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 - 17:41 | 2962233 marathonman
marathonman's picture

It's hard not to be suspicious when Schiff owns a company selling gold, but he is (so far) seems on the up and up.  Want to deal with a bunch of thieving scumbags, then call Goldline and let them tell you steer you to nuimismatics.  Ingram, Beck, and Thompson all shill for those bastards.  That kills their credibility with me.

Fri, 11/09/2012 - 03:12 | 2963604 AmCockerSpaniel
AmCockerSpaniel's picture

>>> 5. The fact that the FED has no exit strategy. <<<  I think the Fed does have an exit strategy. All the money "lent" to the TBTF's is for very short durations (30 days or less). The Fed did this so that the banks must keep the money on thier books, and not lend it out (makes the banks books "look great") This also means that they must (Fed money)  be rolled over very frequently. The fed need only NOT roll over those loans.  It's all smoke and mirrors for us so we don't start a run on the banks. But the banks now can use the little that is left of their money to play with, as they don't have to hold some money (by law they must keep a percentage of their loaned out money in the bank) back, just in case 

Thu, 11/08/2012 - 16:49 | 2961931 TheSilverJournal
TheSilverJournal's picture

What was that 10 yr bond yield at in 1987?

Today, it's 1.59%. Something tells me there's not going to be a huge stampede out of stocks and into bonds...therefore, no massive selloff here.

Thu, 11/08/2012 - 16:53 | 2961946 SheepDog-One
SheepDog-One's picture

Right, I also suspect we wont see a 'sell off'....what people will see one morning when they turn on their computer trading platforms is 'Markets Suspended Until Further Notice'...thats all. Then when they try to cash out their holdings....'Oops....looks like you've been Corzined, oh well get in line'.

Thu, 11/08/2012 - 17:00 | 2962005 bagehot99
bagehot99's picture

How about a stampede out of stocks into gold? Or Swiss Francs, or negotiable CDs, or any other safe haven with a good chance for a return OF investment?


Thu, 11/08/2012 - 17:02 | 2962021 SheepDog-One
SheepDog-One's picture

Well if everyone wants to stampede out of stock markets for whatever reason thats fine with me.

Thu, 11/08/2012 - 18:35 | 2962426 chdwlch1
chdwlch1's picture

Also explains why they've (our beloved regulators) have been trying to make Money Market Funds less "liquid".  Nowhere to run, nowhere to hide!!!

Thu, 11/08/2012 - 17:04 | 2962034 TheSilverJournal
TheSilverJournal's picture

Yup, if assets fall much from here, the entire kit and kaboodle is coming down. The banks will dry up, which simply won't be allowed and that, the real printing is about to begin. There will be no worse of an investment than dollars and bonds. Even over priced stocks will go up up up  and away (this does not mean they're a good investment) as the dollar falls through the floor.

Thu, 11/08/2012 - 17:34 | 2962200 GottaBKiddn
GottaBKiddn's picture


Do you think that maybe the sheep are being primed for a "meaningful" devaluation?

Fri, 11/09/2012 - 03:18 | 2963610 AmCockerSpaniel
AmCockerSpaniel's picture

Leave no cash in your accounts. I have to write checks every time I buy something, and they have to send me a check every time I sell. Not good but I trust the FDIC more now than Corzine and friends.

Thu, 11/08/2012 - 17:02 | 2962019 Conman
Conman's picture

Whats worse a) being in cash at negative 3%ish b) bonds at 1% or c) losing it all when Zynga goes bankrupt.

Thu, 11/08/2012 - 17:09 | 2962072 NitneLiun
NitneLiun's picture

You've got a good point, but investors aren't going to rotate into bonds for the yield. They are going to rotate into Treasuries for the inevitable QE3,4,5 ......

At some point all this QE nonsense has got to crush 10yr yields by 100 basis points, right? Right?



Thu, 11/08/2012 - 17:20 | 2962126 TheSilverJournal
TheSilverJournal's picture

The fed can hold the 10 yr to whatever it wants by printing more money to buy more bonds, and it will hold them very low, straight into hyperinflation.

