Market Internals Confirm Primary Wave 3 (DOWN)

Fibozachi's picture

Fibozachi ~ Technician's Corner

Market Internals Confirm Primary Wave 3 (DOWN)


Today's price action registered extremely bearish readings across the NYSE TICK and NYSE VOLD (Up-Down Volume Difference).


These 'extreme' readings recorded across market internals, serve as secondary confirmation that US equity markets have established a multi-week (if not multi-year) top.


"Buying pressure" played Punxsutawney Phil throughout the session and was decisively punk  ~  offering up only a healthy dish of apathy with a small side of disgust, implying anything but light in store at the end of this tunnel.

Calista Flockhart-wafer-thin 'buying pressure' coupled with impulsive 'selling pressure' (reminiscent of late '08 - early '09) is a rather bearish omen for equity markets (Shanghai - check, Sensex - check, MIB - check, VIX / CDS / IG spreads across the board - hockey players around).

In our oh-so-very-humble opinion ~ equity markets are about to enter the Temple of Doom.





 - Please click on any of the snapshots below to open a large, crystal-clear picture - 





The following daily chart of the VOLD is taken from the 1.27.10 edition of the Fibozachi Technical Update


VOLD Previous


Here is the updated daily at session close


VOLD Daily


NYSE VOLD (1-Minute)


VOLD 1-Minute (Normal)

VOLD 1-Minute


NYSE Up Volume & Down Volume


Up/Down Volume 1-Minute 2-4

Up-Down Volume 1-Minute 1-22



Disclosure: during any given session, we may trade any of these instruments bi-directionally.  We are currently flat at the time of publication, eagerly looking forward to a much-needed break for us and (yet, again) another much-needed reflexive upward bounce across financial mkts to simply let off steam and 'reset' internal measures / metrics of trend / volatility & ATR (average-true-range) before the next rolling-dislocationary leg down, down, down within Primary wave 3 (circle).


For similar technical market calls and insights into the idiosyncratic machinations of financial markets; please visit our website ~  There, you can view a body of our analytic work as well as detailed explanations of the unique design development and technical methodologies within the proprietary technical indicator packages that we employ daily to perform a comprehensive technical analysis of financial instruments (stocks, options, ETFs, bonds, futures, FOREX, etc.) across interval periods of time, tick and volume.

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Anonymous's picture

We could see dow 5500 by the end of 2010.

MarketTruth's picture

If you truly are upset at what is transpiring, remove all funds other than what is necessary from your bank accounts, cash in all stocks and buy gold and/or silver. This is the only way to vote with your money and send a message to the banking and investment system.

"Bernanke will continue to print money until there are no trees left in America."
-- Jim Rogers



"In the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good and thereafter decline to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as claims on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to be able to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." --- Alan Greenspan, 'Gold and Economic Freedom' (1966).

moneymutt's picture

just like physical world, equities seem to go up more slowly than they come down, all that hard work this falll slowly pushing up...

Instant Karma's picture

I'm going to try to wait to cover until the S&P is in the 900s.

Fibozachi's picture

NEW YORK (Reuters) - Gold posted its biggest one-day loss since 2008 on Thursday, hitting a three-month low as a wave of risk aversion swept through global markets, triggering massive technical selling in the metal.

"If you are short, you stay short, because there is no real reason to be a buyer unless the market sold off more," said Rick Bensignor, chief market strategist at broker-dealer Execution LLC.

Grand Supercycle's picture


DOW/SP500 downtrend on the daily chart continues.

The recent equities counter trend rally has finished and the March 2009 bear market rally is over.

The dollar, crude oil and copper charts have been giving bearish warnings for stocks for months.

The DOW/SP500 downtrend commenced as forecast and the USD rally I forecast several months ago is just getting going.

My indicators can identify trend changes before they occur.

They warned me of an impending market crash back in early *2007*

The uptrend since March 2009 has been a bear market rally contained within a much larger bear cycle that started in 2000.

Anonymous's picture


Mr. Bates,

You're a fairly new poster, but you're wise for your age.
You've learned a lot from the last couple of years. If you
take away one thing from this moment in time -remember that some forms of currency last a few hundred years, and some have been around since the dawn of human kind. There will be
no 401k, Social Security, Medicare, etc for your generation.
What will store your wealth?

Plan accordingly as you journey into your 30s/40s/50s/60s.
It's a short ride, and some hedges are more certain than
others when weighed against history...



Anonymous's picture

the post 2nite about 'coordinated currency intervention' is something to keep in mind for short term. Probably happen by Feb 11th.

as far as gold & silver, silver is the better buy going forward due to the Au/Ag price ratio and also silver fundamentals, esp as base metal mining shrinks and produces less silver byproduct.

we've yet to see in the past ten years the motivation to buy precious metals in and of themselves. People have been doing this on their own, but not the institutional money--ala Oct 1987. Look for precious metals to detach from SMkt this year.

