Bears had two feel-good days in a row — about is good as it ever gets for them anymore — before impaling themselves with a short squeeze to end the week. They shouldn’t get too discouraged, though, since the market feels like it is in a topping process that needs only to inflict a little more pain on them before a bear market can begin in earnest. The only thing holding stocks aloft, apparently, is a solid consensus among some of the world’s best chartists that the end is near. A couple more swoons and new all-time highs and it’ll all be over. It is inevitable that the first monster-leg down will occur with ‘don’t pass’ bettors aboard to enjoy it. For our part, we try to keep a few butterfly put spreads in inventory at all times, just for bragging rights if we should finally nail the Mother of All Tops after 12 years of failed attempts. Speaking of which, 4461.00 (or so) looks like an interesting place to try once more, since no one else is likely to be joining us in a place so bereft of trendlines, Fibonacci levels, McClellan oscillators or Andrews pitchforks. Stay tuned to the chat room if you want to stay apprised in real time. _______ UPDATE (Aug 23, 10:20 p.m. ET): Although I usually avoid drawing two patterns on the same chart because it can be confusing, this pair looks clear enough to illuminate the way. The stab today through p=4474.00 of the smaller pattern implies that the futures are all but certain to reach p2=4537.00, and if they close above p for a second straight day, almost as likely to reach D=4600.25. Notice that p2 closely coincides with the 4545.00 ‘D’ target of the larger pattern. This implies double stopping power within the eight-point range that separates them. The larger ABCD is unlikely to produce a ‘mechanical’ buy signal, but the smaller one could, and its appeal would improve if it happens with a swoon to x=4410.88 later in the week.
ESU21 – Sep E-Mini S&P (Last:4483.75)
