We have updated our privacy policy and terms & conditions. Find out more here.
10
 

Leading Indicator Loses 25% Of Its Value In 70 Days

By  |  Commodities  |  May 29, 2013 04:14AM GMT  |   Add a Comment
 
AA
+
-

The Power of the Pattern reflected that a key economic asset, Lumber, could fall 50% in value back on 3/18, due to 20-year channel resistance and 75% bulls. (see here)

Lumber was trading at $385 at the time, while today Lumber is limit down trading at $287, losing 25% of its value in 70 days!

Lumber
Lumber

The above chart reflects that 100% of the time that Lumber hit the top of its trading channel, it has fallen at least 50% in value, over and over for the past 20 years. I doubt that many of you trade Lumber and many of you might be saying,"why should I care about Lumber, I don't own it."

Let's look at Lumber a little more closely: The bottom of the channel was hit in 1995, 2001 and 2009, not bad times to be looking to buy stocks at low prices. The last serious decline by Lumber took place in early 2011. What did the S&P 500 do after this Lumber decline? SPY declined 17%, peaking in May of 2011.

Lumber is not the "Holy Grail" of stock market indicators, yet oftentimes it has paid to respect it at the top and bottom of this 20-year channel and its message for the stock market.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add a Comment

 

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

EUR/USD
 
 
 
Are you sure you want to delete this chart?
 
 
 
Are you sure you want to delete this chart?
 
 
 

Successfully Reported

Thank you. This comment has been flagged for a moderator.
_touchLoadingMsg