Goldman's Noyce On How To Play The "Large S&P Correction Coming" Through FX, (And All The FX Charts That Matter Next Week)

Tyler Durden's picture

In addition to all the traditional technical observations on all the key crosses from Goldman's only must read technician John Noyce, which include the EURUSD, the EURCHF, the AUDUSD, the NZDUSD, and the AUDNZD, the NOKSEK, and the GBPUSD, and a quick look at 2 year USD swaps, Noyce's key technical observation has to do with a pattern emerging in the S&P vis-a-vis trendlines. To wit: "There are a few signals on the daily chart of the S&P which argue that a larger correction could be developing." The key support line according to Noyce: 1,291-1,294 on the S&P, below which the next support is the 200 DMA, which is all the way down at 1,174. The key catalyst: a market that is riduclously overbought at 129 days above the 55-DMA (128 as of the day of Noyce's report which was on Thursday). So how to play the coming correction in FX? The AUDJPY may be the best bet and the Goldman chartist explains why...

Noyce's chart of concern:

Noyce's commentary:

  • No one development on its own is that significant, but viewed collectively, if the market were to make a sustained break below the pivot region centred on 1,294-1,291 where the interim low from 24th February and the 55-dma are converged, there would be quite a decent argument to look for a larger correction to develop. The main points are:
    • Moving average stretch - As we’ve already discussed at some length in recent publications, we’re moving into pretty stretched territory in terms of the number of consecutive daily closes the market has made above its 55-dma (128 at last count)
    • Daily %age Moves - The drop on 22nd February, which immediately followed the cycle high which was set on 18th February, was the largest daily %age decline since the market based in late-August last year
    • 76.4 Retrace - Tuesday’s high at 1,332 was less than half a point off the 76.4 retrace of the initial 18th/24th February drop
    • Daily Patterns - Tuesday’s sharp intraday turn around caused a bearish key day to be posted from that 76.4 retrace
  • Overall, while the market needs to close below 1,294-1,291 to generate further confirmation signals, the risks do appear to be quite significant that this break will be achieved given the list of developments on the daily chart highlighted above.

It is not only the S&P which is overbought - so is the DAX:

  • These patterns have tended to work quite well over the last three years. Eight having been posted since December ‘07, seven of which worked well.
  • While as with the S&P to increase confidence we need further daily chart patterns/breaks the idea of a more material correction developing certainly seems quite feasible.

  • This retrace hold adds to the initial warning given by last week’s bearish weekly reversal that the risks of a correction are increasing.
  • The pivot point which should decide whether a more material correction develops or not is 7,135-7,093 where the 55-dma (which the market has been above since early-October on a close basis) and the interim low from 24th February are converged.

And in response to the technical patterns in the S&P and the DAX, Noyce is now negative on the AUDJPY. This could be the best way to prepare for the coming equity correction.

  • Unlike the correlated equity markets AUDJPY has also recently run into quite significant resistance. The 76.4 retrace of the April/May ‘10 drop and the 200-wma which has been a significant pivot over the past three years being converged on 84.26-84.94, against which the market has peaked over the last two weeks. The spike low from August ‘07 at 85.94 is also not far above current levels. Negative weekly oscillator divergence has developed too. Overall a setup which warns of a downside correction developing.
  • Again similarly to the correlated equity markets, we have the initial signs of a downside correction attempting to develop, but the market needs to break further levels to increase confidence in this idea/confirm a negative setup in place.
  • The clearest level to watch on the daily chart is the interim low from 24th February at 81.82, which is what we often term the “pivot of the 76.4 retrace” which has been posted against the highs. A daily close below there would leave the next notable support as the converged 200-dma and interim low from 1st December ‘10 ; 80.04-79.71.

Full presentation from John Noyce:


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bankrupt JPM buy silver's picture

do you think Loyd knows he looks half squirrel half rat?

Michael's picture

"Traditional Retirement Planning Futility" can be a topic of discussion for anyone who wants to do an article on it.

I talk to some people putting money away for their retirement acting as if they actually believe the traditional actions they are taking today will pay out benefits in the distant future.

