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Technical Observations On An Extremely Overbought Market With 123 Consecutive Closes Above The 55 DMA
While John Noyce covers his usual fare of weekly FX technical developments, with an emphasis on the EURUSD, the AUDUSD, the USDSEK, the NZDUSD, and broadly the extremely low level of implied vol in FX (unlike commodities - we expect a switch from commodity implied vol to FX very soon), as well as a very curious collapse in correlation between G10 FX implied vol basket, the VIX and the EURAUD spot. But the most notable observation is what may happen to stocks now that the 55 Day Moving Average is in danger of being breached for the first time in 123 days. The two key support trendlines are the August uptrend since August, which is at 1,300 and the 55 DMA, which is at 1,284. Should both of these be taken out, there is no technical support until the Jackson Hole level of mid 1,000s.
From Noyce:
- The S&P has so far done the absolute minimum correction, in terms of it has tested the uptrend from the August ‘10 lows at 1,300
- However, as discussed in a number of updates and client meetings over the last couple of weeks, the thing which “concerns” us in terms of it being a warning of a larger move is the fact that the market has been above the 55-dma for such an extreme period on a daily close basis.
- With Wednesday’s close above the market having spent 123 consecutive daily sessions above this particular moving average (it hasn’t made a daily close below since 1st September ‘10). This is very extreme by historic standards and takes the S&P to a greater period above its 55-dma than that which equity markets in other regions (particularly Asia) managed before they began to correct over recent weeks.
- The other notable point about the recent price action is the extreme move seen on Monday where the market posted its largest one-day %age decline since the recent rally began in earnest on 27th August ‘10.
- In terms of levels from here;
- The uptrend from the 27th August low’s at 1,300
- A similar size correction to that which took place from the 5th November high to the 16th November low (in point terms) would target 1,290
- The 55-dma stands at 1,284
- In conclusion we’re by no means making an argument for a real “downtrend” in equities to begin, it’s too early to make that type of statement, but, the risks of a larger correction developing do seem quite high.
Also, the US is now more overstreteched than any other world markets:
- The charts opposite show the same count of the number of days the market achieved above the 55-dma for the Kospi and Taiex (the Korean and Taiwanese benchmarks)
- These two markets, from their lows in May ‘10, developed some of the cleanest and most steady trends of the various national benchmark indices in the Asian region. However, even given that backdrop, they only managed to achieved 111 and 109 consecutive daily closes above their respective 55-dmas before breaking back below on a daily close basis and correcting further.
- With this in mind, just in pure comparison terms, the chances that the S&P achieves a daily close back below its 55-dma which stands at 1,284 seem quite high (as a reminder, up until Wednesday, the S&P has made 123 consecutive daily closes above its 55-dma).
On the other hand, with the market correlating about 0.9 with the size of the Fed's balance sheet, as was first demonstrated
on Zero Hedge, to say that charts, technicals, fundamentals, or
anything besides central planning matters, can seem naive to many.
Another interesting chart for those who still believe the VIX is still relevant (we believe the SKEW is much more important than the VIX, but that is a different story).
- As always it’s difficult to calculate targets for the VIX, but the way the index is breaking quite impulsively higher from its recent wedge like consolidation against the April ‘10 lows and the fact that you can argue some sort of double bottom pattern is in place certainly warns that we could see further upside.
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terminal meltup is the endgame
I'm not sure of the relevance of technical analysis in the context of a rigged market fed by endless supplies of newly created $
Agree. The whole meltup proved it. Nobody did or even could trade of technicals because the signals operative under free market conditions never occurred. The Bernanke put and $7 billion liquidity per day was the only technical anybody needed to know. Fibo who??
Indeed we have seen a tendency to pull back at the last second from breaking critical support but the fact also still remains that volume comes back on the downside. Big volume and prices drop hard, that much hasn't changed.
Increasing Oil Prices is the game changer. POMO and QE cannot take up the slack when the final oil issues surface. If you fo to any oil blog they are all talking about the "Great Bull Oil market of 2011. These guys are goig to be bidding up the price as speculation takes hold in the face of actual reduction of oil production because of the spreading contagion of rioting in the oil states.
Benny is now screwed, because all the increase in oil is taking out all the winding up he has been doing. Gas hits the $3.50 average and this market slows considerably and all those Small Busniess change their positins, change their business plans, layoff a few more and the rest. This all in the face of muni bond collapse, and the cities, states laying off hundreds of teachers and public servants. Last I checked the total number of teachers proposed across the US for cuts between now and June is somewhere in the range of 200,000-300,000. That is a big dent and will put the risk off trade into permanent in the numtual funds. Add in the reduction of consumer spending brought on by gas increases and the perfect storm for the GD II.
