The Dow Jones is carving out a head and shoulder pattern on it’s 60 min chart with the neckline being around 10600. Now it’ll be just like the market to act like it’s going to collapse and then rally 1000 points…but I’m not taking this pattern lightly. For the most part I’m on the sidelines until we break out of the mini range that we’re in as my timing signal has been whipsawed far too many times to count. I did pick up CORN near the end of the day because I like the weekly chart and feel this recent downturn is just about over.

The Put/Call Ratio (2nd chart) shows that volatility is coming down out of the market..that’s the good news. The bad news is that where it is right now is near the upward sloping trendline that volatility has been picking up for most of this year.

Then the real question is are we going to sell off and bounce off the trend line with an increase in volatility? Or will we fool the bears who are anticipating this pattern playing out and slowly grind higher as volatility exits the market.

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2 Responses to “Calm Before The Storm?”

  1. Richard Says:

    This chart certainly looks like a whipsaw . As you say calm before the storm.
    With this sort of oscillation on quite a large scale I’d say its going to perform
    some sort of equally rapid larger oscillate . Its like a heart monitor .
    I agree that a grind higher could occur , the wall of worry . Just a little difficult
    to see such a pulse being slowed down without a burst of energy . Going to
    need quite a braking system .
    Looks a little or rather quite a lot like soyabeans from the beginning of the year
    but on a different time scale .

  2. Richard Says:

    I’d put a tightish trailing stop on that Corn.
    you could well be correct , however
    on intraday it looks like a bear flag.
    If it starts going through 605/595 it
    could rapidly carry on south to
    produce the full cascade .

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