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Monday, October 21, 2019

Market Update 10/21/2019 - Broadening Top Patterns & Contrarian Indicators

I was going to blog on on Dennis Gartman - our favorite contrarian indicator - but then I started charting, and found all these broadening top patterns, and expanding triangle patterns, so I thought I'd tie it all in together.  

You often see the unexpected, on Options Expiration, and Friday was no exception.  Looks like everybody lost. The Bulls couldn't hold onto the $SPX 3000 level, and the bears who no doubt bought the 3000 calls in order to hedge their short bets - also didn't get paid....

The market rolled over about the time Dennis Gartman came on Fox Business, and started talking about how he wasn't going to take profits, because he believes we're still in a bull market, because the price action is moving from the, "lower left hand of the chart, to the upper right....", when in actuality, the market has been trading sideways for months.   

The pattern we were watching on the 15 min. chart has changed from an upturned triangle, to what looks like a broadening top pattern, on a 1 min. chart.

 $SPX - st target remains 3015, but it could fall short in a weak market, or overshoot... in a short squeeze. Triangles are funny; the targets are hard to pin down, as stocks continue to whip-saw on higher volatility. I would actually call this a wave B triangle, because I think this is where we are in the wave count, but you can also see this type of triangle in an extended wave 5, as I'll show you on the bowing chart below.

$BA - Boeing finally rolls over, and you see 2 different types of triangles on the chart. 1. The broadening top in an extended wave 5 (a major topping pattern). 2. The smaller expanding triangle pattern (seen in purple), which I believe is a bearish wave A triangle. 

That fact that Boeing build a defective aircraft, and then lied to investors, to try to cover it up. Is this Trump's fault?  

I think Boeing will get a bounce here, so I wouldn't pile on, if you already missed the boat on Friday. Still I think it's going to $300, just in time for the holidays. 

My next favorite contrarian indicator is Jim Cramer!

Last week, I was watching Fast Money, and was too lazy to get up and change the channel, and so I caught a little Mad Money, and I was stunned by the snake-oil he was peddling. Not As Bad As Feared (NABAF). 1 It doesn't have a nice ring to it. 2. It sounds like a contrarian view. a. Things are bad. 2. The bulls are fearful. 3. Stocks can go up on earnings anyhow. Doesn't sound bullish to be at all!

$HON - Cramer liked Honeywell earnings, and says "it's going higher"!

Fast Money can also be a good contrarian indicator, but not everybody.... I even learn something once in a while, like on Fridays show when they were talking about how heavily weighted healthcare stocks are, in the $SPX. As it turned out, it's the #2 most heavily weighted sector....  I haven't looked at Healthcare in a while, but I plan to.

One stock I don't think they're right on is Caterpillar. If It's no longer trending up, I don't care about it's valuation.

$CAT - here you see 2 triangle patterns, and down-turned channel or wedge.

$MSFT - Microsoft reports this week, and they like that one, because it continues to work. I've wrong on Microsoft before, and still don't like it, for obvious reasons. Watch the 50 day ma. This kind of growth, is not sustainable. The bulls are delusional

That's all the time I got.
See you in the public charts area,

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