The dominant pattern this week is a bearish rising wedge. As the chart shows, prices are tightening up, forming a Bollinger squeeze. Technically this pattern breaks out to the downside with a possible 8% drop from Friday’s close, on falling volume. We are not saying this will happen, but we want to be prepared with specific stops if it does.

The wedge could also break to the upside; however, it has to get through stubborn resistance at 2214 to fail in this way. As noted below, many other patterns are in triangles that have no up or down bias.

There is new leadership in industrials, healthcare, utilities, aerospace, and consumer discretionary funds. Financials and foreign funds have lost strength. The market will move sideways to slightly up as we move into the holidays. In January, earnings will dominate.

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