Calling that formation on the NAZ a three peaks and a domed house is completely premature. The dome of the domed house probably takes at least two months to form, something many of us might call a rolling top. You can't call a domed house when an index is at all time highs. It's wishful thinking by people who missed the parade and are now hoping for doom upon those who are still in. How can a person see something that isn't there? We are all subjective in what we do, by definition, but we should try as hard as possible to find some objectivity in our analysis. To see something that is not there is a betrayal of analysis and is a betrayal of oneself.
There is a tendency to find one pet indicator that is our end all and be all, and when we see it, or worse, when we think we see it, we become deaf, dumb and blind to everything else. I did this in mid-February when the spx was in the 2330 range, one indicator that has been helpful was giving a sell, so instead of paying attention to the momentum, the expiration week, and everything else, I just stepped up and decided enough was enough, shorted the market, and proceeded to lose some valuable upside.
We call it technical analysis for a reason: it is supposed to be objective analysis. You test it against what has gone before and hope that you can find something in the past that is similar, that had consistent results, and then maybe you get a repeat. But it requires analysis, not wishful thinking and not imposing our bias upon what we see.
On a little different subject, since the market pretty much either goes up or down (or sideways for a while, but eventually, up or down) we have a 50/50 shot (less the house vigorish), which is pretty good odds. When we get it right, we often attribute it to our skill in reading our tea leaves. But, speaking for myself, I'm sure that often I get it right just because I have a 50/50 shot and sometimes, it's not because of my good analysis, it's just that I'm lucky, or that I am rolling along with a market that doesn't do anything wrong, so I let it carry me. I have mentioned how I wish I had more in the NAZ, but the fact I am in it doesn't make me smart (or stupid because I don't have more), I'm just letting it carry me along at this point. I never expected the NAZ to rally like it has been doing. Many times my success in the market has been pure serendipity, not genius, and sooner or later, normally sooner, the market will hand me my hat.( And it could be tomorrow. Today was very disappointing in the spx, losing half the gain. All I have to hang my hat on here, continuing the analogy I guess, is that the momentum is still okay, the short and mid-term indicators are not overbought, we were up today, NAZ up big, so we are merely dealing with the supply of stock that has come in at the round numbers of 2400 and 21,000 and once those sellers are cleared out, we can rally strongly in the spx and djia as well.) Some of our beliefs about the market are nothing more than superstition: we saw some correlation once, and then came to belief that correlation was causation. But remember, correlation is NOT causation. Just because you did a rain dance twice and it rained does not mean your dance caused it to rain; you just got lucky that the rains came when you were hoping for them.
