Market Wake-Up Call

David Fry's picture

 photo Slap-PC.gif

For the last two months I've been saying that markets have become accident prone given the combination of
overbought conditions and ultra-light volume. One of those weekend-based news dumps caught in the sift was
from Cyprus, an "accident-like" event that triggered some serious selling in equity markets.
Obviously an EU tax or even some would argue a theft in the night, on bank deposits didn’t play well with savers.
Goldman Sachs (GS) even chimed-in before the open stating this decision set a bad precedent for resolving debt
issues in the eurozone. Some were suggesting southern European country depositors should move their deposits
to the UK.
Since the trial balloon didn’t go over well there was some back peddling by authorities first with Cyprus declaring
a bank holiday until Thursday. Not so curiously, Russia intervened denouncing the tax as a poor way of doing
business. But, as this article reports, the country’s banks are loaded with money-laundered deposits from
Russians.  So, it seems Mr. Putin wants the EU to bailout Cyprus and his pals at the same time giving Russia
a free ride.
The only U.S. economic news Monday was the Housing Market Index which was a disappointment (44 vs 47
exp & prior 46). Apple (AAPL) was once again in the news with rumors the company will raise the dividend by
As suggested, stocks gapped open lower but then rallied with the DJIA turning green briefly as dip buyers
appeared. Stocks then turned lower again to close with losses, with the leaders losing roughly .50%. Those
leaders were in financials (XLF), down .80% on fear of Cyprus contagion (How would we cleverly add a “C” to
PIIGS? Someone please help with this.). The dollar (UUP), bonds (TLT) and gold (GLD) all rallied on a flight to
safety. Commodities (DBC) overall were weaker led by oil (USO), base metals (DBB) and agriculture (DBA).
Overseas markets were lower again, from Cyprus naturally, while China (GXC) announced more property curbs.
Most investors are nervous now and need to hold things together to include the Fed meeting announcement
Wednesday. If bulls are lucky they’ll get their Turnaround Tuesday.   
For all this volatility and fear, volume was unremarkable and breadth per the WSJ was negative.
3-18-2013 5-22-00 PM diary

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The NYMO is a market breadth indicator that is based on the difference between the number of advancing

and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth

indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major

trends. I believe readings of +1000/-1000 reveal markets as much extended.

The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own
interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day
period. Greater buying of put options (protection) causes the index to rise.
Perhaps bulls will get lucky and get their Turnaround Tuesday. The only economic data will be from Housing
Starts with 919K expected.
The latest news from the rapidly evolving situation was this via Reuters: “Cyprus to introduce "more progressivity"
in terms of deposit levy terms: Eurogroup statement” That’s not very reassuring frankly and whoever came up with
this theft ought to change their mind quickly.
Let’s see what happens.

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razorthin's picture

Presenting the bull<shit> case.  It's going up because it's going up.  Soon it will be going up because it's going down.

peter4805's picture

"...the country’s banks are loaded with money-laundered deposits from Russians.  So, it seems Mr. Putin wants the EU to bailout Cyprus and his pals at the same time giving Russiaa free ride."

It doesn't matter who the money belongs to. What matters is who it doesn't belong to.

BeetleBailey's picture

Chart Porn....this post is the gloryhole of it all

Clowns on Acid's picture

The chart showing Fed printing is missing. Thats the onlty chart that matters.

MFLTucson's picture

Most investors are nervous now and need to hold things together to include the Fed meeting announcement Wednesday. If bulls are lucky they’ll get their Turnaround Tuesday.  Are you fuckin kidding?  This market is so over done its a fucking joke! 14,500 on made up finaical lies?

Setarcos's picture

Anyhow what market, let alone free?

And what meaning is there in this flock of charts when there is no human drover driving all that frenzied activity, just robots generating HFTs in anything from real stuff, to re-hypothecated, hypothecated derivatives of arcane CDOs and shorts on bottled farts maybe, who knows anymore!!

A flock of birds came to mind when scrolling through this plethora of charts, having watched Starlings and White Cockatoos performing amazingly co-ordinated mass movements which are seemingly random.

