Toppy Tuesday – Return of the Spitting Cobra

As you can see on our Big Chart, we are beginning to form a "Spitting Cobra" pattern and those generally resolve to the downside – much like it did in mid-January, when I warned you about it on 1/15, a week before we began a 1,000-point drop on the Dow.  At the time, I said:

Speaking of reality – we're still waiting for the S&P to confirm the bull is back by popping over 1,850 again and the Dow is pathetic under 16,400 (our 2.5% line).  They NYSE is over the 2.5% line at 10,250 so, IF the rally is real, the Dow should have no trouble making that leap today.  If not, we'll, these Spitting Cobra chart patterns can be very tricky – you never know when they are going to strike! 

We're still early in the formation but the fact that the Dow is STILL stuck at 16,400 does not bode well and, if the S&P fails 1,850 and the NYSE fails 10,250 – it would certainly be time to brace yourself for another good drop – especially if you haven't already heeded my call to get back to cash at what still seems like a market top.  

What's really bothering me more than anything is that SPY volume yesterday was 71.4M, about what we get on a half-day holiday (see Dave Fry's chart).  On the NYSE, only 1.07Bn shares were bought to the upside but they were swamped by 1.9Bn shares of decliners.  This indicates that the Big Boys are trying to dump shares en masse, but simply can't find any buyers.  

Maybe I'm wrong.  Maybe we shouldn't worry about China's defaulting bonds, or the missing plane, or the Ukraine, or Japan's slowing economy, or Europe's disappointing numbers, or declining US Retail Sales or the sky-high valuations of equities… Maybe.  And, if not, we can use our cash to buy more stuff.  

As you can see from our February Trade Review, we were 39 and 7 (84% accurate) on our picks in the first week and 35 and 4 (89% accurate) in

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