Update on COMP: Mar 23, 2015

When we last reviewed COMP on Oct 14, 2014, it had flouted so many chart patterns and Fibonacci retracements that the chart was as clear as mud.  Note from the comments that we had already taken to putting quotation marks around the word “market” — a very good indication of our frame of mind at the time.

The close-up reveals the Sep highs didn’t quite reach the .886, and the latest low didn’t quite reach the .618.  Either could still be in play, depending on the overall “market’s” intentions.

2014-10-14-COMP daily 1300

This was nothing new.  The long-term chart contains many such breaks with charting convention.  Note the general absence of reversals at major Fib levels.

2015-0323 COMP wkly 1300

The last time it had done anything very conventional, it bounced at the SMA200 on Apr 15, 2014 — which happened to line up nicely with a trend line from the two previous lows.

So, we paid attention when six months later — on Oct 13 — it closed beneath the SMA200.  We really sat up and paid attention when it continued to plunge below the SMA200 and the trend line from 2009.

We weren’t the only ones.  Fed president Jim Bullard got a frantic call from someone who informed him of the bearish developments and suggested he get himself on TV pronto — which he did.

At 1:30 into the clip above, he suggests the Fed might pause the taper if the “inflation expectations” — wink, wink — didn’t remain near their target.  That’s all the “market” needed to hear.

2015-0323 COMP daily 1300Three sessions later, the plunge below the 5+ year TL was forgotten and COMP shot above the .886 to new highs.

Since then, it has constructed a TL connecting four distinct highs that reaches the former all-time high around mid-April.  It has also tested the SMA100 four times, holding even when it closed below it.

The rising wedge is fairly well-formed.  But, we wouldn’t bet on it playing out.  Consider that the last two highs have slightly exceeded a TL (solid red, above) connecting the much more important highs of 2004 and 2007.

Of all the charts out there, COMP has been one of the most dysfunctional.  This might or might not change anytime soon.  It will depend completely on the extent to which Bullard and his central banking homies leave the “markets” alone — if ever.

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