I’m sitting on a bench beneath a tree on the bucolic campus of one of my children for a school event tonight. What better place to discuss an index chart? So here it is – – the Dow jones Composite:
At the end of the 2014 and the start of 2015, I yammered on endlessly about the pattern I dubbed “Ichthus”, shown above in magenta, which I felt presaged a decline. Indeed it did, and the well-formed pattern and the subsequent tumble in the market (terminating in January of 2016) made my bearish heart go pitter-pat.
Ironically, that descent was the beginning of a much larger pattern which could make life for the bears miserable for years (more) to come, which I’ve tinted in yellow. This inverted head and shoulders pattern implies a new massive upswing in the market which, if it occurs, will certainly inspire me to spend my time doing just about anything else except trade, as I’ve been increasingly tempted to do. A Clinton victory, I suppose, makes such a lift possible, because it’s going to be Status Quo on steroids with a person destined to be one of the most hated presidents in history.
The third pattern, however, tinted in cyan and by far the smallest, has my attention right now. This is the “make or break’ pattern that’s happening, and I suspect Election 2016 will decide its outcome. The market is being propped up desperately right now, and if they manage to keep it propped up – – – and HRC wins – – and stocks push above that cyan rectangle – – it’s off to the races for the bulls once more. I imagine it’ll just go on to create the longest-running bull market in history (right now it’s already the second-longest).
On the other hand, if prices fall below that area, which I suspect they certainly would if Mr. Trump pulls off a holy-God-what-have-we-done type victory, then I think all hell is going to break loose. As much as I love the United States, a part of me would love to see the kind of mayhem and chaos that would ensue in such a circumstance, especially since the equity markets would go stark raving mad.
So that’s how I see it. We’ve got sixty days left until the election. It’s going to be amazing to watch, and if I was the sort who actually drank Coke, I’d be getting it (and the popcorn) ready for the first debate later this month. I can hardly wait.