Fri, 11/09/2012 - 02:01 | 2963527 DeadFred
DeadFred's picture

That's why when the stuff hits the fan you don't short treasuries you short corporate bonds. Both moved up in price together but do you think Ben will defend high yield? Wait for the first missiles to fly. Sunday night maybe? It's got the Veteran's Day theme, the new moon and why not counter 9/11 with 11/11? After all everyone knows it was the Iranians that attacked the Towers, or was it the Iraqis? Darn, where's Fox News when you need to get your facts straight?

Thu, 11/08/2012 - 16:49 | 2961934 harami
harami's picture

This time is different, we have Obama! /s

Thu, 11/08/2012 - 16:56 | 2961966 pragmatic hobo
pragmatic hobo's picture

and bernanke's printing press.

Thu, 11/08/2012 - 16:49 | 2961935 monopoly
monopoly's picture

I really doubt there are too many equity bulls on this site. Most of us have learned our lesson and own "real" currency and related miners. 

Thu, 11/08/2012 - 18:28 | 2962406 gonetogalt
gonetogalt's picture

yes, my miners are up 30-40% since summer, and where's the out-of-the-blue, blind-side left hook coming from? 

That's my 'safe' money, otherwise I've spent 9 years living in a tent in the jungle mining like hell...

Thu, 11/08/2012 - 16:53 | 2961952 HellZero
HellZero's picture

After months of low volume ramps ups, the rats are finally jumping ship Strangely just the US mkts for now, Europe strangely not following suit for now

Thu, 11/08/2012 - 18:50 | 2962467 johnjkiii
johnjkiii's picture

When I was on the sell side we called this kind of market a "to-whom-er", as in sell to whom? The algos have been trying to suck the hoi polloi in with little buy programs. Now that they can't hold it any more they appear to be running for the crapper. The trick is volume - always bigger on the sell side, always faster. Like diarrhea.

Thu, 11/08/2012 - 16:54 | 2961953 oldman
oldman's picture


The end of this show is going to be much different than the 1987 game---this is hundreds of times that little game.

I don't know how it will end, but I really feel privileged to be here to see the show.

I coulldn't buy a share in 1987---everything went to 'family'. The market makers did nothing but wait us out----it was the endgame for most oldtimers---they saw it for what it was and were completely disgusted by what they saw. These were smart, honest, and princpled people.

I was lucky to have been among them and they taught me a lot that no longer applies   om

Thu, 11/08/2012 - 16:55 | 2961962 pragmatic hobo
pragmatic hobo's picture

just what is up with vix?

Thu, 11/08/2012 - 17:46 | 2962246 RSloane
RSloane's picture

This is from the comments section at Daneric's:

"Is the VIX some kinda joke? either parabolic tomorrow to make up for today's lost ground or it's being truthful, not because we ramp but the big players aren't buying protection because they are already soooo positioned short, who needs protection."

Dunno if that's informative for you or not.

Thu, 11/08/2012 - 18:53 | 2962479 Implicit simplicit
Implicit simplicit's picture

The vix is a measurement of the volataility of the variance in a 3o day smoothed average of option prices. The volataility in the variance showed up yesterday as the price of purchasing put options rose. We are not seeing any panic yet. 

Thu, 11/08/2012 - 19:05 | 2962514 walküre
walküre's picture

vix is a crap shoot. better odds in Vegas

Thu, 11/08/2012 - 20:19 | 2962661 Implicit simplicit
Implicit simplicit's picture

Only with craps and 21

Thu, 11/08/2012 - 19:04 | 2962512 Implicit simplicit
Implicit simplicit's picture

The BTFD  mentality has not been injured enough for panic selling yet. Once the BFTD slows the VIX will start to act more like a warped opposite mirror of the market. The vix will glide easily over 30 once the panic sets in. 

Thu, 11/08/2012 - 16:56 | 2961963 Dr. Engali
Dr. Engali's picture

Yeah but it's different this time........

