They say a blizzard starts with a single snowflake that fits on the end of your finger.
Fundamentals work. And having been influenced by Sir John Templeton for over 25 years, that’s a message I can’t ignore. Of late, the fundamentals sure seem to be sending a concerning message. Here is a chart I made in early July when the Dow was testing the 2-year falling channel support at (2) in the chart below.
On the other hand, did the first positive TA snowflake start falling over a month ago? High yields first started sending a positive message and the Dow held at falling channel support, the technicals have been sharing that something different could be in the making.
Here is a series of positive snowflakes since the date of the twins chart:
- Nasdaq 100: Playing a Bounce (July 6)
- Revisiting the High-Yield-Fund Indicator (July 15)
- Einstein H&S? Yes. NDX H&S? Still in Play. (July 20)
- Green Shoots for Copper July 23
- Fundamentals or Technicals? (July 26)
- Joe Friday: “Just the Facts” (July 30)
- Death (of the Banks) Been Exaggerated? (July 29)
- Triplets at Play? (July 30)
The Technical Analysis Bottom Line
Positives that started over a month ago: High yields expressing strength, Nasdaq 100 held at its neckline, Copper and Base metals breaking resistance, numerous indexes look to have created “inverse head & shoulders” patterns (500, Russell, NDX and Banks).
NOW the key TA is the NECKLINE of the 500, Russell and NDX (see Triplets at Play). The neckline has to be taken out for these positives to continue.
I’ll end this retrospective with a look at the Dow after today’s close — 800 points higher than it was in the chart above.