There is a lot of talk about a “pennant” formation in the index charts. Since I can only stand hearing so much technical analysis bullshit, I have reached my limit. I rarely discuss detailed technical analysis with anyone or write about it on this blog. It’s just not something I like to do. I make exceptions when I feel that the media is intentionally or unintentionally misleading investors. First of all, non-technicians should shut up. Appearing on CNBC or Bloomberg does not mean they are experts on anything, much less technical analysis.

As it relates to the pennant formation, there are two types - bullish and bearish pennants. Listening to many of the supposed experts lately, you might be led to believe that all pennants are bullish. That is not the case. Typically, these are continuation patterns meaning that they follow the preceding trend. Expecting that this is a reversal pattern or something you see at the top or bottom of a trend is not a good assumption. If the market action from January 22nd until today truly is a pennant, then I am concerned. Remember the preceding trend over the past several months is down so a continuation of that is also down. Please read this article on bearish pennants and then read this one on bullish pennants. You decide which one is more relevant to the way today’s index charts look.