Circular Financing, Circular Patterns

The Alger AI Enablers & Adopters ETF (ALAI), below on the daily chart, is composed of fifty-seven holdings, with the heaviest weights naturally assigned to AI monsters and market leaders like NVDA MSFT AMZN APP META GOOG and TSM. 

As you can see we are looking at a potentially game-changing bearish head and shoulders topping pattern, spanning several months. The neckline is sloping down, which often a serves as a higher probability indication that the pattern has a better chance of working.

That said, I recognize many of you are rolling your eyes right now, as we have seen so many failed bearish patterns for years as the market continued to melt higher regardless of both bearish technicals and/or news flow, on top of Lord know what else has been apparently bearish. 

Such is a market during a melt-up bubble, however. 

And just today there is Micron popping hard after earnings giving AI bulls another reason to expect a fresh leg higher. 

But today's action is still well below yesterday's highs on ALAI, and just below them on the QQQ and even SMH ETFs. We have a Bank of Japan rate hike likely coming tonight, something the market continues to essentially blow off as an actual risk. Furthermore, the IWM small caps are back below that key $250, finding some resistance there today. 

Overall, today's bounce galvanized bulls on top of President Trump's de facto pep rally at the White House last minute, as there was a conspicuous lack of saber-rattling against Venezuela. However, the Micron-led rally has not confirmed any real bullish technical progress yet. 

Finally, the actual "Santa Rally" period (yes, it is a real thing on Wall Street in terms of the dates) does not officially begin until the the final five trading days of this calendar year.