The problem with bubbles is you have to decide whether to look
like an idiot before they peak, or look like an idiot after they peak.
John Hussman

The Nikkei has been repeating a clear pattern for many months, now.  Each dip to the neckline of a large H&S Pattern has bounced back to a falling trend line — typically to whatever Fib level intersected with the TL.

Monday, NKD bounced off the neckline again.  It got a great boost from USDJPY’s reversal off the SMA200.  And, today, it has retraced .886 of its last decline.

Why does it matter?  continued for members…

It just happens to coincide with ES’s .886 retracement (1894) of its last decline.

If the Bat Pattern were to play out, there is a decent looking downside target at the SMA100 (the yellow line, white dot.)

Of course, this would mean a decline of some 55 points — which, I agree, seems far-fetched in this market.  Still, it’s probably worth a shot.  Interestingly, tomorrow is one of the few days this month with no POMO.

If it doesn’t happen, it was a pretty good fake-out.  If it does, 55 points in the next few days would be a nifty little shorting opportunity.  Naturally, it would probably mean going short over the holiday weekend — the equivalent of juggling chainsaws while blindfolded and walking a tightrope over a pool of piranhas.

And, just for grins, if the “market” were to really start operating without manipulation again, 1744 would make for a nice target.

Update: EOD

Strange close.  ES reached its .886, but SPX didn’t.  They both sold off at the close, which was really creepy after being up so much during the day.  The really creepy part was no USDJPY ramp and VIX bang in the last 10 minutes.  In fact, USDJPY sold off between 3:45-4:00pm — which is practically unheard of.

Apparently HP early-released truly awful earnings 30-minutes early. Missed on revenues, earnings, etc. and are apparently laying off up to 50,000 employees (ZH article here.)