Note: Since the market has given up a 60+ point gain this morning and is now down 20 points, this update is timely enough to send out a little early today. - Allan
On Tuesday the Dow Jones Industrial Average rose just shy of 200 points. That is no matter how you slice it a good day for stocks and a bullish omen for the days and week ahead.
Or is it?
This is why I like pattern recognition so much, it takes a day like Tuesday and puts a question mark at the end of its bullish narrative.
Most of the market strength of the past six months has come from the FANG basket: Facebook, Apple, Netflix and Google. Year-to-date, while the S&P 500 is up 9%, the FANG's are up a group average of about 26%. Note that part of that 9% gain in the S&P includes the 26% gain in FANG, so the disparity in performance is even greater than it seems.
Let's take a look at the FANG stocks from a pattern recognition point of view, just how bullish was Tuesday's rally?
Both AAPL and FB are still well below their respective late July all time highs. Looking at NFLX and GOOGL below, we see the same pattern:
Two more and my point will be taken, TSLA and the DOW:
There was a lot of hoopla surrounding the rally on Tuesday, the day after the Solar Eclipse and the session before President Trump's much touted Phoenix speech. There are always cross-currents In the market and never any certainties, blue trend lines or not. But looking at these charts does add perspective to a 200 point Dow day, and maybe should temper a little of the bullishness that oozed out of the financial media on the big up day.
GBTC has now DOUBLED since the July 24th Buy Signal. A $300+ stock is acting like a single digit option.
We are in an Intermediate Term Sell, and so we will be until prices say otherwise. So we tread gingerly into the September-October seasonally weak period.
Next scheduled Update: Weekend Update (Saturday)