Perhaps Complacency Has Not Peaked Quite Yet?

A pattern has developed in the market over the past couple of weeks.

While my last post speculated that peak complacency has been reached, I now favor another small wave up to produce a higher high closing within the upper Bollinger Band.

If this pattern plays out as I anticipate, it would form an M pattern with significant downside afterward.

As can be seen in the chart, the Bollinger Bands are now pinching.

Note that the RSI has unwound and is heading soon to oversold territory.
MACD has recycled to near zero and Slow Stochastics has just given a bullish cross.

Not shown in the chart is movement in the VIX that implies further move to the upside.

It is now my view that we will tag the 1440 or 1450 level within the next few weeks.

After that, peak complacency should ensure a substantial move to the long awaited deflationary move to the downside.