A little over a week ago I posited the following observation, it came as I was looking at the Russell 2000™. From my "technical eye", I saw what I believed to be a pattern that is very well-known (as in has better odds) to resolving in certain manners. Below is that observation:
Over the ensuing days, it appeared that my original observation may be playing out, for the pattern seemed to be resolving much like it is known to do. Then - everything took off, once again. The catalyst? Let's go with an ant made it across a busy road during rush-hour traffic in Boston. That's about a good a reason (and has more logic!) as any compared to what I've heard across the mainstream business/financial media.
However, as I was perusing the "markets" this morning, I looked at the same index using the same time intervals as the above chart and, once again, this pattern caught my eye. The issue is - it's far bigger. Here's what I'm speaking to…
What I've done is annotate where my original observations were, what happened, and where we are now.
The issue here is two-fold.
First: If this pattern resolves in the manner that I first described, the drop will be far more precipitous, as well as volatile.
Second: A drop of this size and scope happening, along with what is happening elsewhere, will exacerbate any and all markets (think Emerging Markets for just one).
The Russell, much like the NASDAQ™ is the last bastion for any remaining "hot" or "chasing higher" money still remaining. When these run out of steam, that's when the real pressure to the rest of the "markets" may resume.
Will it happen? Who knows. But that doesn't mean it's not worth paying attention to and look for clues beforehand. As always…
We shall see.