No, not “erectile dysfunction,” Mr. Market hasn’t had any trouble getting it up lately. Not yet, anyhow. The “E.D.” I’m talking about is “ending diagonal,” one of my favorite chart patterns.
The “ending diagonal,” is characterized by ascending trend lines in which the lower trend line is steeper than the upper trend line. It’s a sign of waning momentum in the primary trend, as shown below in the Dow Industrials ETF. I like to see MACD lines (below the price chart) that diverge from higher prices as confirmation of this analysis.
The S&P 500 ETF is showing a nearly identical pattern…
…and the Nasdaq 100 ETF is showing just a slight variation of the same pattern:
To me it looks like the Fed’s Viagra (QE) will soon wear off. Mr. Market and his pusher man may then be forced to look for a new drug.