S&P 500 And Nasdaq Frightening Double ‘Double Top’

Purists say there is no signal from the past that will affect the price of the future in equity markets. This should be more true of indices which have many random components all noisily gyrating together. Yet most of us instinctively see that charts are not random. We are indeed often “fooled by randomness” as Nassim Nicholas Taleb’s best seller maintains, but the markets are not perfectly random and these days, much less random than they were when they were allowed to get on and do their thing. Also markets go through a spectrum of randomness, from utterly, to mostly, to mainly random and on rare occasions like a repricing on news they lose most of their randomness entirely for a time.

My theory is simple: if people know a charting theory and watch out for it in a big way, it won’t work or even appear, but the minute you start looking at things no one else cares to examine or simply can’t because they don’t have the tools or inclination, then non-randomness can be much in view. One of those things not often regarded in stocks and indices is the long term.