Do You Smell a Top, or Just Kona Gold?

by Rick Ackerman

I’d be lying if I told you I smell a top. That would be like noticing a fart in a coffee roasting plant. With exuberant expectations of stimulus until kingdom come, the aroma of Kona dark is all that investors detect when they sniff the air for the scent of trouble. After all, what could possibly go wrong? Even at full-tilt war, Democrats and Republicans still agree on one thing — i.e., that the money spigot must remain open no matter what. They differ only as to a timetable and how many trillions of dollars should be force-fed into the economy in the next round. Meanwhile, companies are so flush with cash that they don’t know what to do with it — other than the obvious: buy back their own shares. And now comes a vaccine said to render Covid-19 harmless in 94% of those who get two shots spaced weeks apart.

All this aside, I am not relying on my sense of smell — which is to say, my instincts — to warn of trouble just ahead. However, I do see distinctive topping patterns in the charts of no fewer than three important trading/investment vehicles that I track closely.

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