Is there anyone here who actually believes the economy will continue to chug along for years to come as the personal retirement financial experts such as Suze Orman suggests?

What good is it to continue pumping retirement money into Wall Street when you know it will never keep up with Fed induced inflation?

What good is it to continue investing in America when you are 100% sure a complete and total economic collapse is a mathematical certainty?

The TV talking heads are clueless at best and complete shilling liars at worse.


GlassHammer's picture

The bad part about investing away from America (the move money aborad approach) is that our market can take others with it when (not if) it falls off a cliff. 


Millerette's picture

I'm not putting any money into retirement anymore, but what do you do with money already in a 401k?  turn it all into PMs and hide it on the back 40?  move it overseas? sit back and watch its value go to zero?  i.e. even at this point in time am I totally screwed?

Orly's picture

Pimco Total Return Fund.

Unca Bill will take care of you.


New_Meat's picture


"... i.e. even at this point in time am I totally screwed?"

you're still breathing. at ~1:00

- Ned

BigSkyBear's picture

A 401K loan will get you a hedge of sorts, and a decent stash of the "Three B's"

(Beans, Bullets and Bullion...Bitchez)


Call it a Hedge Play.




buzzsaw99's picture

The Squid Holding Company chart is looking bearish too. They should call JPM aka teh fed and tell them to put a "buy" rating on everything squid related.

Sudden Debt's picture

nothing more then the november correction. QE3 will make the fear go away.


ZeroPower's picture


In a bull market, the 200DMA doesn't even have to be touched.

old_turk's picture

I don't think so, not this time.  The muni bond market looks as dry as a martini (hold the vermouth).

The tachicardia is striking the market again (topping action, yes?).  I'm waiting for the mavens to sally forth with the 'break out' predictions forthwith.

Though I suspect the real downhill ride will be more late 2nd Quarter/3rd Quarter due to withdrawal DTs from QE2.1 (lite) and the necessity for some massive rollover of debt in the corporate and muni markets.  There's some technical reasons to doubt that any sort of QE3 will occur in any meaningful way.  There's a cost to a 4 trillion balance sheet, regardless of what the Treasury and the FRB say.

My advice is watch what they do, never what they say.

Misean's picture

Overbought?!?!?! This slimy peice of filth works for Golman Sucks...doesn't he know where the friggin' money to levitate this scam is coming from?!?! What, did he NOT get the memo?

All I wanna know is what this shyster is hawking? What's his goddamed book?


cosmictrainwreck's picture

you're joking, right? they publish this shit to set up their in-house shorting plans

dick cheneys ghost's picture

Bank of England...Britain at risk for another crisis..........

Long-John-Silver's picture

LOL!  He thinks the Internet can be purchased like the MSM.

He has no idea how social networking works.

attst487's picture

social networking, a la facebook, is already bought and paid for by special interest social controllers. thats how the real world works.

piceridu's picture

That's an Onion Article, no?

Rainman's picture

Central planning's future intent is the only chart that matters and they don't make 'em. Play the hunch and good luck. 

SMG's picture

It's sad really, but you are exactly right.

chumbawamba's picture

Why America is doomed:

And there's nothing you can do about it.

I am Chumbawamba.

chumbawamba's picture


Junk away, oh damned fools.

I am Chumbawamba.

Careless Whisper's picture

Oh my! Terry Randall wearing that pink tie and tacky fake fur, and "Pastor" Cherry Jones wearing his dolce gabana sunglasses and black leather jacket. Those gurls make such a lovely couple.


Ludwig Van's picture


chum -- junked upon request.


BigJim's picture

America is doomed because a tiny minority of religious nuts want to install sharia law?

You really think that's our most pressing problem?

