Friday’s ugly market correction has taken several indexes back to recent breakout points. If these breakout points fail, it’s likely that a significant correction could ensue because the indexes will have traced out a bearish rising wedge pattern. On the final move higher, price often gets "thrown-over" the upper trendline of the wedge before falling back. This pattern "traps" over exuberant bulls in at higher prices and creates supply each time price rises.
The "throw-over" or "bull trap" could occur on the SOX if the decline continues into this week.
A "throw-over" in the SOX could precede a "throw-over" on the Nasdaq…
If the S&P 500 is any guide, the "throw-over" will complete, which could precipitate a more serious decline.
