August is living up to its choppy nature and heading into September, the worst month of the year. Too soon to think that way? Maybe. But more than one analyst I respect is starting to talk about a nasty fall, and I don’t mean Autumn.
They look at voodoo fundamentals but I have to tell you they look pretty rotten even to a technical analyst like me. Anyway, check this chart. We may cheer the intraday recoveries in two of the past three days but in Japanese candlestick parlance, the appeared after a decent rally and are labeled as “hanging man” candles. The name is ominous for a reason as they represent possible ends to the trend.
Of course, they need confirmation and that, by definition, means we cannot use them to pick the top. But there comes a point when the market will run out of shrugging power. How much longer can it shrug of all the bad news – including today’s bailout of the states – before the bears win?
Sure, resilience in the face of bad news is bullish but it should manifest in a rally sooner rather than later. It is time to get off the pot, if you know what I mean, and start moving higher. The longer it stays here the worse it looks.
