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Chart Updates

I am sorry that I have posted so sparingly of late.  I am quite ambivalent regarding the market.  I still think we are in a topping process.  I still think if looking at the long-term picture, market sentiment shows in the chart as a rising wedge: i.e. consolidation of bulls in an unbalanced position.  Some technical analysts that I really respect have mentioned the prospect of an upside breakout, which would be a big deal.  It would make the notion of a “topping process” only plausible in the most ridiculous hindsight down the road.  That said, I still see this as a time to put money someplace safe.  Whatever that means, these days.  Here is the S&P rising wedge.

2015-02-25-ES_CHARTS

The same pattern is still present in both the Nasdaq and the Dow Jones.

2015-02-25-QQQ_CHARTS 2015-02-25-DIA_CHARTS

Treasuries are very interesting to me as well.  Going back almost a decade, there is a rising channel in place.  A month or two ago, the 30 year ETF (TLT) hit the upper line of resistance and has since pulled back sharply.  A sharp decline in TLT price would seem appropriate for a breakout in equity prices.

2015-02-25-TLT_CHARTS

I continue to be amazed by what I see as market blindness.  Short-sighted pursuit of market profit, regardless of risk.  It seems to me that the various Central Banks have driven any authentic “price discovery” from the markets. I do not know what will act as a catalyst to break that confidence, but I do believe that when it breaks, the fall will be further than faster than anticipated.  But I am not willing to bet on such a fall right now.  Nothing is broken just yet, and the bulls have command.

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  1. Draft
    March 8, 2015 at 1:15 am

    I went short over the last several days — not sure if you did as well. We didn’t hit the top of the S&P wedge, which made me a bit hesitant to go short, but various signs looked like we had hit a turning point. Still waiting to see whether this decline is short lived or whether it will cause a medium-term trend change.

  2. March 9, 2015 at 2:12 pm

    I bought a little VIX but have not loaded up short. Still just watching ambivalently for the most part.

  3. Draft
    March 10, 2015 at 1:01 pm

    Looks like we’re already testing the bottom of the wedge. Let’s see what happens next…

    • March 10, 2015 at 2:02 pm

      Wow, that happened fast. I assume you are using the original support lines. If the support lines are adjusted to account for the most recent selloffs (as I did in the first chart of this post), it lowers it a bit… looks like its around 2020 to me.

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