Better Read Between The Lines
An eternity seems to have passed from the time that I first talked about the
possibility that the semis would make a bungee jump from below “broken
support” and thereby help to tow the rest of the Naz out of a steep
nosedive. Actually, it was only a few weeks ago.
What’s happened since then is a tribute to the simple power of a few lines
drawn on a chart demarcating simple patterns. Nobody really can provide a viable
explanation as to why this works. But let’s just say that this methodology holds
its own against all the quant power that the institutions can muster.
The irony is that it is these very same lines that are now giving us a
warning sign that the party could conceivably be over. No…that’s a little too
grim sounding given all the favorable technical factors that are tripping the
green alarms in the war rooms of many hedge funds. But I’m at least advocating
ducking at this time into the nearest foxhole until the all clear.
I mean check this out. The Naz has rallied to the same extent that it rallied
on two previous failed attempts. The move has taken us to the top of a steep
downtrending channel…which also happens to be near the 50% retracement of the
January highs to the March lows. If there was ever the potential for this whole
thing to be halted, right now would be a great, awesome opportunity for it to
happen. I won’t try to guess what kind of “halt” it could be. But the market does like to set off emotional extremes.
Here we are at a point of extreme optimism. What would it take to conjure the
opposite?Â
A similar situation exists for the SOX. A channel is forming. A
little more to go and we hit the top of it. Pause maybe? Perhaps. But maybe
more.
These are charts worth printing out and staring at before you
rush back on in.
Have a great weekend,