I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Wednesday, November 30, 2011

Nov 30 ... and a *CRAZY* idea

Yesterday was an odd day. Monday had a pullback which was shallow. Then yesterday ramped up in the morning and consolidated / tested the breakout the rest of the day. My trend system had been on a buy since Monday morning (since the gap) and I was just waiting for an entry. It seemed to me like me market was consolidating for a move higher, so I bought: See here and here

And like I was showing Monday, we had a nice proportionate move on many levels. But I would like to go back to a chart that I was sharing with HighRev on Nov 18 (see this chart for the original). The more this wave has unfolded, the more compelling I find the parallel. Here is the updated chart:

I think whatever the next leg ends up being, I think we have more upside to the end of the year.

.... Now, on to my crazy idea .....

First, don't read too much (if anything) into this. It is just an idea that I have been kicking around in my head for awhile. It is not a preferred count. I don't even think it is a likely count, not yet at least. But it has been marinating for awhile and I am just putting it up publicly to see what I think about it on the screen (to make it slightly more 'official' as it were).

The reason why I am thinking about it to begin with is because the last year and a half has begun to take on a pronounced sideways feel to it. And despite all of the analogies floating around, I don't think the comparison to 2008 is appropriate. Way too many people are expecting it. It just has a false ring to it. And I don't think the macro is as *acutely* dire as it was then (which so many downside economic surprises). Yes the EMU is a mess (and flawed), yes I think there are major dislocations to come. But it is a question of timing. Can things be held together for awhile longer? I think the answer, surprisingly, is yes. And I think that is very different than most of the commentary out there, which makes it somewhat contrarian. I don't know, we'll see.

But back to the crazy idea. I wanted to see what a pattern might look like to explain a large sideways move (not topping), that would fake a bunch of market participants out. I mean the thing barely looks like a triangle. But then neither did the one on the BKX in mid 2009.

Food for thought. Feel free to comment or throw poo at this count. I don't much care either way. I am simply thinking about it right now.

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