Tuesday, October 20, 2009

The S&P's Low Volatility Ascent - It's An Illusion To Believe Markets Can Be Tamed

We showed a similar pattern with Apple some weeks ago. This is a terribly bearish chart formation. The only question is how bearish.

Some chart formations are more reliable than others. A rising wedge is a reasonably reliable formation for what it reveals is a low volatility, highly controlled ascent. This is reminiscent of the 2003-2007 bull market where Wall Street was able to control volatility temporarily. As we stated re the same dynamic before the 2008 collapse, volatility simply cannot be tamed. And Wall Street is employing the same failed strategies which ultimately led to the debacle last year.

We just hit a major Fibonacci turning point before the last minor correction and another very major turning point is almost upon us. Additionally, it was not a coincidence that we recently remarked one of my trading algorithms did not issue a new buy signal off of the last minor correction as it had after every minor correction off of the March low. In other words, market dynamics have changed. Will that be temporary?

I have another chart which goes with this one and I'll try to get it up this week but I have many posts that are already backed up so we'll just have to play it by ear.

posted by TimingLogic at 5:43 AM