| | | They don't have to be bearish 100% of the time, but it is a bearish wedge since most of the time the market breaks downward in that kind of rising wedge which is why they're called a bearish wedge... there's nothing to stop it from breaking out higher, but historically this kind of wedge pattern has typically been negative for a market... since no one can actually see into the future we can only go on probabilities and the historic data from this kind of rising wedge has a high probability of a decline... it should be interesting how it actually unfolds this coming week...
Yes, the bus stopped just one block shy of the next officially scheduled bus stop, so we could still see that reached... either way, I also went flat yesterday, there are just too many cautions here for me to hold any long position over the weekend...
Another consideration here is the ratio relationship between the TLT and the SPY... when the ratio between the two markets reaches a high level, then we often see the ratio begin to decline just ahead of the SPY and it also often forms a negative divergence just before the decline begins... below is a two year daily graph... I have a five year chart which is even more graphic but it can't post here for some weird reason... in this two year graph, you can see the ratio as the green line... the blue line is the SPY, the red line is the TLT... notice how the green line ratio begins to top out and form a divergent pattern to the SPY just days (sometimes even weeks) before the SPY begins a more meaningful decline... right now, we can see that the SPY has just made a higher high, but the ratio has not risen but instead formed only a double topping pattern... of course, the market could just keep on zooming higher, but considering the probabilities (which is all we can go on) AND that rising bearish wedge posted earlier, I personally want to be cautious about being aggressively long this market for now... sure, we could still see this market rally another 30 or 50 SP points no problem, but the rounding top pattern of the ratio is telling us that the richest cream has already been taken and there's nothing left but skim milk... of course, after a good pull back, then it could be off to the races again... I'm not at all suggesting a final market top, just a warning here that these markets will typically behave as they always have... and if so, then a market decline can't be far away...
GZ |
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