Before we look at some of the 2009 bull market uptrend channels there are a couple of more big consolidation patterns I would like to show you on some of the stock market indexes. The DAX, German stock market, broke out of its 13 year triangle consolidation pattern back in 2012. Late last year it broke out of the blue bull flag with a nice clean backtest to the top rail. The big triangle consolidation pattern also had a smaller triangle as part of its internal structure.
Next up is the $FTSE, London Financial Times index, which is in the process of breaking out from a 15 year rectangle consolidation pattern. Just like the $DAX the FTSE also built out a triangle consolidation as part of the much bigger rectangle. The key to the breakout of this massive rectangle is the H&S bottom that formed just below the breakout area. The right shoulder was formed during the BREXIT vote. The shakeout before the breakout.
The $BVSP, Brazilian stock market, is still working on a 9 year triangle consolidation pattern. We last looked at this chart in December of last year when it was backtesting the top rail of a multi year downtrend channel.
Lets look at a couple of US stock markets that we’ve been following for many years starting with the SPX. This index was actually one of the first of the major stock markets to breakout of its massive consolidation patterns. The breakout in 2013 was accompanied by the breakout from the blue bullish rising wedge. There was a very short one month backtest to the top rail of the flat top expanding triangle before the impulse leg up began in earnest. That impulse leg ended in 2015 where the next consolidation pattern was needed to consolidate those gains, forming the blue bullish expanding falling wedge. Again notice the clean breakout and backtest to the top rail which has led to our current impulse move higher, which is making new all time highs.
I commented on this exact same chart as the one above back in May of 2009, two months after the bottom was put in at the fourth reversal point. I was speculating on how this big trading range may play out over the years, as described in the notes. There was no way to know how things would play out back in 2009, but a big consolidation pattern was one of the possibilities.
