Good morning, everyone. Wow, is it black outside. I guess the days are already getting shorter, which I like. Typing in a dark office with a totally black exterior gives me the warm, fuzzy feeling that I’ve nailed the “early to rise” thing that Mr. Franklin told us about.
Anyway, it’s good to start off what could be a very tough day with some good news, and that comes in the form of a paint can. Specifically, Sherwin Williams. Back on June 15th, I did a premium post pointing out the head and shoulders pattern on this fabled paint maker (symbol SHW). Regrettably, in spite of the quality of the pattern, SHW Is not immune to the market in general, and the enormous rise in stocks starting June 15th spoiled the idea and I promptly got out at a loss.
The top stay intact, however, and about a week ago I re-entered my SHW puts. The earnings came out this morning, and as the news indicates, they were a big miss.
And this is producing a nice, hearty selloff of more than thirty dollars. Yay!
The daily chart below doesn’t reflect this plunge yet, since the cash market hasn’t opened, but I wanted to illustrate the topping pattern again. I’ve got January 2023 $280 puts, so I’m simply going to hang on to them, since a breach of the horizontal line at $214.22 would just make a good thing even better.
Generally speaking, the morning belongs to the bulls, as every single quote is green (except gold, of course, which is forbidden by federal statute from doing anything but disappointing). The beautiful top on the /ES got spoiled by the post-earnings giddiness of MSFT and GOOGL, so now we’re still grinding away in this range between about 3920 and 4000. It’s a shame that we have to gird our loins for as despicable a bureaucrat as Jerome Powell, but there we have it.
I honestly don’t have any strong feelings about what post-FOMC is going to look like. From a “bottoms-up” perspective, there are tons of great bearish opportunities. But as SHW clearly shows, if the market in general is strong, it hardly matters how good your individual chart is, since it is more than likely to get dragged along for the ride, no matter what the direction.
