This post by Unersaettlich has been promoted from StockTock Social.

Ruben’s statement in a comment:
” . . . it’s not a pennant anymore.. That ship has sailed…The only possible reliable pattern to keep in mind is the Expanding Triangle. ” seems to go a bit far. The chart below shows quite a few possibilities involving pennants (all now broken downside by today’s action) as well as the triangle (Tony C and I had a nice email exchange and agree that we are still peacefully coexisting even if we do have minor differences). I was happy to see that Dan and Ruben and I (and several others, including Schweizer’s video “Rally? – not so fast.”) all found ways to bounce around in similar waves (even if numbered differently) and wind up heading the same direction (at least in Ruben’s Count 2). The 770ish 2002 low is the least of our worries, and 700 or worse would follow in short order if 770 breaks.

If the truth indeed comes wrapped in a pennant, the 840ish lower boundary should now resist instead of supporting. The pennant’s top line will probably resist, even after it crosses below 840, as is about to happen with one of the possible pennants (pink in the chart). I also colored the 5dMA pink because it has so closely tracked this pennant’s top line lately.

Tony C’s Expanding Triangle does need less evidence now, though. Any significant excursion above 840 would pretty much dispose of the pennant concept (but the top downtrend or channel boundary formerly thought to define a pennant would still resist). However, rallying the full height of Tony’s Triangle would be unlikely because of much resistance from MAs, Fibs, and the downtrends already mentioned. This, coupled with continued selling by hedgies to meet redemptions, and lack of enthusiasm everywhere with selling into anything remotely resembling a rally, keeps the 5dMA looking very sad indeed. Even the big pop the other day just put a minor squiggle in it. With the 5-, 20-, and 30-dMA’s all actively resisting, along with the top downtrends of former pennants, any rise above about 900 would surprise me. I would be even more surprised if it lasted longer than a few hours. Sellers would pounce on rises intraday, leaving only an ugly bearish long spike of a shadow on the day’s candle as they stripped the flesh.

Of course, our friends of the PPT, and other exogenous factors may indeed surprise us at any point, and judging from the action in foreign markets, maybe US stocks may look more palatable to foreigners than to us, especially as long as the Dollar keeps rising, which will be exactly until China or whoever else has gazillions of greenbacks starts moving into gold on volume in anticipation of better days for metal. Commodity stocks, natgas and maybe oil, might turn around a bit if the winter gets colder, but I was playing in the leaves outside today at a time when we used to have a foot of snow that often had been here since it fell on the poor little trick-or-treaters weeks earlier, and would still be under all the other white S#@& (as it is affectionately known y those who shovel) that fell until nearly April.