The upswing in equities was relentless ever since the opening bell on Sunday. Here is the /RTY during that time:
So, near-term, that is since a few trading days ago, equities have been flying higher like a bottle rocket. There’s no doubt about that.
I would ask that, in the midst of all this excitement, you to take a step back to an even somewhat farther-term view to observe what has been transpiring over the past month: a series of “upside-down” V’s, with this one being the latest “lower high”. Now, Lord knows this could change. Patterns are always broken. But, at this moment, at least keep the past month as a whole in mind.
Stepping even farther back, you can still see the descending channel against which prices have been bouncing.
Here, on the ES, you see the same situation.
So step back and be amazed at what Mr. Permabear has to say, and I hate to say it, but here goes: this absolutely could be one of the cleanest flag patterns I’ve ever seen. Take a look here at our pattern guide to see how the present chart matches the classic flag pattern. So a breakout would be a big deal.
So what’s driving this monster rally? Well, a couple of things. First off, of course, is Powell. His 60 Minutes interview apparently produced the results he wanted. It’s not accident that he does these headline interviews on Sunday evening just as trading is starting.
The second is a chart I’ve been highlighting recently, Moderna, which is seeing some promising Covid news from its labs. I’ve put a magenta tint in the zone where it’s indicated to open, which is a substantial percentage pop and suggestive of the end-of-virus optimism that’s going on.