Happy Friday, everyone. We kick off the day with equities slightly red across the board. What I find particularly exciting – – – besides the fact that next week has historically been quite bearish – – – is the preponderance of bearish setups in the form of what is normally quite a rare pattern, the diamond top.
The first item to show you isn’t a diamond, but is a very small H&S pattern which broke just minutes ago.
Backing up quite a ways, however, you can see the diamond. It may seem obvious now, but this is the kind of thing that most folks wouldn’t notice. If you’re wired funny like me, and have looked at millions of charts, you get good at spotting them. Incidentally, computers actually suck at this kind of thing. Every time I see someone trot out a pattern recognition product, I’m a bit concerned about being made into a dinosaur, but I’m relieved to see that what the computer “sees” is utter dog crap. Thus, I’m safe to fight another day.
The /NQ has an even better one. I actually only noticed these things after I took the screen shots, and I manually added those trendlines (again, possibly only because I’ve done this a billion times). Originally, the only line I had in place was the upper right trendline, showing resistance. My point here is that we might have a really good day, and a good week ahead, on our paws.
Allow me to also point out, rather excitedly, how fantastic the small caps look. This is one hell of a fantastic head and shoulders top. I’m honestly thinking next week could be a total jaw-dropper. If you read Xerxes’ post, which precedes this one, you get the sense he’s waving the white flag in disgust. I’ve got a feeling he’s going to be able to shove that handkerchief right back into his pocket.
Lastly, and yet more good news for the bears, I think bonds are about to utterly crap their trousers. Plunging bonds means soaring interest rates. Soaring interest rates means doomed economy. Doomed economy makes for a happy Tim. I like that chain of events!
