After yesterday’s baseless mega-rally, it was a relief to see a bit of red this morning. Looking at the small caps, there has been a strong burst since early Friday morning, which appears to have taken a U-Turn at the horizontal I’ve drawn in the middle of the chart, which constitutes the base of the head and shoulders pattern from last week.
Liquidity moves markets!Follow the money. Find the profits!
Looking back farther, at a 4-hour chart, you can see the uptrend from March broken, with a topping pattern being hammered out since then. We had a break below this pattern last week, but evidently the misplaced faith in yet another multi-trillion dollar “stimulus” package goosed things higher. I’ve here to tell ya, this once-great republic of ours is going to stimulate itself into oblivion.
The ES is sporting a similar setup: that is, an ascending trendline from March (now broken) and a fairly recent topping pattern forming over the past couple of months.
I’ve got 48 individual stocks sold short, and 2 ETF shorts: those are EWZ (Brazil) and Utilities (XLU, shown below). I also have January 2021 puts on XLU, which I find to be a captivating pattern.
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