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Stock Charts Are Fragile — All Wedges, Flags and Gaps

This is a syndicated repost courtesy of NorthmanTrader. To view original, click here. Reposted with permission.

Well, at least it’s all out in the open now. Nobody even bothers about growth or earning anymore (at least for now).

Liquidity moves markets!

Follow the money. Find the profits! 

It’s all about the Fed, markets by central committee. Don’t take my word for it, just look at the headlines:

Barron’s

@barronsonline

Dow Futures Drop Because the Fed Might Not Cut Rates After All https://on.barrons.com/2JjXti7 

The Dow Is Slipping Because the Fed Might Not Cut Rates After All

The Dow Is Slipping Because the Fed Might Not Cut Rates After All

Tensions between the U.S. and Iran and Deutsche Bank layoffs are also weighing on the market Monday morning.

barrons.com

See Barron’s’s other Tweets

Mohamed A. El-Erian

@elerianm

This @CNBC headline illustrates what is consensus expectation: Yes economic conditions are likely to will get harder but can continue to rely on the power of to drive asset prices higher –that is, an ever widening gap between fundamentals and valuations!

42 people are talking about this

It’s just the extension of what we’ve seen all year:

…or since 2009 for that matter:

And for now the machines continue on their programmed mission to buy no matter what:

Robert Burgess@BobOnMarkets

Wall Street is chasing the billions of dollars of stocks bought and sold on autopilot in the dying minutes of every trading day https://www.bloomberg.com/news/articles/2019-07-08/wall-street-fights-stock-machines-with-trend-chasing-on-steroids  via @markets

Wall Street Fights Stock Machines With Trend-Chasing on Steroids

Wall Street is fighting the robot revolution by chasing the billions of dollars of stocks bought and sold on autopilot in the dying minutes of every trading day.

bloomberg.com

See Robert Burgess’s other Tweets

My current technical outlook remains the same as outlined in Sell Zone.

The Distortion continues.

But look closely, the market construct is fragile. It’s all a bunch of rising wedges, bear flags and open gaps.

Indeed rising wedges have been the hallmark of the market’s action for the past year and a half:

$NDX:

$DJIA:

$SPX:

They’ll squeeze and squeeze until they eventually break.

And underneath the big 3 main indexes we have bear flags:

$BKX:

$RUT:

$TRAN:

And in between all of these patterns we have an array of open gaps below:

And now a couple above. Markets of the gaps. Wedges, flags & gaps. Swell.

But don’t worry, the Fed has our back. Right? Right.

After all we have Jay Powell to look forward to this week, over and over again no less, 2 congressional testimonies and a speech plus dovish Fed minutes.

Who needs earnings and growth. Well maybe Deutsche Bank, the bank with the largest derivatives book on the planet.

18,000 being laid off. How’s that going? Well, you already know:

Sven Henrich

@NorthmanTrader

53 people are talking about this

Maybe the Fed can keep the 3.6% unemployment fantasy going for a while. Maybe not.

Jay Powell will tell us this week that he can.

Last year he also told us he can raise rates this year.

He couldn’t.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

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