Technical analysis is ccrewed, but the markets now cannot continue on this as the "new normal". It is now the same as 2008, and the speculators will drive the oil up this time to $180 in the opinion of the oil speculator blogs.
Game over!
The TA rule as of late, and what I got out of it, is that the 55 day is sacrosanct. Thru June AKA: QEIII.
The 55 day rule is being tested right now and looks to have passed.
Self ass kicking is also in play here, as Ben is saying 'what are you waiting for, leverage up'.
I don't get it.
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=9&dy=0&id=p98611122549&a=225987185
Looks like a break to me...
...I am not sure of the relevance of any form of analysis under the current bogus market conditions.
on the topic of technical analysis -for weather geeks out there Bastardi left Accuweather but is still posting on twitter
http://twitter.com/BigJoeBastardi
Did they fire him for not being a shill for global warming or did he leave on his own?
The latter. Perhaps he sensed that being the Glenn Beck of weather was a tired routine.
http://www.mnn.com/lifestyle/arts-culture/blogs/accuweather-forecaster-j...
"But the most notable observation is what may happen to stocks now that the 55 Day Moving Average is in danger of being breached for the first time in 123 days . . ."
Seriously? The Fed will just buy more stocks. Get over it. The market is NEVER going down, at least not in nominal/significant terms. NEVER. The entire ponzi and the safety and power of the Powers That Be is tied into the markets.
The days of this market behaving anything like it has in the past ARE OVER.
+ Manipulation is THE game. Our masters will continue to consolidate power and wealth. That is the driver, that is what is painting the charts.
we wont be at "the top" until ZH starts frequently posting articles bullish on stocks
Permabears are not necessarily reliable contrary indicators.
Brilliant insight. Of course for that to happen, it would mean we believe central planning and market manipulation are viable strategies.
If Tyler changes his tune we can be assured space aliens sucked his brains out and replaced them with Federal Reserve Jello.
(Lime) Green is good.
Gee, thanks, CD. Now I gotta clean my keyboard.
if tyler changes his tune, i'll probably move to the sidelines. i'm sure there are other record setters out there but for me i've never known anyone to fight the tape longer than he has.
let the junks begin, all i can say is if you haven't cleaned up in the market lately then you too might be a 'zero' hedger
I disagree.. what didn't you understand about BTFD or PMs? It has worked very well for me.. and unlike the rest here, I happen to enjoy the technological iBoom that Apple has given to us tech geeks. Certainly has helped my income and I even like the 70/30 cut from the store. Sooo easy for us small timers.
oh heck, i've been a total silver bull. i'm pretty sure most of the posts i've made reflect that. just saying that in the future there will be a lot of zero hedge posts today that will look brilliant, but the advice and conclusions won't be very profitable.
take your aapl for instance, i'm pretty sure tyler's done nothing but ridicule it all the way up. he's a brilliant mind that completely missed that one too. or at the very least, caused others to miss it.
tyler's a very rich source of information with just one major flaw.
Tyler hasn't "missed" anything because Tyler doesn't proffer stock buying tips or suggestions. He has consistently and repeated dismissed the basis for the run-up in stock prices as nothing more than manipulation and Ponzi economics. He has never said you can't take advantage of the insanity other than to say those who wish to play in this market are taking on much more risk than they are bargaining for.
His most direct observation has been that it's insane to think you can safely play in an insanely manipulated market. He never said you couldn't make money, only that the game is rigged and you can loose very quickly in a rigged game. His advice was to stay out of any game you know to be rigged. He has also said large profits can be made if you are nimble and reckless. The ultimate question he has posed is how to you keep those profits?
A fact many dismiss. Thanks for the material Tyler.
+1
Thats my take on it, too. Well said.
It seems to be official policy of TPTB to halt all American consumption by crashing the USD and redirecting global resources for Asian growth for the next century.
The stock market is masking the quiet looting on Wall Street and the coming disaster. Open secret.
Where are you guys ordering your gold and silver from these days? Anyone care to give a recomendation based on experience? Thanks!
Golddealer.com Lowest buy and sell spreads anywhere when you add in the cost of shipping and insurance.
Gainsville coins, shipping is high but I get it very quick { a matter of a few days} which is very important to me..
Apmex does it for me. If I get lucky on a pull back will add to all. In order of dollar % over-weight. Silver, Gold, Palladium, then Platinum. They are honest and you get a nice gift at Christmas.
Just received my first order from Tulving. His minimum order sizes are high but I think he has the lowest margins. Have also used Apmex - good experiences with them also.
Thanks you guys! Appreciate it!
