The Eight Scariest Charts For Equity Bulls

Tyler Durden's picture




 

It would appear Mark Twain's infamous quote that "history does not repeat, but it does rhyme" has never been so apt. The following eight charts suggest the rhythm is getting louder and louder. How is it possible? It's nonsense? Well at the heart of the markets, it is still us humans and our endearing greed, fear, and heuristic biases that drive the flows... trade accordingly.

 

The current price action in the S&P 500 is eerily similar to the movement leading up to the collapse in 1987... (via Bloomberg)

 

The Dow is also tracking this move almost perfectly over the last two years...(via Citi)

 

The next three charts are particularly concerning...

Here is the Dow leading up to the 1987 drop - showing its distance from the 55-week average and the collapse once it crossed... (via Citi)

 

here is an unnamed stock's price action (percentage change) over the past three years...(via Citi)

 

and AAPL's price appreciation from the lows in 2009 and its 55-week average...(via Bloomberg)

 

It's not just 1987... Here is the Dow analog again the 1977-78 period and 1905-1910 period... (via Citi)

 

and the Dow Transports are playing out a very similar pattern to the 1960s-70s... (via Citi)

 

And a Bonus Chart - for those who prefer to look at Bond Analogs... Here is the current move in 10Y US Treasury yields overlaid on 1992's movement... spooky no? and somewhat fits with a view of weakness into year-end, downgrade on debt-ceiling and collapse... (via Citi)

 

Machiavelli accounts for this 'repetitive' oscillation by arguing that virtù (valor and political effectiveness) produces peace, peace brings idleness (ozio), idleness disorder, and disorder rovina (ruin). In turn, from rovina springs order, from order virtù, and from this, glory and good fortune.

Machiavelli, as had the ancient Greek historian Thucydides, saw human nature as remarkably stable - steady enough for the formulation of rules of political behavior. Machiavelli wrote in his Discorsi:

Whoever considers the past and the present will readily observe that all cities and all peoples... ever have been animated by the same desires and the same passions; so that it is easy, by diligent study of the past, to foresee what is likely to happen in the future in any republic, and to apply those remedies that were used by the ancients, or not finding any that were employed by them, to devise new ones from the similarity of events.

 

“Everything that needs to be said has already been said. But since no one was listening, everything must be said again.” — André Gide

Charts: Citi and Bloomberg (as marked above for clarification - not all charts are sourced from Tom Fitzpatrick of Citi)

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Thu, 11/08/2012 - 17:28 | 2962170 GottaBKiddn
GottaBKiddn's picture

 

Are you implying that central planning is something new?

Thu, 11/08/2012 - 17:40 | 2962194 vast-dom
vast-dom's picture

at this unprecedented level of meddling, do you really need to ask that question?

no free markets = no freedom. as what you can do for yourself, far from the gov.

Thu, 11/08/2012 - 20:46 | 2962741 Ness.
Ness.'s picture

While I agree that we live in a different age of intervention (Fuck the Bernank), don't discount the algo models that are controlling this farcical casino we refer to as a market.  IOW, humans are no longer making the buy/sell decisions these days (you know that as well as I do).  These charts, however, are most certaintly being used as 'potential outcomes' to the children that are actually writting code for the algos.  

If the 'charts' breakdown, the algos will go bidless and fist fuck themselves to death trying to 'get out'.  I'm guessing that they'll be 'programmed' to reverse their position, jump on board, and get us to a mean quicker than you think.

 

 

 

 

Thu, 11/08/2012 - 22:46 | 2963126 vast-dom
vast-dom's picture

until algos are purely self-replicating, there is much room for human idiocy. and these algos are essentially allowed to run amok precisely because gov is too busy destroying our freedoms rather than protecting them. that is the scary shit, markets collapsing and levitating ain't nothing in comparison.

Fri, 11/09/2012 - 00:20 | 2963356 TruthInSunshine
TruthInSunshine's picture

Here's a provocative thought experiment:

List the countries as of 2003 that did not have fractional reserve central banks controlling the volume of their fiat supply.

Now list the governments that formerly did not have fractional reserve central banks controlling their fiat supply that have been invaded & overthrow, overthrown by coupes with help from outside sources, or otherwise toppled in the last 9 years,

Fri, 11/09/2012 - 00:28 | 2963367 Ness.
Ness.'s picture

until algos are purely self-replicating.. backtesting

these algos are essentially allowed to run amok.. agreed

gov is too busy destroying our freedoms rather than protecting them...  true, but not relative to the current market manipulation.

that is the scary shit... agree whole heartedly.

 

I'm just happy that it only took 2 days after more 'hope and change V2.0'  to get me back to scratch.  Looking forward to 4 more years.


