I’ve mentioned a few times over the past few months that the equity indices are likely in a topping process, and a few days ago that the setups on NDX and RUT had reached a stage that I would expect to see at a major top. The same is true of SPX. Do I think these patterns will play out? Most likely yes.
I’m not expecting them to play out right now, but that’s mainly because big declines are a rarity in December. These tops have formed, but I’m expecting the markets to limp along through December until the winds turn more bearish in the January to March timeframe,
I may be mistaken however, and if I am then these topping patterns may have already started what will likely be a strong retracement of the huge move up from the March 2009 low. That decline could be triggered, as hard as a I find it to believe it, by the Fed increasing interest rates from almost nothing to slightly more than almost nothing next week.
