Stocks: It's Decision Time!

Short term traders should be saying... it is decision time! What does that mean? Well, every now and than the market actually has no idea which way it should trend. It consolidates and digests information from the future through a discounting process. In other words, the market hits a road block and indecision between bulls and bears builds. Prices tend to consolidate into a point, what I usually call a pressure point, out of which either bulls or bears eventually must win. As prices tend to move in the path of least resistance... I guess one could say we are about to find out the direction of that path very shortly. Consider the following charts:

Triangles or decision points are now evident in many individual stocks, sectors and even the overall sector like the S&P 500. Many technical analysts are now waiting for the breakout, before they make future predictions. Many traders are now waiting for the breakout, so they can trade it and make some profits. S&P 500 is getting close to decision time and a lot of people smart traders must have their finger on the trigger...

Telecom ETF is pretty much in the same setup as well...

... and so is Oil Services ETF. It seems that decision time is close to approaching almost all sectors. The story is quite similar globally too, with the Australian ASX 200 and Brazilian Bovespa in a similar formations. On top of that Gold has now made a small triangle at the peak of its recent rally, without being able to make a directional decision over the last week or so. Palladium, an economically sensitive metal, also falls into this category as well. Finally, consider the two charts of Silver below:

Very similar to S&P 500 in terms of pressure building for a resolution in coming days...

... and if you apply simple moving averages to the price, once again a well defined technical triangle.

Summary

This post is very technical, something that I do not use very often. However, no one can deny that currently we have a similar setup across many asset classes and a breakout from these setups, that is confirmed across the board, could give us an important signal when it comes to the path of least resistance. Traders, especially, should keep their eye out on these setup and coming moves for opportunities. Personally, I will also be engaging into a few trades as well with minimal risk. Finally, a few words of wisdom. Don't be a hero trying to figure out which way the price will break out, even if you already know.

"In a narrow market, when prices are not getting anywhere to speak of but move within a narrow range, there is no sense in trying to anticipate what the next big movement is going to be. The thing to do is to watch the market, read the tape to determine the limits of the get nowhere prices, and make up your mind that you will not take an interest until the prices breaks through the limit in either direction." ~ Jesse Livermore