As we sail into the dog days of August it is difficult not to see in this chart the makings of a truly humongous kilroy (reverse h&S) bottom.  The symmetry is startling, as price arrives at a potential neckline.  A pronounced downwave would be necessary here to complete the pattern, but that is always possible with the help of Goldman.

The present public mood is promising for a downdraft.  Recesson is over.  (Bunch of economists just said so.  Now if that’s not scary…)  We’re all ok, Jack — except for that 10-20% unemployed, depending on whose statistical lies you believe.  And except for that nagging little voice that says that by 2011 half (HALF) the houses in the country will be under water.

At the moment it’s hard to imagine what could spook the market — but back in 2008 we used to sit around trying to figure out what was going to cause the bear market we knew was coming.  Of course there is an ominous drumbeat of dying banks, and if we had to go back to mark-to-market accounting for the banks all the rest of the banks would die too.

Given the exaggerated upwave we have seen here and the general air of disease (on our part) and the complacency of the economists we would look extra hard for some shorts now and be ready to jump at the drop of a dime.

We can hardly wait for Halloween.  In the meantime we can hardly wait for the 14th when the astrologers are predicting Armageddon.