Yet another post about why hype in markets can really hurt less experienced casino patrons who believe that experts exist in this realm.
Was this pattern not hyped as the “jaws of death” by a then-prominent TA (and a PhD to boot) about a decade or so ago? Why, the market top (that wasn’t) almost made it appear so in 2015 until resolution took the form of a severe upside thrust.
Here is the chart’s log scale bro.
Moral of the story: don’t take as science anything that any TA (including yours truly) writes, theorizes about or projects when using nominal charts. Think of TAs as the guys in that department over in the corner of the building, laughed at by the real analysts.* TAs are the guys who are given wedgies by the popular kids in high school and spend a lifetime trying to be taken seriously after that humiliation.
As to the charts, that is one overbought situation on the monthly time frame and it would be best for it to resolve in a continued correction. But the amazing thing is that even a test of the top “jaw” line would only be a test of the 2015-2016 pattern top. In other words, Dow could take a 20%+ haircut in the form of a cyclical bear market but remain in a big picture breakout and secular bull market.
Final note: We are still without power, but the genie is cranking and backup internet access is working okay (fingers crossed). Not that it matters too much since I have to do a lot of running around today.
* Trick wording. I think there are precious few real analysts vs. pretend analysts out there, but a TA, even when he means well, is dealing in an art not a science, no matter how much he may want to believe otherwise. And some are good at it too, but it’s still an art, not real analysis.