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Wow! What a week this has been. And it’s not yet over.
Equity investors were cheered by Tuesday’s and Wednesday’s rebound. Many others, however, were left wondering if it was merely a relief rally in a market that’s turned bearish. They have plenty of reasons to fret so.
The chart was certainly looking ominous. First of all, there was that potential double top stretching back to last fall. Its putative failure point—the second top in May—also represented the crown in a head-and-shoulders top formation begun in March. Then there was last week’s double whammy—the index falling below its 200-day moving average as well as its piercing of the head-and-shoulders pattern’s neckline. With that,...