Russell 2000 ETF -IWM -Daily -Raising a LOT of FLAGS here

For those of you who look for price patterns, the "terminal" pattern is the most opportune pattern there is. The reason the "terminal triangle" is so powerful is because it creates a psychology that is extreme in the sense that each dip is less and less and each dip leads to a new high. Investors literally become euphoric. Investors become immune to risk and begin to look forward to the sure-thing of another dip and more money to be made, the easy way.

What is the fascinating part of this uptrend is the way the terminals are layered on each other.

Is the market ripe for a fall? Maybe. Many economic indicators are pointing down and should be making portfolio managers wonder where the earnings are going to come from. Stock markets can roll over for all kinds of reasons and it is usually something logical, but usually "after the fact" is it logical. Decide for yourself, but the pattern here is telling me that people are "Frothy bullish" and that means there is more downside potential than upside.

Do I hope I'm wrong? Yes. I'd like to see higher stock prices since a bull market helps us get out of a recession, in theory. However, I'm a realist too and look for times when the odds are stacked in the favor of one side of the market or the other.

I'll make a list of all the bullish and bearish factors and we can all weigh them collectively - on another post in the near future.

Trade concept: SHORT AT 124-124.50, cover 119 and 114. Re-short at 117 and 120, then cover at 110-104.

Cheers.

Tim 12:28AM EST, Monday, May 18, 2015 123.65 IWM