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A month or two ago I wrote a couple of very bearish posts on this thread... watching the bhp chart evolve i thought I was seeing a head and shoulders pattern in the making... then when that didn't work I expected to see a macro scale lower double top... wrong again.

The last couple of weeks turned me very bullish and threw my thinking on it's head... not for long though. My own bullishness is just as good a contrarian indicator as any... if I tried my best to do the wrong trades I'd double my hit rate and there's a couple of things that didn't quite stack up in my own thinking when I was considering the H&S pattern... the tech. target was around the 16 dollar mark and I didn't really believe it'd get there. The set up is looking a bit more believeable now though...

Over the past couple of months the US indicies have range traded sideways while the xao has made lower highs/lower lows... so with us markets only 10% from all time highs the potential is there for another leg down. If the xao makes a lower low then an equal move down from the recent rally will put it at about 4700... 20% lower than the current level... Lopping 20% off bhp puts it at 34 dollars again and a good reinforcement of that toggle point if the market rallies from 4700.

World markets have been making major lows at five month intervals over the past year... mar 07, aug 07 and jan 08... if the pattern repeats there will be another major low at the end of jun. I don't see any reason for xao 4800 to hold and by that stage of the game the bhp chart will hopefully be set up with a high at 44, supp/resist at 34, and target for an equal move down of 24 (which I can believe!)... Worth noting that the bottom bollinger for bhp on a weekly chart is at about 34 and on a monthly chart is at about 24... so if the world bear continues it seems a fair bet that it'll get there.

A couple of years ago the us indices halved after being bid up at the end of a bull run that I never really understood... no reason why it shouldn't be the xao's turn now.