Below is a chart of the S&P 500 on a minute-by-minute basis for the past six months. Beneath the chart I'd like to break down what I consider the "theme" of each tinted chunk of time (as always, you can click on any chart to see a big pop-up version of it).
- A – "Hey, a nice inverted head and shoulders pattern has formed. It's time for this market to push up to 1050!"
- B – "Wait a second. This breakout failed. Why can't this market get its act together? We've got a new President coming. Oh, well. At least things are stable."
- C – "Ahhhhhhhhh! Oh my GOD! This bear market is never going to end!" (The climax on March 6th was touched to the day by Time magazine, which had its Hanging On For Dear Life cover story).
- D – "Things are incredibly cheap. Brand-name outfits are trading for 50 cents a share. Buy, buy, buy!!!!!!!!!!!" As you all know, the one portfolio of mine which benefited from this was my 401-K, in which I bought all kinds of goofy, junky stocks. I made low triple-digit gains in some cases, and many, many 50%-70% gains. But overall this was a really rotten time for me!
- E – "OK, cool. We've got a nice inverted H&S setup again, and we've broken out above 880! Yes! Time to head to 1050 now!"
- F – "Ummm. So where's the big surge to 1050? What's going on? This market is just stuck in neutral again!"
- G – "Yes! We're at a new high for the year! But – – ummm, again – – why are we stuck here?"
So this market's psychosis has tricked a lot of folks, bulls and bears alike. But no matter what you consider yourself to be (and don't give me that "I just trade the market" nonsense; you know you lean one way or the other) – everyone has been getting excited (or wringing their hands) over this inverted H&S pattern since the time of the cavemen. Take a good hard look at "G". If there was an explosive rally based upon the pattern from January through May, where is it?
At this point, I have one word for this market: feeble. It's not soaring higher, as bulls would expect it to do based on the pattern (which I think we can dub a head and shoulder and shoulder and shoulder and shoulder pattern, based on its freakish design), and its attempts to drop lower are usurped by these end-of-day erasures.
I think all we can assume is that the next stage, "H", will stand for "what the Hell???", which is one the disappointed side is going to exclaim.
One last closing item for the day – – yes, my watch lists are coming back, but for those who just can't wait for it on the sidebar, here's a sneaky link so you can see it now.