I use Lear Capitol.. they are the cheapest Ive found on eagles, maples and rounds. They also pick up the phone unlike alot of online dealers....U can get free shipping and Insurance on your first order using this referral code "2B8CD". If you find anyone cheaper please tell.
To understand this chart one needs a comparable chart of money creation under QE-2, to see if there is any correlation, as professed by all the proponents of FED induced asset inflation since june 2010. Maybe the author could provide some inputs.
We post updates to the Fed's balance sheet, to bank excess reserves, to M2 and MZM, and to the Adjusted Monetary Base every week. We also post an update to Shadow Banking liabilities (much more comprehensive than M3) every quarter.
Don't mind falak pema. He's still trying to find the "reply" button.
lol, thought I'd found it. I got the message. TY, TD. Will check out next update.
<HELP> for explanation
Overbought? Technicals? I thought it was because of that POMO operation being performed everyday by those 4 dudes with their Bloomberg terminals. Technicals? We dont need no steenking technicals.
Retail getting back in big time, after having missed the runup since 09. Just in time to get sheared again. The top is in...
I havent seen much evidence of greater participation unless you are talking etf's. What are you looking at to say greater retail participation?
Less than a month's worth of positive mutual fund flows. Not much broad participation. But those lemmings who got in are already getting ulcers.
Yes, its the rate they are getting back in, about $30B since the beginning of the year into mutuals and etf's...
Will remain overbought for quite some time to come, nobody to sell to since retail investors are not joining the party.
Nobody to sell to is usually the time the market falls. I dont understand your logic
insiders wiil know beforehand when this thing comes down. they'll make a fortune shorting, and at the abyss, will buy everything on the cheap, owning everything, enslaving all!
I guess my last yen years or so was random luck. I cant call shit anymore.
When I gave up my silver short that is when we had the correction. I have closed out all my bearish options positions and sold spxu. That means an intermediate top is just about in. I am just an ordinary contrary troll.
Now I am just living off past successes like the 40 year old high school quarterback.
However I am not going to be like jesse livermore. I know when to quit while I am ahead.
Balanced portfolio with a slight overweight to precious metals, emerging markets, small and mid caps, an emphasis on dividend payers, and a slight underweight to bonds. I got 20 more years until I need it.
The Mkt is stretched lika a balloon, the Money that was pumped into it can be Gone Much faster than it went in..
The decline is going to be swift falling thru 50 dma.. 100.. 200..like a runway elevator.
Maybe they just close the great stock markets like they did in Eqypt.. hasn't opened in a Month. You know those fabuloz Emerging Mkts.
NIFTY Updates both LONG term and very SHORT TERM::::
A bearish Picture for INDIA.......NIFTY would be good BUY at 3500 area:::
http://markettechnicals-jonak.blogspot.com/
Yep. I would definitely buy in at 3500 assuming the fall was due to ordinary turmoil.
Just a PSA for everyone... it's not good to zerohedge while driving.
Thank you.
The result of an unfortunate soul Hedging while driving. :>)
Thats the only time I have to hedge! That and the crapper. Wife hates it when I hedge during sex.
A little paint and Bondo™ will fix that right up! :>D
Hope everyone is all right NL.
when ben stops the pomo, GS and JPM will have front run it. and be short everything..
can we get a bug in any upper management office 'TD, for a little tip off to us Loyal ZH
groupies when that happens?
hell been trying to get a janitor job at GS for years..but they don't like older white men who are strait.
This equity intervention has a real cost and what we gain in stocks we lose in other areas like food, fuel, and income. We sacraficed the three highest needs for the masses without giving it even a moment of thought.
I wonder what Kostin's clients say about the Arab world turmoil and of course what is his point of view.
Probably wait and see.... and sell some.
Research was from the 24th, thankfully was bullish close friday on ES, so all about what happens tomorrow morning. Might levitate a bit overnight (as per usual) but as long as we dont get back to 1294s we should be fine for the retrace higher.
Start here.
http://www.youtube.com/watch?v=zKEGxy7xFvM
To me this seems to be nothing more than a giant scheme to drive out non-insiders. Since retail abandoned this BS ride well over a year ago we have mostly professional traders left in the market. We still have the 1-2 % insider group and all of those other hedge funds/institutional non-insider investors left. My guess is the insiders will have to shear the clueless ranks to make any money. Retail was easy, professional traders less so.
i think this is what they said throughout the 90's. what a decade of returns that was!
i think 1995 was a year it never fell below the 55 dma
i found it way more profitable over the years to buy near support instead of being scared shitless whenever support levels drew near
i'm guessin' the powers that be won't rest till new all-time highs are surpassed. i never expected them to literally drop it out of helicopters
sSilvio Berlusconi resigns?
http://dawnwires.com/politics/silvio-berlusconi-italian-prime-minister-resigns/
"The other notable point about the recent price action is the extreme move seen on Monday where the market posted its largest one-day %age decline since the recent rally began in earnest on 27th August ‘10."
