A Savage Market as 2018 Winds Down

I have some traveling to do today for Thanksgiving, which is likely to see me staying in full cash through the holiday. While the selling may seem overdone, the reality is that bulls have failed miserably in terms of presenting themselves with any sort of conviction at fairly big technical levels, such as 2,700 on the S&P 500 Index. 

Indeed, it is markets like these which expose the flaws in "new age" technical analysis. While old school chartists seem to be at the center of many jokes these days, ridiculed for being obsolete, the time-tested concepts about using price action to manage and define your risk as objectively as possible still is very much relevant.

The new age technical-types love to try to front-run rallies off support without any regard for the idea that "support" is only a place of note on a chart to observe more closely to see whether buyers step in or not, in lieu of a place to rush in and bet the ranch on a bounce. The new age likes to fade sentiment on a daily basis and look for breakdowns to buy. 

But, again, in this type of tape all of those exotic strategies tend to come apart at the seams and are exposed for their genuine danger to both capital and confidence. 

One example of this discussion would be the weekly chart for Square, a payment processing leader and one of the more prominent tech stocks this year. SQ is finally correcting and doing so in a major way. As you can see with the horizontal light blue line, the stock is back down to prior highs from the spring months of this year. Square looks like it *ought* to hold this level as support, but so far we have not seem any actual evidence of stabilization in the form of buyers stepping in for at least a day or two with a decent uptick in buy volume and intraday dips bought. 

Until that happens, or some variation of it, we must acknowledge that this correction is decidedly old school and breaks character from the new school type of V-shaped bounces and false breakdowns we saw many times over the years in this bull run.

Old school corrections compel us to adopt old school concepts like protecting capital and exuding patience while many traders unfortunately do not financially survive this market in the end.