What I learned looking at 100 ETF Charts Yesterday

This is just a quick post.  But I wanted to relay to you what I noticed looking at 100 ETF charts across many different sectors yesterday.

Put simply, my take is that many of them look surprisingly constructive.  More specifically I am noticing quite a few clear head and shoulder bottoming formations.  If they engage into valid breakouts either this upcoming week or next then the measurements implications could point to new all time highs in many of them, including the major market indices.

If that happens, then it makes one wonder whether the deflationary scenario will be completely invalidated soon.  A couple months ago I was anxious to see which scenario would win out and it seemed clear that a rapid price decline in the form of a mini crash or at least rapid price destruction would hint towards a new deflation wave kicking in.

On the other hand a more orderly normal corrective decline somewhere in the neighborhood of 10% would seem to point to a sloppy directionless market perceiving an continued inflationary wave.

Anyway, I might as well put my finger on the chopping block right now instead of getting too ‘hedgy’ (I just made that word up, but it passed the spell check ?).

So the call is that many different markets will be able to break out north out of these small head and shoulder correction price action bases in the next few weeks and it may lead to some of them hitting their highs of January 2010 again.  I just have to make that call now based on what I am seeing in the charts and in the tape action.  This is not a time to be excessively bearish.

So once again key decision point numbers that will determine if I am wrong or right are the 1116.56 number on the SP500.  We get above there and it is a green light in my opinion.

Posted in ETFS, Index Trading, Market Timing

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