Knees and Toes

Head and shoulders, knees and toes, knees and toes..........
-- children's song

Is every pundit calling the current market a head-and-shoulders pattern? I recall the same in 2009 and the market took off to the sky.  And even earlier this year, there was talk in the charting community of an inverse head-and-shoulders with the low (head) comprising of the Japan tsunami low.  That one did not work either.

Today's column was on said pattern as it spans the entire 2011 trading. In the Dow, no pattern. In the Nasdaq-100 a possible expanding triangle.

In the Russell 2000 a rounded top. Or, just a trading range.  Most of them have bearish implications but none of them have completed at this time.

But I stand by my view that the short-term is weak and the longer-term is also weak.  As I wrote in Barron's today, we just have to wait for the market to confirm the latter.

Here is the industrial ETF chart following the weak durable goods report.

The bears have the ball, that is for sure. But some positive news from Barnum and Bailey, er, Senate and House of Representatives could send an over sold and under loved market skyward. 

...and eyes and ears and mouth and nose. Head and shoulders, knees and toes, knees and toes.