Quick Take: The Tension on the Tape Builds

By Andrew Nyquist
So the saying goes, “the tension on the tape” is thick.  Evidence of this lies in the aforementioned multi-week pennant formation on the S&P 500.  This formation illustrates the extent to which the Bulls and Bears are jockeying for position.  The sheer size and scope of this formation is sending a message to market participants that the next move should be both sizeable and volatile.

My advice to traders and active investors would be to play small and quick.  I would also be on the lookout for a “fakeout” — the thicker the tension, the greater the odds of a quick misdirection move.  For instance, a quick move out of the pennant formation in either way that quickly reverses back through the pennant in the opposite direction.

However, a sustained break higher would entertain a run over 1300 on the S&P 500 into year end, while a break lower may signal a sharp pullback and retest of the lows.

Market Charts

You can learn a lot from watching.


Your comments and emails are welcome.  Readers can contact me directly at andrew@seeitmarket.com or follow me on Twitter on @andrewnyquist.  For current news and updates, be sure to “Like” See It Market on Facebook.  Thank you.

No positions in any of the securities mentioned at time of publication.

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.

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