Breadth indicators and is Apple forming '3 Peaks and a Domed House' ?.

I do not pretend to be an expert of any sort when it comes to stock market 'Breadth' indicators, however some of the other Blogs I read occasionally cover this sort of stuff in detail, and recently they have been making some interesting points. One of the better blogs, Trader's Narrative, posted a good article yesterday highlighting that one significant breadth indicator, the percentage of stocks in the S+P 500 index trading above their own 50 day moving averages, has reached the highest level since Apr 2010. The article can be seen on this link. - The article does makes an interesting point; that the level at over 90% is typically associated with market tops, however it does stress that there are exceptions to this rule, and when this occurs the market will often power higher. An exception occurred in April 2009, I have tried to highlight the periods when this breadth indicator flashed up this signal on the chart below (Timings of this signal will not be precise, but approximate only). It may be that this is one of those exceptions, I have tried to show on this same chart how the price action in recent months is not dissimilar to the price action in March - April 2009. This may favour this being one of those exceptions, either way I guess a big move may be coming in the next month or two.

Another excellent Blog that I follow is 'The Trend' blog, he also discusses Breadth in the sense that 92 of the Nasdaq 100 stocks are in an uptrend in his own particular system, typically in the wake of this sort of reading the Nasdaq move sideways to downwards over the next 5/6 weeks. The article can be seen on yesterday's posting by clicking here.


Is Apple forming a '3 Peaks and and a Domed House' formation ?

I am wondering whether Apple Inc is in the process of forming a rare '3 Peaks and a Domed House' formation. For more information on this pattern click here. The chart below shows Apple Inc over the past four years on a weekly Log-scale chart, with labeling and the idealised 3 Peaks formation shown below. If this does actually follow through it could mean a very sharp correction lies ahead at some point for Apple. On the assumption that this pattern is valid, then a crucial issue will be are we at label point 23? or is this high still to come, and if it is it could still have some way to go higher. Apple of course matters, it is close to 20% of the Nasdaq, and is one of the 'Poster Boys' of the equity markets. 

As an example of what happens when the '3 peaks and a Domed House' formation does work out I have added a completed pattern which occurred on the Weekly Bank Index over the period 1992 - 2009 on the chart below.