Phase 0

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If there’s one small thing that could have been pointed to as a plausible, albeit small, success story over the past 3.5 year political nightmare, it was the U.S./China trade deal. There was nothing epic about it, to be sure. The bluster surrounding it dwarfed the reality of the soybean-buying, purchase-promising pages, but it was a small success nonetheless.

Well, that lilliputian victory has been zeroed out as well

I am delighted, of course, since I put on my Big Boy Pants and ramped up to aggressively short once more.

One thing that struck me, however, was how the small caps (/RTY) seemed to put the brakes on at a very specific level, which just happened to have a horizontal line on it. In other words, I mark up my charts (as you well know) with a truly spare number of embellishments, so when prices interact with one of them in a powerful way, it has my attention.

When I backed away from the 1-minute chart to the four-hour chart, bingo, yep, that’s what the line is all about. It’s the line I drew marking the very well-formed cup-with-handle pattern. Isn’t that remarkable? As many years as I’ve been doing this, it is always striking to me that this stuff works so well.

This means, of course, that this line has great import. The level is 1265.60. Stay above it and strengthen all day and, well, crap, my big boy pants are going to slip around my ankles, and I’m going to be unhappy. Break it, however, and we’re going to start to see an honest-to-God unwinding of that absolutely horrible and miserable month that is the absolute king of fake market manipulations, April 2020.

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