Patterns Still Matter

Well, in spite of its reputation as a “crash month” (1929, 1987, 1990, 2008 – – and that’s just off the top of my head!) October has certainly sucked out loud for equity bears like me. Wednesday was a breath of fresh air, since I was not only up, but I was up four times as much as the S&P was down. Thursday, however, completely undid that progress, which is frustrating, to put it kindly. It makes me wonder what all this hard work is for if we can’t get a persistent downtrend in place.

In spite of my bearishness, I don’t short everything just because I think it’s “expensive”. On the contrary, I am completely patterns-based. When I looked at GOOGL, AMZN, and MSFT before earnings were announced, my temptation to short them was exactly zero. As I said on my Tastytrade show before the closing bell, there was “nothing bearish” about any of them. Good thing, too, because as you know by now, they are all exploding upward, and – – just in case they needed it – – Page, Brin, and Bezos are now $8 billion richer than they were before the closing bell.

There are, however, patterns which still look bearish, in spite of the 2300 point rise (!!!!!!!) in the Dow over the past couple of months. Below is just a sampling of the kinds of charts I’ve been offering and showing that, central bankers be damned, patterns still really do matter, and they can give you an edge. There’s Arctic Cat……

Community Health……..

And sports retailer Cabela’s……….

It’s quite evident that tomorrow is going to be a blowout day on the NASDAQ (and, ummm, could someone remind me of why we need all this global “intervention” and “accommodation” with equities ripping higher like this, and corporations obviously making money hand over fist?) I’m going to stick to the proverbial knitting, however, and continue to try to smoke out patterns, like those above, that can defy the odds.