 


Fri, 11/09/2012 - 00:36 | 2963373 vast-dom
vast-dom's picture

i'd think about this a bit more :"gov is too busy destroying our freedoms rather than protecting them...  true, but not relative to the current market manipulation." i realize certain gov created banking cartel entities purposely define themselves as neither private nor public, depending on how/when they must deflect the illegality of their operations, but that little loophole notwithstanding...

Fri, 11/09/2012 - 01:48 | 2963504 DeadFred
DeadFred's picture

In a toe-to-toe between Bernake and the algos I'm betting on the algos. Both have flawed programs guiding their every move but the algos are FAST!

Thu, 11/08/2012 - 19:16 | 2962548 Rip van Wrinkle
Rip van Wrinkle's picture

Central planning ALWAYS fails. It's just a question of when.

Thu, 11/08/2012 - 20:51 | 2962754 GeezerGeek
GeezerGeek's picture

It's also a question of how much pain and suffering are caused by the arrogant incompetence of the central planners.

Thu, 11/08/2012 - 17:54 | 2962290 slickrock
slickrock's picture

Two Iranian fighter jets couldn't catch (let alone hit with multiple missles) an unmanned drone?  Those guys really do suck!!!

Thu, 11/08/2012 - 18:36 | 2962431 BlueCollaredOne
BlueCollaredOne's picture

They were warning shots. Don't be obtuse, missiles are heat seeking and would have hit the drone if fired.

Thu, 11/08/2012 - 20:13 | 2962656 Bill D. Cat
Bill D. Cat's picture

Who the fuck would fire a warning shot at drone ? Obtuse ? Don't be a fucking moron .

Thu, 11/08/2012 - 20:51 | 2962756 Ness.
Ness.'s picture

Shooting down the drone would be suicide - Iran knows this.  But a near miss would definitely garner attention, don't ya think? 

 

They didn't miss downing an unmanned drone because of ability.

 

Don't be a fucking moron.

Thu, 11/08/2012 - 20:56 | 2962768 Enslavethechild...
EnslavethechildrenforBen's picture

They shot down my paper airplane with a rubber band. Terrorists/guilty/bomb em

Thu, 11/08/2012 - 21:44 | 2962924 fuu
fuu's picture

They captured one not too long ago.

Fri, 11/09/2012 - 05:48 | 2963729 OldPhart
OldPhart's picture

That was a give-away.  Obama's gesture to Ahmadinajad.  We should see that reversed engineered within this month.

Thu, 11/08/2012 - 20:43 | 2962728 mjcOH1
mjcOH1's picture

Not necessarily warning shots.   It was fired on by two Russian made ground attack aircraft (SU-25s).   The fitted gun was originally a 30mm anti-tank cannon, although it's unclear what's on there now.   They put the same anti-tank cannon on the Mi-24 Hind attack helicopter.

Wrong tool for the job, and they didn't get lucky.

Thu, 11/08/2012 - 19:41 | 2962600 repete
repete's picture

The drone's name "Maddox" of all things

Sat, 11/10/2012 - 08:43 | 2967467 SuperRay
SuperRay's picture

iranian (or U.S.) jets shoot down drone over the gulf of tonkin.

Thu, 11/08/2012 - 19:49 | 2962608 vix is for kids
vix is for kids's picture

Tyler, you are comparing AAPL's to INDU's.

Thu, 11/08/2012 - 16:44 | 2961909 realtick
realtick's picture

Nice charts

Thu, 11/08/2012 - 16:45 | 2961914 TeamDepends
TeamDepends's picture

It was the best of times, it was the worst of times.

Thu, 11/08/2012 - 20:53 | 2962761 GeezerGeek
GeezerGeek's picture

Who gets to lose his head this time? I have my candidates, but the DHS may be reading this.

Thu, 11/08/2012 - 16:47 | 2961916 ebworthen
ebworthen's picture

I thought idleness was "ouzo" (?).

What's the problem?  1987 was a pretty good year for me.

Thu, 11/08/2012 - 17:04 | 2962033 urbanelf
urbanelf's picture

I think I had exactly 2 public hairs at the time.

Thu, 11/08/2012 - 17:10 | 2962082 bnbdnb
bnbdnb's picture

You should keep that information private.

Thu, 11/08/2012 - 17:35 | 2962203 in4mayshun
in4mayshun's picture

No, he didn't say "pubic hairs," he said "public hairs...y'know, the ones people see.

Thu, 11/08/2012 - 16:47 | 2961924 SheepDog-One
SheepDog-One's picture

S&P in danger of worst case scenario 1150 and DOW might go to 10,000? Not too scary to me, hell we were just there a short time ago, big deal. I guess wake me when the S&P plunges to 500 or so then there'd be something remarkable.

