Massive Bearish Wedge On Wkly Nasdaq

Oil has gotten my attention this week as it has broken out to new multi-yr highs and given the tensions that are occuring in the middle east it’s likely to continue higher. Now I’m not one to trade off of macroeconomics, but my scan results this week are supporting a move higher in energy stocks and my timing signal is pointing to a market correction. It could be 5% or it could be 25%…I have no target and I’ll play it as it develops – or doesn’t develop.

The long term Nasdaq chart below shows that we have a lot of room to fall, potentially down to the 2550 area. Never mind the smaller bearish wedge that was forming on the Nasdaq, we have a much larger one that clearly shows how strong this market has been without stopping to consolidate it’s gains. Below I included Faber’s views on a potential correction from an interview this week as it supports my bearish thesis, although I wouldn’t say he’s as bearish as he normally is as QE3 should provide a floor for this market to spring higher down the road.

Faber on Stocks from LewRockwell

I’m not ultra-bearish on equities. I think they will now correct because the market is way over bought. And, so we can easily have a correction of 10% – 15%. As soon as the markets drops, say, 15%–20%, QE3 will come into play. And all that is favourable for silver and gold. … [visit site to read more]

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