I know exactly what the bulls are thinking. It's all in this graph:
The narrative is simple: they see the /ES pushing above that horizontal line and flying up to 1250. It's on page 3 of any technical analysis book you can find. The inverted head and shoulders. Simple. Obvious.
But, as I've mentioned, I think the bulls are going to experience the full-on disappointment that the bears felt in early February………..and early July…………and early September……..when the market looked like it was going to (finally) plunge but, instead, made an obscene gesture, shouted something horrible, and bounced the opposite direction.
Since the market is such a cruel mistress, it'll probably get above that line, cause all the bulls to fan themselves with excitement, and then make the aforementioned gesture/shout/bounce. That'll make sure the bulls are furious and the bears will be too petrified to do anything about it.
The ways the bulls have been talking, you'd think that the market had been up the past 2,000 sessions in a row (although it sure feels like it). The frantically-bullish sentiment confirms this. The cold fact of the matter is that the Dow is about 4,000 points under its high and – – – here's the important part – – – in spite of our government whoring itself out in every way imaginable, the market has been flailing around at the 50% retracement level for about a year now.
Again, one picture says it all:
I think the odds of the S&P soaring to 1250 are about as good as the S&P collapsing into the fabled land of "wave 3 of 3 of 3 of 3 of 3". It's too obvious. It's too simple. And it's not going to happen.
Let's have a look at the pattern that continues to unfold in the iShares 20+ Year Treasury Bond ETF (TLT). Very interesting and tricky set-up in the TLTs now. Let's notice that it plunged to new lows at 100.85 for the decline off of the 8/25 high at 109.50 and in so doing has broken the Apr-Sep up trendline at 102.15 (for a second consecutive session).
While my pattern work argues that the downmove is nearing or at completion in the 101.00 area, the TLTs must reverse and climb back above the breach-point of the up-trendline — at 102.15 — to confirm that a significant corrective low has been established. Within the next couple of sessions, the TLTs had better start showing some life on the upside to confirm what my work is telling me could be a powerful upside recovery towards 106-plus.
Originally published on MPTrader.com.
Foreign Sloper Correspondent Serge sent me a fantastic analog today. Here's the QQQQ from a decade ago:
And here's where we are at presently:
They even had their own "flash crash" back on April 4, 2000, which was the day Microsoft did an earnings warning. Fascinating stuff!
As many have gathered, I'm been kind of "down" on Elliott Wave lately (for reasons regular readers know all too well). One E-waver, though, seems to get consistent respect from Slopers, and that is Pug.
Here is his site, which appears to be partially free and partially fee-based. Now let me be clear that my general interpretation of the market's direction differs considerably from Pug's, although ultimately we are in total agreement (that is, the S&P getting somewhat below the February 2009 lows, but not by apocalyptic amounts). Here is his latest "big picture", which calls for a rise to new highs (gack!!) followed by a long fall.
There's been enough adulation about Pug in the comments section that I thought it was high time to point out this impressive site.
Ah, the joys of blogging!
The Snark Index has been exploding higher lately, and this morning I got this lovely missive, prompted, I suppose, by my post about technical indicators last night.
Errr, perhaps I need to clarify something about my refusal to give advice one-on-one. There are a few good reasons for this:
(1) I don't have the time;
(2) I don't have the inclination;
(3) There's no point in dealing with the liability, which doesn't exist when you're talking to a broad general audience;
(4) There's nothing for me to gain by doing so;
(5) The comments forum is a great place for exchanging ideas and information, which I – and many others – do all the time.
So I'm not sure what the confusion is, Mikey. Oh, wait – now I remember – he hates everything.