I’ve often talked about looking at your own portfolio to get a feel for the underlying market. Over the weekend I noticed a pattern repeating in a wide variety of the stocks I actively track that can provide an indication of where the market is likely to go next.
There are several stocks across almost every sector that are currently painting multi-month consolidation patterns. Many of these patterns consist of fairly wide and loose sideways or down patterns where the difference between peaks and valleys are in the 10% or more range. These wide consolidations show the growing uncertainty among investors as they have been reluctant to push a broad cross section of stocks to higher prices. At the same time many of the stocks aren’t being pushed substantially lower.
At this point the stocks are still mostly consolidating, but their performance over the next month or so will likely show the market’s hand. If they start to break higher the market will go with them. If they break down I suspect we’ll see the largest correction since 2012. As a result, this is one of the top 5 things I’m watching at the moment for clues about the future.
Below are a sampling of charts you should keep an eye on (in no particular order).