Jaws
Like I said the other day, the market
seems to always be at a crucial juncture. Today is no different.
On a macro scale, I’ve got a monthly chart of the S&P 500
(
SPX |
Quote |
Chart |
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PowerRating)
brings this point home.
The past five years, the S&P has kept itself reliably above this
trendline. The effect of the bounce that sent the S&P into a positive bias
for the past two months is now pretty much petered out. A pullback to the
trendline is likely. From there…be ready for anything.
Our expectations are molded by reading patterns. The trip hazard for traders
is reading too much. It’s largely a Pavlovian expectation of “whatever
happened in the past, will happen in the future.” Usually, the market
convinces as many people as possible of this before it closes its jaws on them.
So, if you’re think that this a nice, tidy little pattern, remember that
there are many “analysts” who are hanging their hopes on it. If the
market is as perverse as it has been in the past, it will find great joy in
crushing their hopes.
For traders like all of us, it doesn’t matter. We’re tagging along for the
ride.
Have a nice weekend,
Eddie
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