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Call This a Warning Sign
This is the first real technical warning sign that the market is on
the verge of breaking down and the economy is on the verge of a
recession.
See figure 1, a monthly chart of the
i-Shares MSCI Emerging Market Index (symbol: EEM). The pink labeled
price bars are negative divergence bars. As I have detailed numerous times
negative divergence bars represent slowing upside price momentum, and
typically, the lows and highs of that price bar will provide a range for
future price movements until there is a breakout or breakdown. In
addition, a clustering of negative divergence bars typically is a sign
of market top. This is fairly consistent across time frames and
different asset classes. For example, see the article I wrote on April
27, 2011 entitled "Long Term Treasury Yields Going Lower". That “call” was based in part on this research.
Figure 1. EEM/ monthly
The cluster of negative divergence bars is
an ominous sign, and as you see, the 2007 top had a cluster of negative
divergence bars. For example, in the SP500, a similar pattern was seen
at the 1965, 1968, 1973, 1977, 1981, 1987, 1998, 2000, and 2008 market
tops. As an aside, I need to dig into the numbers a little bit more
deeply, and I will do so over the next couple of weeks, but for now call
this a warning sign!
Lastly, this is “call” or observation is
obviously bearish; however, I do not believe that it will affect the
market over the next couple of weeks or maybe even months. My
contention is that the market should bottom as sentiment is bearish. I
will give the market the benefit of the doubt here. I have questioned
the quality of the ensuing bounce, but in the absence of a crystal ball,
I still believe the correct “play” is to get long when others are
bearish.
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@ WallStreet,
Hmmm...I see. You think Mr. Paul's a senile moron who has nothing else to offer besides his anti-Fed stance...
What about his position to return us to a gold standard? Or do you prefer our current fiat/worthless/unbacked/manipulated/toilet paper FRNs?
What about his position to pull our U.S. troops out of wars of opportunity and bring them home? Or do you prefer to keep attacking countries that are hindering our attempts to get more cheap oil? Our last true war (in which we were attacked by a sovereign state and Congress officially declared war) was WWII. Now we're acting as World Police.
What about his strong pro-life position on abortion? Yes, many people want to waive the flag of "reproductive rights" (and I simply cannot think of anything more heinous than a woman who kills her own baby for convenience's sake), but we now have 40 million fewer Americans who could have been part of our fabric of society.
What about his stance on getting rid of unnecessary and/or overreaching federal departments such as the Dept. of Energy (a failure), Dept. of Education (failure), Dept. of Agriculture (failure), Dept. of Homeland Security (epic fail), etc., etc.? Or do you prefer to keep these bloated entities?
What about his stance on restoring States Rights, and repealing many oppressive federal laws that trample on our inherent rights as U.S. citizens? Or do you prefer to continue feeling that choke collar tightening around your neck more each day? Do you even LIVE in the U.S. at all?
Ron Paul isn't perfect. NO human being is perfect. But he certainly is one of the very, very few in government who's espousing many of the same ideas, hopes, and mantras discussed here on ZH.
You're entitled to your opinion, of course.
And I'm entitled to junk you and call you an idiot.
"I simply cannot think of anything more heinous than a woman who kills her own baby for convenience's sake"
How about a mother that abuses there unwanted child and blames the child for everything wrong in her life? You obviously haven't had the joy of growing up in a broken home with a mother that could care less about her children, feeding them junk food every day. You think making abortion solves anything? Are you really that dumb?
Consider that oil production is in permanent decline. The era of growth is forever gone. Only misery and hardship is a head in the future. Only ignorant zombie people too dumb to see the pending future disaster are having children and are pro-lifers. I cry for all of the children alive today, who will endure suffering not seen since the dark ages.
Nice try, AGuy, but I'm a father to two young adult children, and after all these years with them, there's absolutely nothing you could ever say to detract from my joy of being their father.
Go ahead and whine and moan about all the problems in the world, but get out of the way to let the rest of us step up and start fixing them in whatever ways we can. Go suck your thumb on the porch steps and let the men do their work.
If you care for the child today, they will have a bright future.
In the book "Freakonomics", the author made a very compelling argument regarding the drop in violent crime rates seen in the 1990's, and connecting it to abortion becoming legal a couple decades earlier. He contended that many "accidental" and possibly unwanted babies are the ones who later become violent criminals; so with abortion legal, some of these future violent criminals were never born.
http://pricetheory.uchicago.edu/levitt/Papers/LevittUnderstandingWhyCrim...
The operative bit: "He contended"
Excellent reply and much more than this name calling idiot deserves.
... he certainly is one of the very, very few in government who's espousing ...
I think the point was that is all Ron Paul has accomplished ... espousing. Nothing has come of the espousing. So why would the espousing be particularly valuable?
Ron Paul is one honest politician in a den of thieves and you're blaming him because he can't turn the whole den (or atleast 51% of them) around?
The fact that he stands (sometimes alone) for what is right is a quality that I wish more in D.C. would have, instead of floundering on the issues just to gain support for their pet projects.
He's doing his part by holding strong, now lets do ours and send more people who will back him up.
"I think the point was that is all Ron Paul has accomplished ... espousing."
I wonder if very soon Mrs. Weiner will be Despousing?
...and you've written how many books, given how many lectures or speeches before Congress, held how many hearings? Who would you say is speaking truth to power, who is your role model for actually representing constituents?
