In terms of points, yesterday the S&P 500 jumped 54 points, and the Nasdaq jumped 270 points. Today, the S&P 500 plunged 123 points and the Nasdaq plunged 453 points. Worse, from the peak frenzy 30 minutes before the close yesterday to the close today, the Nasdaq plunged 512 points. They’re forming really crappy charts, with lower highs, and lower lows (data via YCharts).
It’s now the second time in a row that this happened: Two big-fat rate hikes and two sucker rallies that people chased higher, while shorts were panicking and buying hand over fist to cover their short positions. And the next day, it all blows up.
But now that the whole entire world knows about the J-Pow pattern, someone might think, if the whole world knows it and plans on doing the same thing, it’s going to get jinxed and blow up and rip people’s faces off. And so someone might think, OK, I’m going to go contrarian and do the opposite, so when the pattern blows up, I’ll make a bunch of money.
And now, that the whole world knows that the contrarian approach is the thing to do, everyone will do the contrarian trade and it’ll get jinxed and blow up and rip everyone’s face off, and we’re back to square one of how to trade the J-Pow pattern.Morning After J-Pow, Second Time in a Row | Wolf Street