Third Eiffel Tower Pattern in 15 years for the S&P 500?

June 12th, 2013

by Chris Kimble

Several times the Power of the Pattern has illustrated that Eiffel tower patterns can be very important to your portfolio construction & management. At the time when most investors were in love with Gold and Apple, I suggested that Eiffel tower patterns looked to be forming in these white hot assets.

Gold appeared to be forming an Eiffel tower pattern on 8/23/2011 (see post here). Results? Gold declines over 30% in value. Apple looked to be forming an Eiffel tower pattern on 11/7/2012 (see post here). Results? Apple declines over 30% in value.

The 5-pack below shows the Gold & Apple Eiffel tower patterns and that three other assets could well be forming similar patterns. Eiffel tower patterns are dangerous because when you experience the left side of the tower, you often experience the right side as well!

The S&P 500 looks to have formed two Eiffel tower patterns since the mid-1990's…100% rallies followed by 50% declines.

The best way for SPY, XLV & XLY to break from these Eiffel tower patterns is to continue to break overhead resistance. Concern for these assets would come into play in support is taken out!



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