I usually try to find both bullish and bearish charts to highlight. I do this not because I’m trying to talk out of both sides of my mouth. I do it because technical analysis, like fundamental analysis, is a matter of weighing the probabilities of both bullish and bearish outcomes. Making predictions is a fools game and is impossible – making bets based on historical probabilities and precedent is not.
So back to the charts. The only charts I could find this weekend were bearish. The only positive thing that could come of this is that all technical analysts should be slashing their wrists right now. That should get the market to a negative extreme more quickly.
It certainly seems as if the long term bear market has re-asserted itself. The first chart highlights a giant rising wedge that has now broken to the downside.
Second, the NYSE has put in a lopsided but still valid head and shoulders pattern.
Third, the NASDAQ has fallen out of the nice uptrend channel. It looks to be in a giant consolidation between 2150 and 1750.
While I’m no Dow Theory expert, it looks like the Theory gave a new sell signal last week.
Finally, the Three Peaks and a Domed House Pattern looks to be right on track.
The problem with all these charts is that the NYSE stocks aren’t that oversold yet. Based on the Bullish Percent Chart for the NYSE, which won’t be oversold until it gets to 25% – 35%, there’s a high probability of more declines ahead.
