As you know, pattern recognition is one of the main practices that we preach here. It's one of the primary reasons I've had some success with my technical analysis over the years. Well, do I ever have a doozy for you this time.
My buddy, Trader Dan, (https://traderdannorcini.blogspot.com/) has some fancy-schmancy TA tools. He uses those applications to draw some of the coolest charts you'll ever see. Every once in a while, he'll post one that I'll save for posterity, with the idea that it may be a useful tool to refer back to in the future. One such chart was a daily chart of the Continuous Commodity Index (CCI) that he posted on September 6. The chart had the appearance of something that could go up OR down and so I saved it to my hard drive. Here it is:
Note that, after a steep selloff, the CCI had been essentially range-bound for a while. Sure, it looked like there was resistance around 663 but it didn't necessarily look like the bottom was about to drop out, either.
With this buried in the deep recesses of my turd-like brain, I stumbled upon this daily chart of the ES ( the mini S&P futures contract) earlier today. Take a good, long look:
Note here that, with the addition of trendlines similar to the lines Dan added to his CCI chart, we get an S&P chart that looks startlingly familiar.
"Well, that's interesting", you say. "So what"? I'll tell you what...Trader Dan posted yesterday an updated CCI chart that shows the action since 9/6. Take a deep breath and look below:
YIKES! Let's just say that you've been officially warned.
Now, does past performance ever equal future results? Of course not. However, if a lack of current QE and a global economic slowdown can be blamed for the current plunge in the CCI, why wouldn't those same fundamentals eventually have an identical effect on the equity market?
This is definitely something to watch as we move through this month. TF