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It is tough for me to latch onto an overtly bearish thesis for the broad market here, with Dow components such as Home Depot, International Business Machines, and the all-important transportation firm Union Pacific sporting constructive weekly charts. Mind you, I am not ferreting out an imagined pattern on a daily chart or shorter timeframe, but rather I am pointing to the fact that Home Depot, of all businesses in this housing-led debt unwind, printed highs not seen since 2007 this week. Beyond that, IBM and UNP are basing calmly above all of those longer-term, weekly moving averages. The VIX has moved below 30, and staying down there is still the key to whether the bulls are largely out of the bear-populated woods.
However, the chinks in the bulls’ armor are two-fold:
1. The lack of a new leadership group of stocks and proliferation of high probability long setups yet to emerge.
2. The continued sloppy charts of high growth leaders since 2009, prone to late-stage base failure.
In particular, the daily and weekly charts of massive winners and momentum-favorites AMZN BIDU CRM PCLN POT WLT are all problematic to me. Even if they do not fall off a cliff and go the way of previous winners-turned-crashers like DMND GMCR NFLX OPEN, their respective price action strongly suggests they at least need more time to form a new base off of which to launch a fresh sustained uptrend.
Accordingly, I continue to probe the thesis that we could easily be facing a market filled with more subtleties. I doubt even if the bulls continue to gain footing here, that traders will simply be able to “buy the leaders” and head out to run some errands or go to lunch and magically get rich. Instead, I suspect more of a stock-picker, value-oriented market awaits. In other words, do not get too giddy if the broad market breaks out in the coming weeks, because this time around it probably means you are going to have to work harder than ever to outpace your competition.
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BIDU is forming the very top of the right shoulder of a H&S stop that is visible on the daily starting beginning of Oct till now, in the context of a large H&S top on the weekly from very end of March till now with neckline at $120 which we bounced off of end of Nov – we have sliced through it a few times (the $120 mark)but the breakdown hasn’t held as of yet
I already had a cold one in hand, but good read nevertheless. $MCD is another one that’s been going up since the beginning of time. But that one is logical in weak economic environment.
WYNN was another choppy one, very erratic process action the last few days.
Couple of pretty decent cup and handle patterns on IBM and UNP, no? Is the negative divergence between price action and volume over the last couple months a cause for concern?
this is the season for dmnd. what i’d like to know is what the heck happened to them that they fell off the cliff as hard as they have? thanks chess
Let’s have some quality control. Natural hair color only.
Point taken
I was just going to say, Shelly Hymonowitz has really upgraded since her black hair/black Buddy Holly glasses bohemian days in high school.
He hair matches her eyes now.
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