I read another one of those tweets the other day stating that no one knows where the market is going.

Fundamentals haven’t been a great guide lately.  So, it doesn’t bother me in the least when investing “experts” admit they don’t know where the market’s going.  Those guys, many of whom are clients, keep me in business.  But, it greatly annoys me when they insist that it can’t be known.

Technical analysis and chart patterns have been on fire for the past 9 months.  Today, they are sending a clear message.

Is it time to panic? In a word, no.  Not yet, at least.  S&P futures, USDJPY, CL and RB are all at or near the targets we set for them 3-4 weeks ago.  Let’s compare current charts with those from VIX Takes the Plunge on Oct 3:

USDJPY…

CL…

RB…

…ZN from Analog Details on Feb 7…

…and, SPX from back on Sep 27, in FOMC: Two out of Three Ain’t Bad:

Pebblereaders know that 2703 was chosen because it represented a pretty significant drop that would backtest a critical Fib that SPX has been dancing around for 9 months — the 2.24 Extension of the drop from 1576 in 2007 to 666 in 2009 — and, allow USDJPY, CL and RB to get where they needed to go.  They also know that a drop through 2703 (or 2688) would be an important warning of bigger drops to come.

On Oct 9 [see: Investing for Dummies] I put out such a warning that was supposed to be clear enough for anyone to read — even investing experts.  I understand that not everybody would sell out in order to avoid a 6% (so far) drop.  But, even buy and hold types could benefit from a little hedging.  If nothing else, they could have locked in the 7.3% YTD gain.

Let’s take an example of Dow components which is freaking people out this morning: 3M. MMM is currently off about 15% from its recent highs……but has solid Fib and channel support at 185 and intraday at 177ish.If it drops through 177, then there might be reason to panic.  But, for now, it is merely solidifying and protecting its gains by backtesting a former line of resistance.

Other major Dow components are at similarly important support.  So, when we examine whether it’s time to panic yet, it’s important to note that this support — whether for SPX, CL, RB, USDJPY, MMM, etc — is vitally important.  If it breaks down, by all means panic.

Now, on to today’s forecast.

continued for members…

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