Longtime readers know that I am much more focused on indicators than I am on patterns on the chart. Every once in a while we'll see a pattern that calls to us, like the transports or the utes, most recently. But the indicators have to be in the right place for that.
Right now, the indicators are short-term overbought and a little bit giddy as of Monday's close. The giddiness subsided somewhat with Tuesday's trading. The other indicators are still trending upward for now. So basically nothing has changed.
That's why I wanted to take a look at some charts, because as we take a gander at them, I think you can see that most of them are the definition of "charts at resistance."
Look at the transports, with the tagging of 16,000. They have been up for nine of the last 11 trading days, which makes them overbought and they are now at resistance. And recall that blue line I drew in weeks ago, well breaking over that gave us a measured target of 16,000. A pullback would be healthy, wouldn't it?
And the utes, which I warmed up to in early October, as well. Recently, I showed that resistance at 930 (black line). In addition, that little bottom, represented by the blue line, measures to -- you guessed it -- 930. Just as an aside, we measure from the top of the pattern, in this case 900, and subtract the bottom of the pattern (870) to get 30. We then add 30 on to the breakout (900) to get the target of 930. The transports would be 15,000 minus 14,000 = 1,000, then 1,000+15,000=16,000. This is very simple math. I can't even give you a reason why it works, but it does.
But we also have the SOX. Here's a group that hasn't gone anywhere in months. Sure, it's higher than it was in the spring, but it's not terribly impressive. And now the SOX finds itself nearing the top of its range. I suppose it can break out if it wants to, but if it did, wouldn't it have done so already? I say it is at or near resistance.
Even something like bitcoin has reached a resistance line.
It's as though everywhere you look there are charts at resistance. There aren't many at support after this recent rally. The biotechs (according to the exchange-traded fund XBI (XBI) ) are flat on their back right now. If XBI can get going, that would be impressive -- especially if that blue line can hold.
In any event, I don't see much change in the indicators. I continue to think we are likely to see a lot of chop coming our way. The sort of chop where, when the market is up, you think it will never go down and when it is down, you think it is going down forever. That should serve to increase the volatility, but until the indicators change, that seems to be what is in store for us.