I usually stop reading an article when the author mistates facts, or simply displays poor writing skills by using misspelled words or poor grammar. One cannot expect the thoughtful results of the incompetent worth consideration.
Hey assclown, it was a cut & paste from the original GS article. Oh yeah, I guess you stopped reading before you got that far. If I stopped reading everything that contains poor spelling or grammar I'd be much less informed than I am now. You have clearly demonstrated your own incompetence in your attempt to self-righteously point out that of others.
For real, Simone. You should realise that even if the contributor is using ESL (English as a Second Language...), you should not confuse input with content. How is your Mandarin, by the way?
Besides, I don't really see where there is a problem with your quote. Seems fairly accurate to me.
"No one could have seen this coming," said the Bankers to the Congressional Committee.
Hahahaha! Of course, you don't think they are going to say:' ok, we did it to fleece the public, so we can pay for our and your lifestile and your re election campaigns.' Hahahaha
Let's do a quick review.
Take the global bond market, and assume a percentage of those holders are concerned about the long-term prospect of inflation.
Assume the equity market serves as their main hedge in percentage terms.
Assume the Fed is unlikely to sterilize in the near future, if ever.
Wouldn't one expect equities to behave this way?
The depth of their correction here serves as perhaps the most reliable indicator of ensuing currency price-action.
Makes sense to me!
Rather than a 'giant scheme' I see the stupidest game in the world. Reflate the stock market by handing out money for hookers and bottles and hoping the plebes can live off the stuff that trickles. Believing that reflating the stock market can reverse all the decades of rot in the national and global economy. Using the market to stuff cash on corporate balance sheets and assuming it gets re-deployed in the US economy. It's just the latest and most extreme version of the stunts the Fed's been pulling since 1982.
ah but it can Caviar. It can.
News has become irrelevant. Technical analysis is now irrelevant. Fundamental analysis is irrelevant. Financial analysis is irrelevant. We have PRINTED prosperity now!
Maybe so, but you can't live in a house made from pages of "Architectural Digest" or eat pages from "Gourmet" magazine! :>D
MOST current economic thinking in based on two economic realities.
1. - The "Bennie and the Jets" put and the belief that the FED as lender of last resort will not let world markets sink into depression mode.
2. - There is no alternative to point # 1 above. Anything other than #1 will invite world economic destruction.
Look at world economic news. Most governments as well as the major central banks are coordinating this as best they can. Whether we are where we are due to sinister behind the scenes forces or not, is really not the issue. World money based on debt has boxed everyone into the current operating mode.
There are really only 2 questions left.
- Can this continue in perpetuity and if not when does it stop?
- Is there or can there be a plan for the future, when one or more major world economy experiences failure?
Time to switch to Cash US DOLLARS!!..won't catch VirgilC in a herd. He hates crowds and Stocks and Commods are exxtremely crowded at the moment.
It's tough to make $ when 99% agree with you.
I've also got 1275ish, 1230ish, 1175ish, and 1130ish on the chart (interesting reoccurring levels there).
i think the idea of "repealing the law of healthy corrections" is indeed unhealthy. now pardon me while engage in my own personal variant of a "pump and dump" scheme.
It's times like this I miss the predictions of an impending crash from Nic Lenoir,what ever happened to him?
Last post I read from Nic Lenoir was to Buy Silver Sell Spanish Equities at end of last month. Would like to see some more soon their worth reading.
http://www.zerohedge.com/article/buy-silver-sell-spanish-equities
This analysis is brilliant. The Bernanke cash flimflam can't work forever, and when the normally super-Bullish GS starts talking like this, watch out below. Don't count on ES at 1400 any time soon.
I'd say that "everybody" "knows" that Bernanke is going to fuck this up......
"Everybody" "knows" that interest rates will be low for an extended period.
I don't know shit. I just trade.
gh
I like Simple Moving averages. Exponential averages are valid, if you walk away from your trade. I never walk away from any trade. I want SPOT moving averages to work with. Look @ flows . Would you trade a yard in New YORK and play skippy in London?
I look at price and volume. Period.
gh
Long time listener, first time caller. Anyone else catch the Oscar acceptance speech that started by calling out the lack of prosecutions of the bankster criminals? Probably not (since y'all avoid these "circus' fo the masses") but it made me nod vehemently and actually look up from my websurfin. If even one sheep awakes it was worth it...