This morning I discussed the “broadening formation” that we can observe on the cash session. And I included a couple of ideas about what I thought that could mean for us.
That said, if it is a triangle, it may also be a “B” wave, and I wouldn’t know what to do with it here, given its small size, except something like this:
I previously pointed out the head and shoulders pattern (here), and I am a little concerned about someone else’s work regarding the DeMark weekly bars (discussed above the third chart in this post). I am unsure if losing DeMark weekly support will mean anything (and we need a huge rally today to prevent us from losing that support). But, if we are simply consolidating under a head and shoulders neckline, it is possible for us to fail, if the market is just desperate to revisit the pre-COVID highs.
I have no idea what probability to place on this. My bias is bullish because the crowdedness of the bearish trade, but it’s been crowded for a while now, longer than I have expected, and I suppose it could get more crowded still. Eventually that will blow up, but I don’t know when.
I have taken some crash protection, just in case. I hope they burn, but I’m not certain what will happen next, so I feel like I should hold them.
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