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When I was doing the chart below for theartofchart.net subscribers last night I laid out two H&S scenarios and favored the second one, with the caveat that we should know which option would be taken at or soon after the open today. Obviously SPX has gone with option 1 and is likely to open close to that H&S target in the 2010 area. SPX 15min chart:
Well, this sucks. Mr. Permabear is looking at numbers that would normally have him dancing on his desk. However, in a perverse twist of date, he has no positions at all, either long or short, and this is one of those days that will be permanently seared into his memory. FOMO has a basis after all. I’m missing out.
It would be foolish, I think, for me to clamor into shorts at this point, no matter how elegant the charts. Instead I think I will focus on those sectors which, until today, have been beaten to pieces (energy and precious metals) on the long side, but on a fairly small scale.
Suffice it to say that I hardly slept at all last night, and starting the first trading day of the year with my stomach tied up like a knot is hardly a propitious beginning. Below you can see where the ridiculous and logic-free Santa Clara rally died:
