Marking up my charts for the start of the week, it occurred to me this one is strikingly, scarily similar in construction to $SPY. What chart is it? Astute observers will notice it cuts off around mid-September. So what was the outcome?
First came the collapse. Then a rebound. Dead cat bounce? Yes…no: the low’s held. A higher high! A higher low! Yet higher. And then a lower high (shriek); and a lower low. Soon, there have been several visits to both sides of the range in a grand consolidation that has frustrated, confounded and fatigued any and every trader taking a crack at it.
All this back-and-forth, strophe anti-strophe is the stuff of Greek tragedy, past and now also present (evidently; but no, the above is not an index/composite of Athens-listed stocks).
It is also the dizzying dance of US indices as they sidle violently from peak to trough. Here’s $SPY itself:
And the answer?
CAD/JPY, part II of II. Yet more proof – this time with a remarkable correlation to US equities that may or may not prove prescient in the next week or two – that a) anticipating a reversal is a fool’s game and b) all other things being equal, trends usually continue after a complex consolidation.
Just ask the bottom-tickers who were sucked into the rising wedge above 77 before CAD collapsed to 73.50 v. JPY in a little more than 24 hours.
The S&P consolidation is nearly complete, and with it part I of II: anything more than a week or two at the very most would be an outlier indeed. What will be the second act?
