This page has been archived and commenting is disabled.
Goldman Sachs: At 7% Above The 55-DMA, The Market Has Been More Overstretched Just Once In History, And Other Mispricings
John Noyce, Goldman's arguably best technician, in his weekly Charts that Matter, has released one (among many) interesting observation on just how overbought the market currently is, and more specifically just how desperate the velocity of the pick up in the stocks since August has been, in order for levered beta players such as hedge funds, as we predicted in the end of August, to make up as much of their year as possible before seeing redemptions (even so many will not survive into 2010 as the entire 2/20 model is now crumbling). Specifically, by looking at where the S&P is relative to its 55 DMA, Noyce notes that every time the market has gotten to above 5% its trailing average, it has always entered a period of consolidation (read at least modest selling). Furthermore, compared to the recent trend extreme of 7% above 55 DMA, the market moved meaningfully above one just one occasion in the past: in January 2009... just before the crash to the decade lows of 666 on the S&P occurred.
In the FX realm, Noyce appears to stand behind the FX team's long EURUSD recommendation with some technical back up.
Our EUR/Broad Index appears to have completed a similar size bear market from the December ‘08 highs to the September ‘10 low to that which it completed from the September ‘98 high to the May ‘00 low
- While the bounce need not be in a straight line it certainly looks as though the EUR has stabilised on a broad basis and further recovery seems quite likely over time.
- This supports the idea that after a period of consolidation/correction to unwind extreme moving average setups on the daily chart EURUSD should again begin to move higher.
- As a reminder the EUR/Broad Index shows the performance of the EUR versus an equally weighted basket of the other “Old World G10” currencies, it’s EUR-based so higher is EUR-strength.
And last, looking at the 10 Year, Noyce notes a comparable record overstretching relative to the 55 DMA:
U.S 10-year yields have now spent 126 consecutive trading sessions below their 55-day moving average on a close basis. This is beyond the prior extreme set in July ’95 of 124 consecutive sessions below the 55-dma
- Given the concerns we’ve expressed on the prior slide this does seem to be a warning sign that the market is becoming increasingly susceptible to an upside correction in yields.
- The pivot to watch is 2.58-2.61% where the downtrend from the April highs and the 55-dma are converged.
- A break above that point would leave the 200-dma as a possible target a long way above at 3.23%.
- Overall, it now appears very important to watch for any signs of a turn higher in yields.
There is much more in Noyce's latest, but it all just goes to confirm the old maxim that the market can frontrun the Fed for far longer than the 55-DMA can stay solvent.
»
- 31511 reads
- Printer-friendly version
- Send to friend
- advertisements -
Charts
ES http://99ercharts.blogspot.com/2010/10/es_1595.html
More http://www.zerohedge.com/forum/99er-charts
Did anyone actually bother to look at their own chart to confirm?
In January 2009, the S&P was very CLOSE to its 55dma !!!!
The only chart that matters:
http://img808.imageshack.us/i/spxgoldspread20year.gif/
Doesn't this research look familiar! :-) Glad to see that the sell-side is finally catching up.
No matter how I look at this market, assuming I'm using real numbers and not marked to unicorn (Thanks Tyler) I see red in the future. Except this time may very well be different.
How do you discount a kamikaze Fed? Seriously, how do you factor in the biggest distortion in history coming round the bend? Because we ain't seen nothing yet.
I think a motivating factor in the recent bull market is the coming GM IPO. The US gov't owns many shares, and the banksters are likely trying to appease the politicians they control with providing a bull market to sell these shares, hence all their recent POMO buying, so the politicians can have a success story to crow about. Wall Street wants to sucker the public to buy the IPO shares, which they could not do in a bear market.
They better do this quickly, time is a running out
That's a bingo!
As a matter of form, please do not refer to the GM PO as an IPO. Don't feed the memory hole.
Bingo! GS bid it very low, knowing they weren't going to get it, and JPM & MS had to bid low, they don't want to eat shares of GM. Due for another teaser pr on it.
CD they have a huge problem with ANY selling...theres no one out there to sell TO!
A sensible analyst, Dan Niles I think I recall, phoned into Fast Money last night and laid out the tipping point for the market. He agreed that the market has merely been a weak-dollar play, but pointed out that once the fate of QE2 is known, regardless of what it is, the play will suddenly be played out. At that point, which will be Nov. 3, market participants will be forced to consider market fundamentals again. And, as Dan Niles said, "that's when the difficulties begin."
Interesting to see equity futures front run pomo at 6:30 am, lets see how that works, maybe we will see sp1200.
Nonsense...buy and hold equities for the long-haul and there has never been a better opportunity to get a piece of the American Dream...now let me get back to watching some re-runs of Cramerica.