(and no, I didn't junk you)

ivars's picture

It looks more and more likely that stocks and oil will follow the charts (made on February 6th, 2011) they should in this time after a sharp shock to the system during sept 2008-March 2009:

Oil just moves up , punctuated by supply disruption events ( instability in oil producing countries, flight to safety to USD despite the QE2) and continues to move up in 2012, 2013, and beyond ( i have not charted 2014, but is still up, above 200 USD/bbl)

Stock have started their move down in a typical pattern (seen also in Japan after 1990 crash)  after exponential recovery of a system as whole from the shock, when it  still acted in concert. Now de -cooperation will ensure linearity and synchronization in global actions is BROKEN, hence system become nonlinear and responses start to diverge in time. If globalization and synchronization was the cause of the boom, and bust, than deccooperation and desynchronization, conflict, war, will be its natural cure.   Stocks will stay <8000 in 2012 and 2013, and most of 2014, which I have not charted, but when the first pickup will start, most likely related to some war event ( Iran?).

These graphs of DJIA mean a recession of level minus 2-4% in the USA starting from Q1 2012.

Suprisingly, USD will remain strong enough to drive the nominal stock values down, at least in 2011-2014. Why? Flight to safety plus sale of military power in USD ( not weapons, but military power, presence to regimes/countries that will neeed it during their coming instability)






ivars's picture

Here is how USD is getting stabilized by Saudis in exchange for?


Saudi Aramco, the world’s largest oil exporter, raised official selling prices for all crude grades for customers in Asia and Northwest Europe for April shipments and cut prices for customers in the U.S.

Saudi Arabia’s state-owned producer increased the formula prices for Arab Extra Light, Light and Medium crudes to Asia by 65 cents a barrel, a person familiar with the pricing decision said today. Arab Light to Asia will sell at the highest since July 2008 at $1.95 a barrel above the average of the Oman and Dubai grades, the two Gulf benchmarks used by traders.

Six officials at refineries in Asia polled by Bloomberg said they expected a price increase reflecting gains in fuel processing profits. The difference between gasoil and fuel oil prices, the so-called black-white spread, rose to the widest since 2008, suggesting refiners with the ability to break fuel oil into higher value oil products are earning more.

Arab Super Light to Asia will increase by 25 cents a barrel, to $6.05 a barrel above the Oman and Dubai average and Extra Light will rise to a $3.95 a barrel premium.

Aramco set the price for its Extra Light crude oil for April loadings for U.S. buyers at a premium of $2.60 a barrel over the Argus Sour Crude Index, 10 cents lower than March cargoes. The price of Arab Light crude to the U.S. will be at parity with the Argus index, 30 cents a barrel lower than March.

Buyemall's picture

Weekly kickstart no more?

Yen Cross's picture

Thanks for the charts. I can actually read them. I always enjoy the Goldies ideas. Fodder or nay.

Careless Whisper's picture

Oh me too Yen. I love Goldman's research. I can't tell you how much money I've made listening to everything they say. It's just one good trade after another thanks to Goldman. They work so hard for US and it's free advice! They are so honest. I bet they would never package crap MBS and sell them to a client. No way! Then bet against the MBS they just sold ? Not Goldman. They would never do that. I can't wait for Abby J Cohen to be back on cnbs with her market timing. She loves us Yen.

g3h's picture

Where is the search function in ZH?

raya123's picture

Oil will send stocks much lower, and stocks will not rebound until oil hits a temporary peak and begins falling several months from now.  It's all about oil now, not QE or the extension / lack thereof.

Atomizer's picture

Keyword for Monday & Tuesday.. Spike!!

Long-John-Silver's picture

2008 crash redux, and worse. It's the same pattern as the Great Depression.

Wakanda's picture


It's about the oil.

High Plains Drifter's picture

Large S&P correction?  Does that mean back to 666  ?



TradingJoe's picture

Il Oglio will rise, first correction will not occur until the 120-150 area! Buy it now, short it later, the buy it back and stay in it, it's your frikin' insurance policy!

Yen Cross's picture

Hey my friend. I keep notes. Your dxy call @ the .60 level was well done! Credit is due to people that pay attention, and smart people. Like yourself! I will take your ideas into account in the future.

Bicycle Repairman's picture

Who knows.  Stay flexible.

Yen Cross's picture

Are you putting rubber bands around the Monday delivery of the(Wall Street Journal)? LMAO! ON the hill by my house.