But then it occurred to me that there was more resemblance to a mob sheep run riot for lack of a good drover (shepherd) and sheep dog, therefore chaos - yes I have worked with sheep.

For drover read SEC and sheep-dog read Glass-Steagal.

PS Don't confuse "free" with "unregulated" in financial/bankster terms ... an analogy is a game of soccer, which is only freely played and enjoyed, within a framework of rules, such that both sides have the same number of players and that the off-side rule must be obeyed - otherwise the game is unplayable.

cifo's picture

Wow! I have never seen so many charts together. Did you have a chance to take a look at them all?

optimator's picture

Charts?  Binny B. will have the market open green tuesday, futures already up.  Good thing they don't even have to print, just push a botton.  Printing must be months behind, even with those Heidlebergs.

slightlyskeptical's picture

Looks like you want to head to india, Treasuries, Commodities / Metals, and the Vix. Toppy RSI's all across the equity market. Oil may be a buy.

Who sees it different?

StarTedStackin&#039;'s picture




Charts = wundebar! And Central Bankers = God's gift!

StarTedStackin&#039;'s picture

ps, "CHARTIN" SHOWED A SEVERE REGRESSION, prior to Bernanke's first put

Edward Fiatski's picture

Starting to look like the later part of 2007 alright - two Mountains of Doom and an asscreek in between.

Low volume during this risk off event could be explained by the suckers that are all holding long, praying to Lord-Satan Bernanke the Saint-Unholy.

Hail Wednesday & the Storms it brings - We Be Sailin' on Rough Seas, Yarr!

P.S. Have to say: Always liked your chart presentations, Mr. Fry.

StarTedStackin&#039;'s picture

Charting was a reliable tool until Ben started buying/printing

Edward Fiatski's picture

Still is.

Just don't look to make any long, or even medium-term investments - let Ben handle the eCONomy, see how he likes it. :) 

Scalping-Scalping-Scalping fairy princess. La-la-la

peter4805's picture

"We're fucked" would have been much easier to post than all those charts.

disabledvet's picture

i'd like to believe that Cyprus is "going to do what the Fed did in 2006-2008" but i'm sorry...i'm just not there. obviously i can be convinced of anything...i WANT to be convinced...but, eh. "here comes the President to Israel...goodbye Cyprus." i've really taken a flyer on the Treasury complex...not my style--sounded even more ridiculous when i explained it to a friend the other day. clearly though policy makers are cluing in that "you don't want a relationship with a Banker from New York City." those that have built their banks to "stay right there" have weathered the crisis...did they even have one? having said that while i'm not a big fan of the financials index i do like the banks. eventually they will "get the Government out from ruining them from the inside out" and start firing up the lending engines. North Dakota already points the way...and I think Pennsylvania (never a State for quiters) is going to follow suit. Here's a name i like: "gone nowhere for ten years and is close to setting an all time high." sounds like the US economy actually. unlike the rest of the mis-managers however these folks know "if you want your house warm you need to drill." once that State figures out you really don't need Detroit for your car or Texas for your fuel (and that economy is diverse and wealthy enough to do just that) i would say "finally...a winner in the war on terror." we shall see of course. the market is in need of a healthy correction...these things can become "unhealthy" of course. is Cyprus enough to cause one? i find it interesting if it is.

Setarcos's picture

Isn't N Dakota MORE than a tad different with it's State owned bank?

See Ellen Brown's "Web of Debt" and why N Dakota isn't saddled with debt.   See:

I know that a lot of ZHers hate state ownership and see 'socialism' and/or 'communism' and/or 'liberalism' in anything and everything not privately owned - though they strangely hate the private bankster Fed.  Weird that ... some sort of cognitive dissonance there.

Anyhow; over many years - like about 100 - state-owned banks have been very successful, including in Australia ... though the privatization fetish/ideology took hold during the 1980s and we've lost what N Dakota retains.

Key-Rick's picture

wow.  what an insightless article.  what is this, CNBS?

doggis's picture

dave - negative divergence on your NYMO and summation should point that out.....the story is far from a neutral one....