With a drumroll and a little more fanfare than usual, I asserted here the other day that the stock market was due for a nasty drubbing — a comeuppance for the hubris that has goosed the FAANG stocks into outer space. But if Wednesday’s humdrum retracement is the best that sellers can do, we permabears are going to have to resume a familiar position — i.e., bent from the waist, hands gripping our ankles. When I say that price action was humdrum, I mean mild and predictable. Although the S&Ps were down almost 40 points in the early going, they’d recouped half of it by the final bell. As for being predictable, judge from the chart (see inset). As you can see, the intraday low occurred almost exactly at the ‘D’ target of the pattern shown. Sellers were docile, orderly — and completely winded just 90 minutes after the session began. As I continue to remind subscribers, the bull market, now celebrating its tenth year, won’t end until portfolio managers wake up one morning in a cold sweat, asking themselves, What on earth have I done?? Until this epiphany comes, all they’ll need do to maintain the illusion of control is buy shares in the same half-dozen stocks that have buttered their bread for nearly a decade. _______ UPDATE (August 16, 5:48 p.m. EDT): Su-prize su-prize. Bears panicked to get ’em back, lifting the futures nearly 50 points from the lows recorded 24 hours earlier. Now they are bound for the 2874.25 target shown in this chart. A pullback first to the green line would trip a mechanical buy signal there, stop 2802.75. _______ UPDATE (August 19, 4:59 p.m.): The pullback bottomed at 2835.00, nowhere near out stingy ‘mechanical’ bid, before the futures took off. The 2874.25 target remains valid as a minimum upside objective for the near term.