Thu, 11/08/2012 - 17:00 | 2961999 Conman
Conman's picture

Dow 10k is scary when you are uber levered bull tard. Ask Penis(Dick) Bove's employer what happens when leverage and uber bullishness collides.

Thu, 11/08/2012 - 17:06 | 2962041 SheepDog-One
SheepDog-One's picture

Well yea...and then if that is the case DOW 10K will be for only a minute as it proceeds down to 6K or whatever...bringing into play my other comment lower down.

Thu, 11/08/2012 - 17:04 | 2962036 eclectic syncretist
eclectic syncretist's picture

Bots don't get scared.

Thu, 11/08/2012 - 17:54 | 2962289 JPM Hater001
JPM Hater001's picture

Not true.  Chuck Norris terrifies them.

Thu, 11/08/2012 - 20:21 | 2962666 augustusgloop
augustusgloop's picture

but do they go out and party w/ electric Hos aftter work?

(sorry philip k. dick)

Thu, 11/08/2012 - 16:48 | 2961927 GraveyardSpiral
GraveyardSpiral's picture

Thanks for THAT Tyler!!!!

Thu, 11/08/2012 - 16:48 | 2961928 Dr. Richard Head
Dr. Richard Head's picture

So what you are saying is gold at $10K sometime around early 2014?  Wait, these charts didn't say it, but Peter Schiff (and me parroting him) did,  If one believes Peter Schiff's parity of gold and DOW at some point, then that would be the case.

Thu, 11/08/2012 - 16:50 | 2961940 Dr. Richard Head
Dr. Richard Head's picture

$180 silver then too?

Thu, 11/08/2012 - 17:37 | 2962210 in4mayshun
in4mayshun's picture

$180 silver? You wish! JPM would launch nuclear war before they let that happen

Thu, 11/08/2012 - 17:55 | 2962293 JPM Hater001
JPM Hater001's picture

Dont put it past them either.

Thu, 11/08/2012 - 19:17 | 2962551 Rip van Wrinkle
Rip van Wrinkle's picture

In that case £360!!

Thu, 11/08/2012 - 16:56 | 2961969 TeamDepends
TeamDepends's picture

2014?  Hell, we'll all be in Barry's re-edutainment camps by then.

Thu, 11/08/2012 - 18:54 | 2962481 TeamDepends
TeamDepends's picture

Except you reds, of course.

Thu, 11/08/2012 - 20:21 | 2962665 seek
seek's picture

That's only a year away. Logistically there's no way they can handle more than about 10K disappear-ees.

Don't forget, due to the NDAA's elimination of due process, the rational response to someone taking you away is to fight back. This will greatly complicate re-edutainment admissions. That law was a dumb move on so many levels it's astounding.

Thu, 11/08/2012 - 20:34 | 2962704 TeamDepends
TeamDepends's picture

Testify

Thu, 11/08/2012 - 17:01 | 2961998 Mad Mohel
Mad Mohel's picture

TBH I get nervous as shit when I hear guys like Peter Schiff, Marc Faber, Stephen Leeb etc... pumping gold. The spiel these guys lay down sometimes sounds like they are fattening up the sheep. You know what happens next.

Oh and I forgot to add Sprott on there too.

Thu, 11/08/2012 - 17:12 | 2962092 Dr. Richard Head
Dr. Richard Head's picture

I tend to disagree for many reasons. 

1. Chart of reserve currency status and their duration.

2. Housing bust predictions.

3. Preminitions of QE.

4. The fact that so many still say those guys are nutz.  nice contrarian indicator.

5. The fact that the FED has no exit strategy.

6. The chart of gold and the US debt ceiling.

7. The US is full of fools that want free shit, so Congress and el Presidente will oblige.

8. The market share of investors in gold is still so miniscule.  Just ask around who owns either gold or silver.

9. Equity market will scare the sheep with increased volitility.

10. Global repatriation of gold from ECB, FED, et al.

11. Real estate's continued decline.

12. Bank savings offer shit for return.

Thu, 11/08/2012 - 17:29 | 2962155 Captain Kink
Captain Kink's picture

13. negative real interest rates (ZIRP)

14. QEinfinity

Thu, 11/08/2012 - 20:24 | 2962675 seek
seek's picture

15. They're putting their own money at risk and not begging others to invest with them.

Thu, 11/08/2012 - 17:33 | 2962177 Mad Mohel
Mad Mohel's picture

Good sound reasons. I just sometimes get suspicious of some of the enthusiasm these assorted characters show.

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