NEW YORK ( TheGoldAndOilGuy.com) -- Just before things took a dive on the weekend, the major market indices did not look promising.If we take an even longer-term look and examine the monthly charts, we can see that the S&P 500 and the Dow Jones have been approaching multi-decade rising-channel resistance lines. Furthermore, they appear to be forming bearish rising-wedge patterns.
Monthly Long Term Chart Analysis and Thoughts
As evidenced by the completion of the recent five-wave uptrend on the S&P that coincided nicely with the various quantitative easing policies, Ben Bernanke and the Fed have had less and less impact. I truly can't see many fiscal developments that would prompt any significant bullish action. The only scenario that I really think could pump up equities is a series of positive earnings announcements. A lot of expectations, earnings numbers and guidance figures have been revised downwards over the last couple of quarters, so there is the opportunity for some positive surprises that could lead to some bullish price action. In the absence of such a scenario, I really can't think of much else that would prompt a run up. Look at these charts of positive and negative earnings surprises. Look at the dates and remember what happened afterward.
I am recommending two courses of action. For those steadfast bulls, lock in some profits or buy some protection. Missing out on some upside is a lot better than losing some of the gains you have fought so hard for over the past couple of years. For more aggressive traders and investors, start following my updates a little more regularly as I foresee many shorting opportunities coming up in the future. As many of you know, sell-offs are often quick and abrupt, and timing is extremely important when playing the downside. Trading could get very volatile in the near future. Historically and, even more so, looking forward, as August and September have been very costly for the average investor, our focus will be on taking the highest probability trades that offer the best risk-to-reward scenarios. There will be times when we miss trades, and times when they're not timed perfectly. But as those who have been with me for a while can attest to, patience pays off in the long run. This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.