The Latest Red Flag - The Market's Rate Of Melting Up

Tyler Durden's picture

Some more first derivative perspectives, this time focusing on the market's rate of change, via Financial Armageddon's Michael Panzner.

Based on data going back 90 years, whenever the 12-month rate of
change (ROC) in the Dow Jones Industrials Average has exceeded 40
percent, it has generally signaled trouble ahead.

In three cases, a 12-month ROC above that level has only marked a short-term pause, after which the market traded higher.

But on 11 other occasions, similarly rapid advances have been
followed by notable corrections, including the collapses that followed
the 1929 and dot-com era peaks, as well as the 1987 crash.

Given those odds, increasingly exuberant bulls might want to have a rethink.

50-50 odds, with GETCO now controlling the market, AND fully capturing the administration by hiring former Fed governor Randy Kroszner? We are better bid all day every day.