Support and resistance lines certainly make sense to me. However, flags and other patterns less so. Mostly because I have not researched them as much. The market has been showing a rising wedge pattern for a while now and the belief is this is a bearish pattern-especially if it is accompanied by lower volume.
From what I have looked into the past week, it is bearish 60% of the time and bullish 40% of the time. Context matters. I am not clear what other market conditions would effect those percentages overall. Either way, the pattern is going to break soon and that will give more insight.
Bearish divergences are getting stronger, so my guess would be a higher likelihood of pulling back. With that said, I am not ready to bet against the market given how resilient it has been. I would love for a healthy pullback and have been rooting for one for months.
The most important driver of this market seems to be the Capitalized NHNL. The NH is stable and continues to bounce between the 15-30 trillion range. What is the biggest threat to the upward trend is the growing NL. It has been north of 10 trillion most days since the beginning of the year.
There are a few people that seem to follow my personal musings and have ask why I don’t comment on the news. It is because I don’t think the news matters. The reaction to the news is what matters and that is what will show up in the charts. I think the news is just pretext for what the market is going to do anyway. It is just looking for a reason to do it!