Buy 90% & 40% US silver circulated coinage. Typically no premium. Also, this looks even better given Obama is now going to debase metal content in clad coinage:

The 2011 Budget states that the use of "alternative coinage materials". Page 100 of the Terminations, Reductions, and Savings section would provide broad authority to the Department of the Treasury to make changes to circulating coin weights and compositions. The report specifically authorizes changes for five denominations: the cent, nickel, dime, quarter, and half dollar.

The Budget justifies the proposal by citing the significant fluctuations in the prices of copper and zinc, which have contributed to volatile and negative margins on the two denominations, and costs which have exceeded face value by over $100 million in prior years.

Changes in US circulating coinage doesn't happen that frequently:

1. WWII - nickles were made with 40% silver to save on nickel for war effort.
2. 1965 - silver removed from US coinage, except Kennedy half dollar which is reduced 90% to 40% Ag.
3. 1970 - silver removed from US coinage entirely.

Lastly, look at adding a little Nat Gas--in particular UNG, which has been under regulatory pressure from the CFTC on futures position limits. UNG's chart has followed NatGas futures until just the recent past few months.

UNG today was about the only green ticker on the street.

but UNG is one to trade, not invest. It has swaps (derivatives) in it.

Anonymous's picture

Newbie here,

As pointed out, the "man in the chair" buys futures every night. The difference is that now when the market opens real sellers show up. The MKT either goes straight up til you can't stand it, or straight down til you can't stand it. I'd say now that the veil of implied safety has been lifted, it shall be straight down.

Peter (Seattle)

merehuman's picture

captcha is too easy.

Anonymous's picture

What does this mean for gold? Us vested ZH community wants to know!

Master Bates's picture

Well, I feel that gold will probably go the same way as the S&P.  I've noticed that it seems to run in the same direction.

Then again, it's just my own personal observation more than some kind of "fact."  I think that one telling factor though is that if S&P goes down, that means that the liquidity to chase assets is drying up.
If the liquidity is low, than there are less dollars to chase anything, even gold, and all prices are a function of demand.

There is always the occasion that people will flee the stock markets and get into PM's instead of crappy bonds like has been the case in the past.

Short answer: gold goes the way of the S&P since the market has been crashing and reinflating.
Long answer: it doesn't always have to, and could change at any time.  It never really did before 2008 as much.

ATG's picture

Big4 short Dow, Gold, NDX...

Par Contre's picture

In the long cycles, gold and stocks have inverse relationships.  Eg. stocks peaked & gold bottomed circa 2000, gold peaked & stocks bottomed circa 1981. Granted, the recent trend has been for a positive correlation, but this could be an indication that the real move has not yet begun.

My prediction: bear market for stocks, bull market for gold, until 2015, when Dow and gold will both be at 10,000.

abalone's picture

Self praise is no recommendation

tomdub_1024's picture

<<<gold and silver are NOT trades (I stole that, just added silver for us PWT)>>>

Anonymous's picture

What does this mean for gold? Us vested ZH community wants to know!

Master Bates's picture

Holy cow buddy!  You sure are eager to know!  ;p

Just kidding... one time it posted my post like 37 times and it was gay.  I don't know why.  Twice isn't so bad.

Anonymous's picture

Sorry, futures are UP.

Better luck next time.

Anonymous's picture


merehuman's picture

Fake present, fake future. Silver is real. Makes noise when you drop it, try that with a dollar. But dollars do flush better.

I wouldnt be so mean about the dollar, but its being used to rob me and mine like a blunt instrument.

Crime rate is bound to rise , it will be us against ourselves in ignorance of the true reality.  

Is there no way to stop this????

ATG's picture

Big4 short Silver.

Deflation favours dollars...

Chopshop's picture

yes, anon, futures are up 1.75 points or 0.16% ... quite a move, indeed.

way to: (1) examine the messages given by Mr. Mkt; (2) understand what you're looking at; when we (3) talk about the start of P3 (circle); (4) leave a really useful comment of import after reading the disclaimer / crude immediate outlook; and (5) add to a serious discussion of trading / TA / portfolio mgmt.

not trying to be pissy but seriously, are you serious. at least wait until a few people have shared some actual insight before showing us (anonymously) how brilliant you are.  we do enjoy funny jokes that try to touch our TA but c'mon guy, at least put some effort into it now.

Primary wave 3 (circle) ought last anywhere from 13 - 21 months (if wrong, then longer) and eviscerate any remaining shred of hope as it ruthlessly penetrates march '09 and october '08 lows.

from two minute traders: pull back your focus from the trees tonight and focus on the forest of the next few years ~ it ain't gonna be pretty.

ATG's picture

Bingo bango bongo...

Rick64's picture

Thats what I'm betting.

kensuneit's picture

Excellent Post!!!  Is this the beginning of deaper sell-offs?  Reminds me of the Titanic sinking and people ordering drinks, pre-mortem.