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I think that it is safe to predict that today is Monday. Therefore, being the first day of the business week in the Western World, we will start with a look at the 4 hour bars of the ES, S&P 500 fugutures, for perspective. It probably bears reminding that the saucer base, multiple inverse head and shoulders pattern from which the market broke out measures to around 4820.
This falls into the category of “When You Think It’s a Top But It’s Really a Bottom.”
Friday’s needlepoint top suggests that we won’t get there today, but who am I to judge.
Funny thing about these bottoms in a bull market. Most people can only see them in retrospect.
I saw a headline today that Hussman says the Fed isn’t responsible for the bubble, but that the fact that people think the Fed is responsible, is responsible.
Hussman has spent the last dozen years being wrong about the market every single day. Every chart, every day, for him, is merely another example of how overvalued the market is. And yet, some people still pay attention to him. Ah, the wages of charlatanism, even bear charlatanism, apparently pay well.
Forever wrong permabears are hung up on the idea that the market is “overvalued.” The problem is the concept of “value.” In an auction market, value is what someone will pay someone else for something that someone else owns.
Are PE ratios historically high? Yes. Does that mean that prices are “overvalued?” No. They’re just prices. They change every day. They always go up. How difficult is that?
Will that change someday? Yes. When? I don’t know, exactly, but I have a guess, based on Rule Number One : Don’t fight the Fed. The Fed has begun turning the rudder. When the ship starts to turn, we’ll know. First we’ll see the little eddies, then a few little waves, the opposite way, and so on.
But our job here is the intraday patterns, so let’s downshift to the hourly view.
There’s obviously a bit of trend sport around 4690 here at about 4 AM in NY. If that fails, we have about 30 points of airspace to the next sport level. Note that the uptrend would still be intact at that point, so I’m not gonna be like Fussman and call a top every day. Lest we forget, the trend is our friend.
Until it isn’t.
So, likewise, if 4690 holds, then they’ll probably run right back to 4730 today. Take that out, and 4760 would be a done deal PDQ, on the way to that measured move target of 4820.
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