By John Galt
October 5, 2011 – 07:50 ET
If I were a betting man, wait a second I am one, I would wager we see a weak rally this morning at some point during the early session on weak volume. Then as the afternoon grinds on we begin to drift lower finishing slightly above yesterday’s close leaving a damning “Hanging Man” pattern for the markets to digest (See Investopedia explanation at this link).
This would be a perfect mirror to parallel the disaster of 2008 if you reflect on this chart below (click to enlarge/reduce):
The chart above demonstrates an almost perfect duplication thus far to this year as the markets cratered, reversed on a big volume move, stalled leaving a hammer, then the wipe out began. The problem for the U.S. markets this time is that the price levels were little bit more stable compared to this summer’s action so the decline in prices could be more severe and violent in October of this year. This chart of the action for the last six months through yesterday demonstrates that fact perfectly:
With the Federal Reserve displaying impotence and the political elites acting even more clueless than they did under Speaker Pelosi and the Zippy the Pinhead administration back in 2008, the formula for an equity disaster is in place. The moves in today’s trading might be boring, exciting, then boring again, as it could portend a very bleak move if the hammer appears as I think it will by the close of trading today.
Remember, this is more of a technical market now so any discussions about economic and market fundamentals is now what I like to call “white noise” as the economy is faltering severely and the intelligent big money crowd signaled that in June of this year but few paid attention to their actions as the markets floundered.