It would be easy to make an argument for either side at this point. For the bulls, one could argue that the market is deeply oversold and long overdue for a powerful counter-trend rally. For the bears, one could argue that the topping pattern is nowhere even close to having expressed itself to the downside and that, rally risk be damned, the broad trend is going to be lower.
Just like last weekend, I am facing the new week with apprehension and anticipation. Here is the weekly chart of the /ES to show the muddled state we are all in:
Below are recent 5-minute bar charts of important equity futures during the last few days of last week. In each case, I have highlighted what I feel is an important barrier. Break above it, and the bulls have a chance at a more substantial counter-trend rally, Remain beneath it, and the bears remain large and in charge.
Here is the S&P 500 futures………
……..the Russell 2000 small caps…..
……….and the NASDAQ………
I’ll confess here and now that I am positioned very aggressively on the bearish side. Thus, if we rocket higher on Monday, I will castigate myself for being too hasty and over-confident. And if we drop, I’ll applaud myself for being bold and daring. Same decision. Different conclusions.
As always, I take things one chart at a time. And I’ve got to tell you, setting aside the general market, all of my 43 bearish positions have absolutely dynamite charts. As our hero Jerome Powell might say, “I’m not even thinking about thinking about closing any of them.”