My role model for actually representing consituents was shot in the head in Dallas Texas.
You gotta be shitting me! The man whose father paid the mob to rig the election to get him into office is your role model for representing constituents? The man whose parasite family went on to live on the backs of taxpayers and got away with the murder of an innocent woman is your ideal of representative democracy? The icon of an aristocratic legacy that makes their living throwing crumbs to the peasants is your white knight of limited government? Holy shit!
Yup. Huge tax cutter and staunch anti-communist. Give me only presidents like that.
But he's been dead for fifty years. Not much help today.
Not much help today.
Amen, brother.
Lesson? Don't f with the Fedsters.
Lesson! Dont get caught Fucking with the Fed's Nazi Fucks!
Ron Paul is a toothless tiger.
Probably a plant, to help maintain an appearance of legitimacy by preaching to the "fringe" choir.
No call to end the fed or defend the dollar or inventory the Gold will lead anywhere except to more hearings and commission reports.
I call bullshit Paul.
Vote him in and see what he does. What have you got left to lose? One politician is as good as another they say, so what's one more disappointment if he is a stooge. At least you'll have bragging rights on "I told you so".
You haven't figured it out yet have you?
One way or the other, his credibility just hit the shit vault.
“We’re not moving toward Hitler-type fascism, but we’re moving toward a softer fascism: Loss of civil liberties, corporations running the show, big government in bed with big business. So you have the military-industrial complex, you have the medical-industrial complex, you have the financial industry, you have the communications industry. They go to Washington and spend hundreds of millions of dollars. That’s where the control is. I call that a soft form of fascism — something that’s very dangerous.” – Ron Paul
Been there, done that. Happened some time ago. We're only talking about degrees now, as in how many more freedoms can we lose
>we’re moving toward a softer fascism: Loss of civil liberties, corporations running the show, big government in bed with big business.
Not moving towards. Have arrived. Meanwhile, video a cop from your own property and face arrest.
on Fri, 06/24/2011 - 23:16
#1400489
>we’re moving toward a softer fascism: Loss of civil liberties, corporations running the show, big government in bed with big business.
Not moving towards. Have arrived. Meanwhile, video a cop from your own property and face arrest.
*************************************************************
#1 Post your Property! No Tresspassing!!
#2 Carry (open) a bigger gun that the Pig has!
#3 the really important part! dont be a pussy and a afraid to defend your property or your rights!
#4 have a GREAT Esquire on retainer!
#5 have a GREAT Bonds Man on retainer!
Welcome to the Police State America! used to be "Home of the Brave and Land of the Free"...
Maybe even post that the property is protected by video surveillance.. as well.
Say "I don't consent"
Simple.
Laying down on the ground says "I consent".
They take what you give.
The last 6 bars in that graph do appear to be a classic example of a bear flag.
Yes thanks, now if only technicals mattered. I guess they will soon enough.
^ this
Thx for the "heads up" on this...the following link is my chart of EEM...each candle represents 3 days...the current candle began yesterday. Overlayed on the chart are 2 regression channels. It would appear that 41.66ish could represent a "line in the sand" level for this index to turn bearish in a meaningful way...it is roughly the former neckline of a H&S pattern that broke to the downside in August 2008, is approx. the "mean" of a larger regression channel that began in October 2007, and is approx. a -2 deviation of a shorter regression channel that began in May of 2010. Perhaps Monday's close of the current candle will shed further light as to whether price remains below the -1 deviation of the shorter regression channel and remains weak for the remainder of the week (and possibly year). http://screencast.com/t/smMOx7zn4a3
Such a bearish scenario would tie in with my latest post: http://strawberryblondesmarketsummary.blogspot.com/2011/06/xmas-666.html
Great stuff as usual.
I think it is interesting what has happened in the last week, Greece problems, Bernanke admiting US is crappy, and oil problems too. A crazy week, I am guessing there is a bigger move coming on the market.
Been following this guy for a while, his trading advice is killer and is very accurate.... latest video - http://www.youtube.com/watch?v=xKP90DrpfzQ
I use an unscientific approach, the "listening quotient". Conversations I am involved in or comments overheard related to the economy are given a negative or positive point. Waitress tells me her husband's job of 20 years over, retrained as a pharmacy tech and now earns $9 a hr at CVS -. A neighbor is leaving for a 4 day vacation at a beach resort, +. Filling up my car with gas, overheard "I will prepay $10." - Seeing someone walk away from the cashier's counter & a cart of groceries because their bank card was declined - FMeeting an Australian couple traveling Europe for a month when I am traveling for 17 days scores 0 because we don't live the same country. I know their $$$ are doing much better than my $, but only want to score comments of those swimming in the same pot of simmering gruel.
End of day's score: + 2 - 9
"...verge of a recession..."
Where in the hell you been the last 4-5 years LMFAO
Ha ha ha. Yup, next thing you know he may even predict that housing prices will plummet, and gasoline will become expensive.
and the next thing they will say is inflation will effect the retail sheep slowing purchasing.. and maybe if they are really cutting edge they will describe how the dollar has less purchasing power thusly buying habits will seemingly be trailing off? LULZ!!
"the correct play is to get long"?
get long in metal (physical).
Metal should see some downward from the FED pushing.. but at the end of the day.. being in before QE3 thru ???? will not be a bad call.