Thursday, January 6, 2011
There's not much point to making New Year's resolutions prior to Super Bowl Sunday.
Think about it… Super Bowl Sunday is a day for beer, tortilla chips and seven-layer dip, cigars, and yelling obscenities when your team makes a stupid play. Who wants to go on a diet, give up drinking, stop smoking, and cut out the foul language prior to that annual celebration of bad habits?
It just doesn't make sense. So I always wait until after the Super Bowl before getting to work on my resolutions. And it usually works out better.
Last year I resolved to try to be more open to the bullish side of the stock market. My natural inclination is to lean bearish. I don't trust the stock market. I suspect there's way too much manipulation going on. And it would be a nice change of pace to put on some of those rose-colored glasses everyone else is wearing and look at the market through bullish eyes.
But I couldn't do it last January. I looked at the market and this is what I saw…
This is a 60-minute chart of the S&P 500. It displays a long-term bearish rising wedge pattern with negative divergence on the MACD momentum indicator. It's a bearish chart pattern and almost always ends with a significant decline. I wrote about it a few times as it was developing, most notably here.
There was nothing bullish to see here. So I put off starting on my bullish New Year's resolution, just like I put off all the others, until after the Super Bowl.
Here's how the S&P 500 looked on Super Bowl Sunday…
Just as it was easier to start a diet once the gluttony of football season ended, it was far easier to stick with my bullish resolution once the bearish pattern of the rising wedge had played out.
And now, as we enter 2011, I'm once again finding myself wanting to try to be bullish. Let's face it… I've been cautious lately. I'm worried about risk. I suspect there's even more manipulation happening. I wish I could put on those rose-colored glasses everyone else is wearing.
But when I look at the market this is what I see…
Maybe I'll wait until after the Super Bowl to make this year's bullish resolution.
Best regards and good trading,
Jeff may be bearish, but he's got an idea on how to capitalize off Americans' weight loss resolutions. "Yes, weight loss is a big deal this time of year," he writes. "And it's big business for weight loss companies." Learn what companies Jeff's recommending here: The 2011 Weight Loss Trade.
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