted by Upside:
I already have one telling me I'm always wrong so what would it would matter if a gaggle of them told me the same thing?

I'll have to think about the bathroom situation though.

build a heated outhouse, i garantee they'll leave you alone there

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Don't envy the happiness of those who live in a fool's paradise.

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glassman
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quote:
Originally posted by IWISHIHAD:
If it ever gets as bad as your suggesting, land will do you no good unless you have a super stronghold, with lots of big weapons and the manpower to handle them.

Good Luck.

that's why i couldn't stay in So Cali. Too many people and no natural resources to speak of...

--------------------
Don't envy the happiness of those who live in a fool's paradise.

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glassman
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can you imagine if ten million people filed this next april?

 -

--------------------
Don't envy the happiness of those who live in a fool's paradise.

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Relentless.
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quote:
Originally posted by glassman:
quote:
Originally posted by IWISHIHAD:
If it ever gets as bad as your suggesting, land will do you no good unless you have a super stronghold, with lots of big weapons and the manpower to handle them.

Good Luck.

that's why i couldn't stay in So Cali. Too many people and no natural resources to speak of...
If my perception is accurate and that pattern is a bearish reversal pattern... Yup California or any major populated area is the last place I would want to be.
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glassman
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don't get me wrong, i loved living there, but i could never get over the feeling that it was all borrowed. cuz it is. even the water.

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Don't envy the happiness of those who live in a fool's paradise.

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raybond
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It would have to get pretty damn bad for me to ever leave CA. this place is just to beautiful and to many fun things to do.

If it gets as bad as you folks say it will I have 2 places to go and one is completely self sufficient and the other will be by next year. Thanks to the stock market and hard work.

--------------------
Wise men learn more from fools than fools from the wise.

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raybond
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It would have to get pretty damn bad for me to ever leave CA. this place is just to beautiful and to many fun things to do.

If it gets as bad as you folks say it will I have 2 places to go and one is completely self sufficient and the other will be by next year. Thanks to the stock market and hard work.

--------------------
Wise men learn more from fools than fools from the wise.

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Relentless.
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Well, Ray if the pattern completes, then the next low will be somewhere in the $4,000's. That is quite significant and would be indicative of a major economic issue... Whatever that issue is.
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glassman
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the real issue is that "they" didn't fix the real problem with the economy. "they" didn't even try. they literally just printed cash and made it almost free to the banks. the banks bought into the market, and riased it artificially. so now the banks have to sell their stock and take profits or keep prinitng cahs to buy more until everybody starts buying stocks from the banks. What i have never been able to discover is the actaul margin ratios the banks have allowed themselves. i repeat allowed themsleves

there is a deadline involved here:

Banks are required to hold an amount of highly-liquid assets, such as cash or Treasury bonds, equal to or greater than their net cash over a 30 day period (having at least 100% coverage). The liquidity coverage ratio started to be regulated and measured in 2011, but the full 100% minimum won't be enforced until 2015.

remeber that there was also an asset evaluation rule (accounting) change back in '08 that was one of several significant underlying triggers of last collapse.

in the end? the final straws that break the back are always general public perception. but general public perception is one of considerable distrust already right now. we never saw a real "run" on the banks last time because "they" printed plenty of cash,( Jamie Dimon got his ahnds on all he wanted and more) but you can't keep doing that... fundamnetlas have never really changed since... in fact? the only real change has been infaltion without signifaicant earnings increases to accomodate it. whenever i go shopping now, i get a serious sense of very unhappy people and it's cuz costs are not being offset with raises in pay... in fact pay is more or less down.

--------------------
Don't envy the happiness of those who live in a fool's paradise.

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