What a day~! Yesterday we tanked only to rise from the dead and post a decent day. Today a lot of people with a lot of money said the Bulls were in town! And the last 6 weeks have seen the market move on a whim and a whisper, as the news breaks. Wild swings! The talking heads are as useless as ever at figuring it out. It's all a job to them.....entertainment. What? Excuse me? Oh, yes, of course...... the charts. The have been screaming at us showing price and volume, the only real indicators! And volitility shows itself in large moves in both directions. And what are they saying today? They are carving out Bear Flags! The Dow, the S & P 500, and many of the lesser indices. But since the Dow is the Admiral of this Market Ocean, lets look there for answers. Note the trendlines creating an upward channel. As if the wind is blowing a flag toward the 2 o'clock position. And notice the falling volume! Seems to be the formation of a classic Bear Flag. Price vacillating as it moves upward, buyers coming in on the bottom trendline and some leaving at the top trendline. And volume telling us that as we move forward and price moves higher fewer and fewer buyers are willing to risk that price will go higher. And when no more buyers emerge........... TANK goes the weasel~!The unknown answer is ........when. Perhaps we'll get a hint as we move forward.
A Bear Flag is a "flag" blowing upwards, giving the uninitiated the impression that all is well and the market is moving up nicely. But a Bear Flag is called that to imply the end result. With a high degree of probability, the bottom trendline eventually gets broken....... and the ensuing words are......."Watch out BELOW" as the bear commences his march to the downside. The bewildered novice bull is left wondering what happened as he watches his money fade away.
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