To my way of thinking, the U.S. (and global) markets have put a technical ‘top’ in place. The question that remains open in my present paradigm is whether the new trend is sideways or down. Either way, I imagine we should see a bounce in equities here. The U.S. is testing what should be solid support if the market is to continue trending sideways.
The global ETF (VEU) has shown greater weakness, but I have placed the sideways channel support a bit lower, using support from 2010, 2011 and 2012 for a bottom. That level is not yet being tested.
One asset that is looking strong amid equity weakness is U.S. Treasuries, as usual. TLT appears to have broken to the upside of a recent pennant pattern.
My suspicion is that the equity downtrend resumes after a brief rally here. In my search for new short candidates, cousin housing stocks look like appealing short targets: LOW and HD. Both have broken down from multi-year (steep) rising channels. But LOWE’s appears to be the weaker as it has broken under its 200 day MA in addition to breaking its trendline.
One little philosophical note. To me, technical analysis is just a tool for analyzing the collective behavioral patterns of human psychology (I would suggest algorithms also reflect human consciousness in that they are guided by human logical constructions). In contradiction to standard economic theory, I would contend that we are clearly not rational animals and so, not surprisingly, the market is not a rational reflection of pricing. Good luck trading.