Bull Traps, Death Crosses and Bear Flags

This is the investing money quote from Brian Shannon weekend:

Bull markets punish discipline and reward conviction

Bear markets punish conviction and reward discipline.

The trick is to find the balance in both environments

I remember the good old days of last weekend when I wondered if we were all clear on this correction

On Monday the markets took off like a rocket, but by Friday chaos was back.

Price drives sentiment…so with these lower prices, the fear and anger rises.

I have looked through hundreds of charts from my favorite technicians and it was all bull traps, death crosses and bear flags. The fact that so many of these patterns are upon us is what matters.

Andrew Thrasher shared that as of yesterday, 41% of S&P 500 stocks were more than 20% below their 52-week high. At the low in 2016 this figure reached 57% & in 2011 it hit 65%. In 2008 it was north of 80%. More S&P stocks hit new 6-month lows yesterday than when the index was at its November low. Meaning breadth is continuing to weaken.

In english, stocks look weak and vulnerable.

Also published on Medium.