OT: Are aliens preparing to do 'God's Work'? UFOs have recently been sighted over the NYC financial district and over Juarez, two of the most corrupt places on earth.
http://www.dailymail.co.uk/news/article-1321751/After-New-York-UFO-sight...
Something I've always found fascinating is that while in public most people will scoff at the notion that "UFOs and aliens" are "real", in private almost everyone I talk to, once they let their guard down a little, really do want some answers.
Now please explain to me how someone can deny something even exists and yet devote enough time to the subject that they would privately wonder if it's real? Maybe because they have deep seated doubts and don't trust the "authorities" to be truthful about the one subject that, if true, could and would completely undermine their power structure.
It doesn't matter if UFOs are real or not. The PTB must treat them as not real or lose any credibility that have remaining. That alone leads me to believe something is going on here that warrants further study. When my government tells me to close my eyes and ears, I open them up as wide as I can. And when they tell me to open my eyes and look, I turn around in look in the opposite direction as well.
Men in Black is one of my favorite movies of all time. "Rodman's an alien? Not much of a disguise."
One cannot say conclusively that there is no life on other planets until we inspect those planets and determine there is no life. There's a hell of a lot of planets in this universe to be explored. God Speed.
There's lots of water on the moon, apparently. Where there is water, there is life, so we may not have to go very far at all to find it.
As for the long Euro call. Gee, I don't think so, Holmes. The EURUSD mimics the SPX enough that for the Euro to tread in those waters and rise in the face of headwinds from a stock market drop would be next to impossible.
Sorry.
?:
NASA is doing everything in their power to CLAIM water vapor to keep their gravytrain going, it's all bullshit that nobody can disprove their assertions. FOLLOW THE MONEY. New telescope ain't enough. Now they're even floating "RESOURCES" on the moon.
UFOs are definitely real. There are flying objects which are not identified. It does not necessarily follow that they are spacecraft from other planets piloted by "aliens."
Agreed. Nor does it necessarily follow that they are not spacecraft from other planets piloted by "aliens". Any technology sufficiently advanced will appear to be magic and directed by Gods by those who do not possess it or understand it.
I've always wondered how the entire disinformation term "Unidentified Flying Objects" was introduced into the lexicon when quite clearly the truly unexplainable small minority of sightings are clearly not "flying" as this term is widely understood. Unless starting and stopping in mid air, instantaneous 90 or 180 degree turns and vertical or horizontal travel at Mach 5 or 10 is considered "flying" these days.
One must always carefully examine the terminology one is using and what that terminology is subliminally telling us. Or not telling us. Words are used to inform or dis-inform. Once a term is decided upon, it instantly brushes aside or discredits many other terms and explanations.
Propaganda and psyops 101
How do you rationalize UFOs with persons who do not believe in Dinosaurs and that earth is less than 4k years old.
I believe in all possibilities. Look, the market is going to 12,000 next week. Starting on Monday. Right.
TrickyDick *applause* good post!
My thoughts exactly, CD. Whatever organized crime (aka government, big business, religion, etc) tells me to do or how to think, I turn it around 180 degrees; only then do I imagine I'm approaching something even remotely resembling the truth.
That's just the CIA shuffling cash back and forth.
They are just pimping that new movie comming out
This is the beginning stages of a planned "event" which will usher in a global government. To create a world government/currency an event of this size and unbelievability is needed. Even more interesting is that the book published last month by Retired Norad officer Fulham predicted in his book that on Oct 13 their will be a display for all to see over major global cities
http://current.com/groups/unexplained/92725368_prediction-of-massive-ufo...
Yep John no doubt. This isnt just market pumping for the sake of spreading good feelings, its for an upcoming event.
Also some very disturbing and long video footage of bizarre craft over Russia on Oct 20 can be seen on youtube. One looks like a 100 yard long inverted black V shape just hanging in the air, 'cloaking' on and off. A few other places too with weird craft, and a village in China has apparently vanished after a huge ball of blue light was seen hovering over it for hours. Weird things going indeed.
The overhead is paging you to return to psych unit....
I went short late September and have been regretting that decision thusfar, I think I'm at the point where if I don't make money on that trade, it's ultimately not going to matter, because everything will be so completely fucked.
Might as well double-down here. 1190 seems hard to break through.
I think the lame-duck session of congress will do more damage, out of sheer spite, than people realize. Expect new EPA rules on carbon emission, for sure.
Blah, blah, blah. This is the same GS that said if the market broke 1040 then it was surely going to 870 +/-. Enough of the TA of resistance and support. The market just blows through any and all of both whenever the hell it chooses. There is no meaningful analysis at this point as the whim of the driver takes you ANY direction HE chooses.
The best post I've read on this site in a while. There are no supports or resistances. Only Fed money for the upside and a potential shutdown of HFT's on the downside.
I have to agree. Technical analysis is globally a fraud when applied to this market. It can help a bit when placing a position, but never give you the slightest indication about what the GS bots, the PPT and the FED are planning.
