The Present State of Things, Part 1 (of 4)
I'll write up my thoughts in 4 parts, starting with a larger view of the market, and then zooming in. I think we have a brief moment of clarity now before things will inevitably become cloudy once again at some point.
The broad view is that after the February and March crash, we entered a very grave bear market, one that could very well turn out to be an outright depression. Blame the Corona virus if you must, but it could also simply have been a catalyst releasing forces that have been building up for some time to begin with.
So, after the crash, we had a rally: that rally, ominously, took the form of a somewhat obvious rising bear flag or pennant. I am using the ES futures here, because of the absence of gaps. but as most of you know, you can see this pattern on almost every chart. I will use a SPY chart in part 4, because my next targets are some gaps left open in the rally.
Notice that we did break from the flag, and then we tested it from beneath without retaking it over a period of seven exhausting trading days. That of course, is a necessary feature: as many bears as possible must be shaken loose, and as many bulls must be encouraged at the same time. So: that's the big macro picture: we broke the flag.
In Part 2, I will zoom in to the end of the rally, what I believe is a concluding head and shoulders pattern.
The broad view is that after the February and March crash, we entered a very grave bear market, one that could very well turn out to be an outright depression. Blame the Corona virus if you must, but it could also simply have been a catalyst releasing forces that have been building up for some time to begin with.
So, after the crash, we had a rally: that rally, ominously, took the form of a somewhat obvious rising bear flag or pennant. I am using the ES futures here, because of the absence of gaps. but as most of you know, you can see this pattern on almost every chart. I will use a SPY chart in part 4, because my next targets are some gaps left open in the rally.
Notice that we did break from the flag, and then we tested it from beneath without retaking it over a period of seven exhausting trading days. That of course, is a necessary feature: as many bears as possible must be shaken loose, and as many bulls must be encouraged at the same time. So: that's the big macro picture: we broke the flag.
In Part 2, I will zoom in to the end of the rally, what I believe is a concluding head and shoulders pattern.