Is that a megaphone top forming up on the SP 500 March futures chart? Or is the Fed just glad to keep fueling this glorious rally for freedom?
Formations like this are fun to watch as potential indicators, but they really do not work until they 'work.'
That is, they are not active until activated by a clean trend break in one direction or the other. This is true of all chart formations that represent a possibility that can become more or less probable over time, depending on which way things develop.
Charts don't do anything. They merely reflect the underlying reality in an easier to grasp representation, for those with that sort of visual inclination. They are a roadmap, not the road.
Right now 'the market wants to go up,' meaning lots of market participants want it to go up, want to take it up and keep squeezing the bears who piled on ahead of the fiscal cliff and sequestration.
My interpretation of this 'megaphone' is that the market is undecided about the viability of the rally continuing given the impasse in Washington and the impending battle of the budget over sequestration which should happen in about four or five weeks. And despite the recent happy talk, the European situation remains volatile, and the currency war continues.
If you want to play a formation like this, thenwait for it, and give up bragging rights and save yourself a loss from being 'too early' or just plain wrong.
There is a word for those who bet against the market on the if-come. They are called 'broke,' and spend most of their time badgering people on chat boards. They are often wrong, but rarely in doubt.
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