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We may be through with the past, but the past isn’t through with us.
I’m a big fan of history, and although I’m not a trained historian, I wrote a book about history through the lens of financial markets called Panic, Prosperity, and Progress (which has 22 reviews on Amazon, averaging 4.9 out of 5 stars………..so it can’t be that terrible). As part of this, I enjoy thinking of the arcs of history, particularly financial history, and anticipating where we might be going. This post is just such an exercise.
Note from Tim: Dutch originally wrote this post a few years ago for the blog, and he asked me to dust it off and repost it. So here ya go:
This post may offend many and that is not its intention. This is a think piece I have been formulating in my mind for quite some time now. Its purpose is to get you to think about your trading methodology(s) and setups in a critical light.
To my way of thinking, traders who utilize technical analysis all fall into three broad groups (traders who use purely fundamental analysis are excluded from this type of grouping).
Although the Dollar Index (DXY) is up today, the Dollar is down vs Yen.
The big-picture chart below shows the toppy pattern that developed in the USD vs YEN during the May-Aug timeframe, which has been followed by a spike down, and “bearish” consolidation period that appears to be nearing completion.
If that proves accurate, then USD/YEN should roll over hard into a nosedive that revisits the Aug 24 low at 116.13.
Only an upside reversal and climb above 121.10 will begin to neutralize my current outlook.
Remembers BRICs? Seems quaint now, doesn’t it? Because the “B” part of that acronym – Brazil – looks like it’s heading straight for complete cataclysm, and the country’s ETF below simply cannot find a bottom. The only winners are Americans with their sweet, sweet dollars who want to head down to Rio to see what that can buy on the cheap.
Apologies for the missing and late update so far this week. The bug I caught last week is taking longer to shift than I expected. Hopefully it should be gone by the end of the week.
So where are we up to on SPX here? Well the big gap down this morning has taken out daily middle band support, and the small flag I posted yesterday has broken down with a target in the 1912 area. I’ve drawn in the likely H&S patterns that have formed on SPX, Dow and TRAN and if these are right then all of these are on their way to retest the panic lows. I have drawn in possible alternate necklines on a bounce from the AM low today, but I’m not expecting right shoulders to form on those. Just a possibility to consider. Scan 3x 15min SPX INDU TRAN charts: