Uncle Sam looms large. In his left hand, he holds a green chili pepper. But to his right, a much larger and spicier red chili pepper tries to get his attention.
The more capsaicin a chili pepper has the hotter it is. When consumed, our brains receive a message that we ate something hot. The hotter the pepper the faster our heart beats and the more we perspire. Endorphins get released.
The market ate a big ‘ole red hot chili pepper on Tuesday. Both the bulls and the bears must have experienced a rise in their heart rates. Bulls most likely perspired more than the bears did. However, I’m guessing everyone in the market saw an uptick in endorphins.
Uncle Sam may have seen the hot red chili pepper from his peripheral vision but in the photo above, he seems to ignore it. Therefore, he still offers us a smaller and milder green chili pepper to eat because Monday’s huge bullish engulfing pattern, although did not confirm on Tuesday, hasn’t necessarily failed either.
I love my Modern Family. They live in the USA. What are they eating- red or green? Or as they say in New Mexico, are they having both on the side (Christmas?)
Yesterday, the ETF for Biotechnology IBB had a classic bullish engulfing pattern (BEP). Defined in the archived 09/12/16 Daily, since IBB did not close above yesterday’s high, the BEP did not confirm.
Nevertheless, although that seems like a red chili, it could just as easily turn out to be green. IBB had an inside day (traded inside the range of the big BEP) and held the 200 DMA. So let’s just say that for now, Big Brother Biotechnology has both red and green on the side. Which one he reaches for will help us determine just how confident Uncle Sam is right now.
As for the rest of the Family, there are two sectors that remain in bullish phases-Semiconductors and Regional Banks.
Semiconductors touched the 50 DMA on Monday. Tuesday’s action looks less decisive up or down. If it breaks under Monday’s low, safe to say-red. Definitely red. A move over Friday’s high and in spite of the extreme sensation the red chili caused, longs will realize there’s been no permanent damage done.
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