(For Those That Want To Know)
Below is a chart of the S&P 500™ as of the close of today’s day session. It’s the latest in my ongoing commentary that you can find (here). The chart is pretty self explanatory. i.e., I’ve notated it and there really isn’t much else to say. The “markets” will have the last word regardless.
However, with that said, today was interesting looking from a technical perspective, because as many times prior, one pattern that appeared text book to resolve one way, with the smallest of odds that it could go the other, is precisely what has happened over, and over again as of late. Or said differently: the signals have all been fake outs. But that’s why there are odds to begin with. Always remember that.
So with the above for context, what has been happening is a phenom I’ve tried to explain many times: The fake outs haven’t reversed or nullified the original interpretation, they’ve all gone on to form the same signals only in a larger context. This today seems to be doing it once again.
Now I know there are some of you out there thinking “Oh, you’re trying to have it both ways!” And it’s a fair point, but its points like that and not truly understanding the premise of what I’m saying that is precisely how people get in trouble. They believe it’s signalling one thing (like a new bull run) when all it’s been doing is building for possible and even sharper reversal. This same phenom I charted and kept notating happened in February.
Remember February? If not that’s OK, just look at the chart, it’s right there and it was “The highest market high in human history.” There was no Covid scare, no nothing, and nothing but “even higher highs” predicted – then it all fell apart just as I was warning about. Then, “The Wuhan Flu” came in March.
Once again, if you doubt what I’m saying just remember it was none other than the clown prince of buzzer-banging professing on CNBC™ how he felt the market and his nifty proprietary paid for signal sender was wrong and it was time to “Buy, Buy, Buy.” You are now only back to even from when he advised it.
And for those that followed his advice? How’s that round trip been? Good times, no? But I digress.
(Note: Remember, I am not giving or alluding to any trading or financial advice here. That’s not what this or any of my discussions about the markets are about. See the “About This Site” page for any questions.)
So here’s that chart I alluded to. To wit:
What I personally find intriguing about the above is: the pattern; the text book overthrow and reversal; its possible signaling (gold dot marked as “signal?”); both the timing happening at the end of the day, the day before last day of trading for the end of the month. I mean: it’s almost too text book; too good of timing; too perfect in shape and scope to be believable for possibilities. But it is – what it is. But I’ll also tell you that from a technician’s viewpoint – it’s so text book for what it possibly forebodes – it’s scary.
If the markets sell off from here (albeit the market can bounce higher and this pattern can still remain intact) and traverse into that lower circle I noted with “confirmation,” then all of your spidey senses should be beginning to tingle indicating there’s the possibility for real danger to come – and fast.
Will it? Nobody knows. And there have been more than a fair share of “This is it!” types of moments. Personally, from my perspective, I think when it comes to history rhyming, I’m still of the opinion we are more in line with the “Little Boy, finger and a dike” type analogy, rather than what many think is “Chicken Little.”
As always, we shall see.
© 2020 Mark St.Cyr