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The views expressed in this report are those of Lesley Beath and may differ from Morningstar's views.

Hi,

On the monthly chart the Dow seems to be in the final stages of a huge broadening pattern, stretching over 13 years and making the global financial crisis (GFC) look like just a warm-up to what is ahead.

I would be interested in your opinion.

Regards,

Hans

(click image to enlarge)

Hi Hans

I am aware of the pattern that you point out and its implications. But in my opinion, these formations reflect broad swings in investor sentiment and are typical of a market in a state of confusion.

Given that, I think these patterns are more reliable over a shorter timeframe.

If that view is incorrect, and the broadening top formation that you point out is valid, then it calls for a push well above the 2007 highs before the next major down-leg.

I can't see that happening over the medium term.

Can the Dow push below the 2009 lows? I don't think so in the medium term. But I guess you can't rule it out and there are some extremely good analysts who believe this may occur.

But although I am relatively bearish on the US over the longer term, I think we need to just read the action as it unfolds.

Regards,

Lesley