In 2007, I knew several day traders, who really knew their stuff about technical analysis. They were respected traders, worshipped as gurus on some forums. Nobody survived up to now.
I've been putting my money where my mouth is, and unlike Wall Street traders, I don't mind telling the truth or disclosing my positions.
I've bee selling my equity positions over the last six weeks. Got about 10% more to go, which I plan to finish up by the end of this month. Don't really plan to get back in, but, I might consider it some day if the S&P falls below 700.
The easy money has been made. Without pullback to 1150, this is churn.
good move.
Right now, all dips are being bought with the utmost urgency.
What would you recommend at this point - AAPL, SOLF, WYNN or all for a good diversified portfolio?
Robo just adds commentary on elevator rides......nothing useful really.
More like desperation than urgency.
mmhmm.
buy burritos (CMG), flix (NFLX), kindles (AMZN) and iAnything (AAPL).
http://www.youtube.com/watch?v=gSqYAbBFhzc
you misspelled the word "stupidity" at the end of your sentence..
+100
So it is being bought by the PD's with leverage, no? Yesterday exposed just how much of the market is in the hands of PD's with leverage. There is no retail, just PD's pitching back and forth and leveraging up. The reverse repo has shown how fragile this pricepoint is, and this bubble is going to burst in the next year or two. This time though the government cannot afford to bail out the sob's this time. It will be fun to watch, but hell to live through.
"...this bubble is going to burst in the next year or two."
Thanks for heads-up. However, you might want to upgrade your crystal ball to Win 7 to get greater granularity on your timing.
My crystal ball gave me a BSOD. So I had to resort to tea leaves, but I accidently drank them with my tea. My forcast is based on the pattern my pee left on the monitor.
All dips are being bought by whom? Oh yea the 'investors' (FED).
That's when you take profits. Here's a good post summing up the case for it.
http://financialsense.com/contributors/sy-harding/warning-from-sentiment...
..."The Market Has Been More Overstretched Just Once In History, And Other Mispricings"
The market has never been as fraudulent as it is also.
Which means history means jack shit.
Bingo! We have a winner. Fundamentals are dead, TA is totally worthless (although with all the algo trading it should be more accurate), and the dollar is being slowly choked to death at the hands of Bernanke.
rates can't go up, that would negatively impact asset values. lulz
Of course, if they stay where they are Pension managers are going to have a lot of late nights and stomach ulcers. Ben is out of his goddamn mind.
Or brilliant in his strategy and execution depending upon if you're on the giving or receiving end of his "insnaity". It is a great disservice to yourself to even consider that these people are crazy. Just my opinion.
+1 Oh, I'm sure he thinks he knows what he is doing... this is the best way to faux-show the country they are looking to "save the system" and "save jobs" while at the same time, crashing the system to usher in the new global financial order and currency. **I didn't junk you**
I didn't think you did. There are one or two people following me around junking everything I say. Doesn't matter what I say, it gets junked just the same.
Psyops or psycho, it doesn't matter. It's clear some people consider me to be a danger to the hive mentality and they're doing their best to discredit me in the eyes of the ZH community.
Whatever. I find it amusing. They will not shut me up. Never. :>)
"markets tend to consolidate after trending..."
Pure fucking genius huh!
Technical analysis? What does the chart tells?
"In the hold of every sunken ship, you will always find a chart." (and several hindered thousand GS clients...)
MOMO MOFOs.
To the moon. Who says we need to come back? As long as we have air, we can stay high. First we have to legalize marijuana.
"First we have to legalize marijuana."
OT, but he brought it up - anyone in california have an opinion on prop. 19? I've heard that the growers aren't happy with the language and are voting no. I support legalization but, want the right law. Love my medical marijuana card, btw.
Serious question - don't flame me, bro'
I won't flame you bro, but do you think it matters what the Californians vote? The Feds have staked thier claim and they never back down. They have the all-encompassing "Interstate Commerce" at the ready.
Technically speaking, no. But voters are moving ahead, anyway.
Ok, Now what? The market is fucked. Now for the 64,000 question? When will it end? Please dont say soon. Soon sounds like a few years, Plenty of time for Hal to take the Dow to 40,000
Market never been more overbought/overvalued in all of history? Hmmm seems like a great reason to put the floor in here and gun it up a few more legs!
Well for what its worth, i have a confirmed Euro reversal, also gbp, aud and chf...though equities still hanging in there(ahem, for some reason). I am short euro, aud, gbp and cad from yesterday(tight stops) and the fact that GS is long doesn't really bother me. Just hoping for a clean eur/usd close below 1.3925 tonight, and i can have a peaceful weekend.
.
I think people realizede the short squeeze is on on fed buying days, were long, then there wasn't a short later.
And the market will continue up until elections. Doesn't that happen every election cycle?