Crossroads

Greetings from the snowbound tundra of the California Sierras. To me, the definition of civilization is anywhere with an Internet connection, so I'm still quite content.


Today was a good day, but I can't help but be concerned that we will have, yet again, another swing up. I'm not saying it's going to happen. I am saying that it seems to keep happening, and the most polite word I can think to describe this wave-like action is "annoying."


What we need, of course, is a clear, obvious, idiotic-comments-suddenly-cease kind of break in the market. Until then, I have reduced my exposure somewhat with the worrisome anticipation that this stupid market might find its legs once again. The $NDX at least had a nice bearish engulfing pattern today.


The $OEX shows a wonderful example of just how monstrous the divergence is between the price action and the RSI. This market is running on fumes. But there are a lot of people who like sucking those fumes. The bulls always radically outnumber the bears. We are a lonely bunch, aren't we?


The S&P 500 is just another example of this higher highs/higher lows market. In fact, to make matters worse, the lows don't seem to be dipping as low. There are some bright spots, of course. The investment banks are starting to weaken. Some issues (like the CME) are finally making some real progress downward. But others - like RIMM and MSTR - have surprised me with their incredible strength (obviously I got stopped out on these - I may be dumb, but I'm not an idiot).


The Dow Transports, which I've pointed out should be providing comfort to the bulls, is at risk of breaking its inverted head and shoulders pattern. This could be nothing more than a pullback. But if it falls much more, the very clear bullish pattern will have been neutered.


I mentioned Continental Air (CAL) before. The head and shoulders pattern on this is forming nicely. We could be seeking a neckline break in a day or two.


And although CRDN as a whole isn't an exciting chart to me, I was blown away at the size of this bearish engulfing pattern. This is like the John Holmes of these patterns - I rarely see them this big.


Accept my good wishes that the higher highs/higher lows pattern be broken in the coming weeks. The bulls must be conquered, and breaking the pattern is the first step in breaking their spirit.