Click on Chart to EnlargeA point I've always mentioned on this blog is that when a major uptrend ends, there is often a larger and faster decline than any in the uptrend. That is logical confirmation that a larger degree move is occurring. So the things to look for are larger, faster, and (eventually) more time-consuming moves than any prior corrections in the uptrend.
That correction last spring was dramatic, but IF this is a bull market high, it is reasonable to expect a larger and faster decline than that from the highs. That is hard to believe in advance that that could happen, but it is reasonable.
Several commodity markets are breaking down and suggest major highs are in. This adds evidence to the idea that we may be in the early stages of a general liquidity contraction and move to stronger US Dollar and weaker stocks and commodities.
Click on Chart to Enlarge Today oil formed a wide range bar. The USO etf made a super high volume bearish engulfing candlestick pattern and a bearish outside bar pattern. This occurred at a prior resistance swing high, in a zone of prior unfilled large gap down which may be a reversal zone after retracement, and also it formed at the upper Bollinger Band in some what awkward configuration.
So with the high profile news out and huge volume, we can infer that the larger players are seeing fit to unload oil at this point in time, presumably to less savy late comers. Looks like a market to get out of and or to possibly short with a well thought out strategy.
Also the GLD gold ETF, formed a bearish engulfing pattern at the upper Bollinger Band and in the zone of prior highs which may be resistance. A reversal in these markets portends a turn up in the US dollar and a decline in commodities and likely stocks as well.
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