This new meme that emerged last week confirms my view that many try to rationalize price action in the context of their expectations and that most of technical analysis is thinking in words.
The Nasdaq-100 ($NDX) fell about 4.5% from highest high to lowest low in the last two weeks. Some call this a crack in the bull market. Where is the crack exactly? Let us take a look at maximum percentage changes in two week periods with a negative overall return from close to close in NDX weekly chart since the bottom of the financial crisis:
There have been 79 occasions when NDX fell in a two week period from the close of the previous two week period but at the same time the change from highest high to lowest low was more than -4.4%. There is nothing unique about this pattern forming in a 433 week chart.
This new meme emerged last week and confirms my view that many analysts try to rationalize price action in the context of their expectations and that most of technical analysis is thinking in words.
Many, including this author, suspect the market is over-extended. But maybe is not a good idea to try to confirm our biases based on some normal price action behavior. This meme does not describe a serious signal of a crack in the bull market. It is highly probably that there will be a crack soon but this is not a signal for it. I fully understand the anger of many analysts when dealing with a market manipulated by central banks. However, this should even make them more careful since there are a few big players with large purchasing power that can impose a strong directional bias in this market.
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