As you can see from our Big Chart, we are once again possibly forming those "spitting cobra" patterns I warned you about back on May 31st, with the S&P at 1,654, when I said:
Big Chart – I don't like that pattern one bit. That's a spitting cobra pattern and usually they strike to the downside (and, before you ask, yes – I made that up). Still, very logical for the M to form down to the 50 dmas – especially as those 50s are right on major lines for the S&P, NYSE and the RUT and we know the Dow is too silly to worry about and the Nas is ruled by 10 stocks and 5 of them are AAPL so they also give funny readings but the 3 that are broad and hard to control are all lining up perfectly for a 2.5% drop.
The drop off came hard and fast after that and, less than a month later, the S&P was down to 1,560, down 5.7% on a slight overshoot, leading us to flip back to bullish. As I said last week to our Members in Chat:
Just because we are long-term bullish doesn't mean we have to always have bullish positions – even in companies we love. Sometimes, they just get overbought and we cash out and wait for the next pullback or sometimes, like NFLX or GOOG, they get so ridiculously expensive that we actually cash our longs and flip short on them.
I already warned our Members this morning that the pre-market rally in the Futurres was FAKE (because all the indexes were moving up almost identically, like a lazy person was trying to make an impression) and we had a nice 2nd opportunity to short (with very tight stops over the line) the S&P (/ES) at 1,750, the Nas (/NQ) at 3,350, the Dow (/YM) at 15,400 and we're still wating for the RUT (/TF) to cross 1,110, back to the channel that led Wombat to make this comment yesterday:
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