Gary Savage has this chart up on his blog. Essentially the argument is: this pattern is different from the patterns that created short term buying opportunities, viz, buy-the-dip. That this pattern suggests a deeper and more prolonged pullback.

Purely on a pattern basis I agree. The problem is of course that if Bernanke comes out and says something positive with regards to QE on Wednesday, then a chart pattern will be invalidated within a couple of minutes.

I have in this week’s newsletter addressed specifically market expectations with regard to the Fed., so for the moment I’ll leave that topic.

If however your thing is chart based trading then I agree with Le Savage, things for common stocks do not look that promising at the moment and buying this dip is probably not the best choice.

Blogoland is similarly conflicted. You can find an opinion supporting either side quite easily and both have a case to make. Which is why I remain firmly market neutral. Although I have an opinion based on COT numbers, Fed Funds numbers and Put/Call ratios, I remain market neutral as that is the most prudent position currently. I would actually like to see a deep pullback that knocks a few market participants out of the game.