In the 1980s, Black Flag was known as a pretty lousy insect killer but they had a good ad campaign – "Black Flag – Kills Roaches Dead". I don’t know how else you can kill something except until it’s "dead," but, whatever…I still remember it and I guess that’s the key to advertising.
Which brings me to a corollary pattern to the "Double Top Symmetry" pattern I mentioned a few posts back. The dreaded "Black Flagg" (yes, it’s a stupid name, but it helps me remember my own patterns).
Essentially, after a market has a strong breakdown after a huge run, it will form several (usually three) triangle patterns. The market is digesting the sell off and marking time for the next move.
This pattern worked nicely in the weekly NASDAQ in 2000.
Right now, the NASDAQ is breaking down from a similar "Black Flagg" pattern on the daily charts.
While we should continue to bounce around at these levels because of the deep oversold condition, any rally that occurs on light volume should be looked at as an opportunity to continue selling.