Thu, 11/08/2012 - 17:02 | 2962023 oldman
oldman's picture

Yeah, Doc,


In SCALE------

That is the only reason it is interesting because otherwise I've seen it before and it is not so interesting on smaller scales

Keep your head down, brother, the shit is going to keep flying            om

Thu, 11/08/2012 - 18:09 | 2962339 RSloane
RSloane's picture

Doc and I were talking about how similar all of this felt the other day, down to intuitive interpretation of data. What makes it interesting for me is: its like an outraged stampeding bull elephant is charging the Fed and markets, and everyone is out of bullets. So, do you want the elephant tusk up your ass or up your nose? Its going to be bloody either way.

Thu, 11/08/2012 - 21:22 | 2962862 oldman
oldman's picture


I am not going to get close enough to the elephant to get any blood on this oldman. I just am going to sit here night after night and watch what happens. Life is too easy to complicate it by playing games where the deck is stacked against anyone but the house.

I am enjoying the collapse that began in 1987 continue on its merry way. This is just another Zen moment in a universe full of such things.

BTW, elephants like peanuts, so always have some with you       om


Thu, 11/08/2012 - 22:36 | 2963100 rhinoblitzing
rhinoblitzing's picture

You talkin to me?

Thu, 11/08/2012 - 16:57 | 2961979 Mattress Money
Mattress Money's picture

i think it maybe a short trap, i dont play after losing 200K,  I know the minute i decide to buy puts the market will rise 27%


Thu, 11/08/2012 - 17:01 | 2962010 SheepDog-One
SheepDog-One's picture

Any 'short' out there that does not know by now to take his 3%-4% and bail has got to be retarded.

But I think this post-election may be different, its a new game I suspect.

Thu, 11/08/2012 - 17:26 | 2962154 Awakened Sheeple
Awakened Sheeple's picture

When the most batshit doomers here (myself included), don't believe the market can possibly go down, it's a pretty strong contrarian indicator IMO.

Thu, 11/08/2012 - 19:06 | 2962520 walküre
walküre's picture

I was about to go long before I punched myself in the face.

Thu, 11/08/2012 - 20:22 | 2962671 DanDaley
DanDaley's picture

That's just funny. Thanks for the laugh.

Thu, 11/08/2012 - 17:35 | 2962204 RopeADope
RopeADope's picture

Obama's new wealth tax, legislators not required. I was wondering what that big red sell ES button was doing on his Oval Office desk...

Thu, 11/08/2012 - 17:01 | 2962009 NotAMathWhiz
NotAMathWhiz's picture

Sorry, did you say something?  I wasn't listening...

Thu, 11/08/2012 - 17:03 | 2962029 SheepDog-One
SheepDog-One's picture

I'm only surprised that after 2 market down days, we havent gotten any QE rumors from the FED yet? Certainly must be a new post election new paradigm here.

Thu, 11/08/2012 - 18:48 | 2962463 Bay of Pigs
Bay of Pigs's picture

LOL, can hardly wait for FarceBerg's coming collapse. 19 handle today.

  • November 13th: 1.332 billion shares, 49% of shares outstanding.
  • December 13th: 124 million shares, 5% of shares outstanding.
  • May 17th, 2013: 47 million shares, 2% of shares outstanding.

    Read more:

  • Thu, 11/08/2012 - 23:46 | 2963277 ReactionToClose...
    ReactionToClosedMinds's picture

    Facebook is an out in the open scam ... ask yourself ... what is their biz model?   Fools/people willingly forever giving up personal private marketable data .... sooner or later even the cattle herd & move .... then Farceberg is a another top 5 bank scam (of course Barry Ritholz along with Aaron Sorkin will tout it to the end).  But never forget that Donald Graham CEO of Washington Post, friend of Warren Buffett, was The Chief Enabler to the Zuckerbergs.  It is all there if anyone cares to do basic research ... such as read public information.

    Thu, 11/08/2012 - 17:05 | 2962045 Conman
    Conman's picture

    Holy dotcom bubble 2.0 is confirmed - priceline buys kayak? whats next facebook buys isntagram? oh waitt... fuck.

    Thu, 11/08/2012 - 17:07 | 2962055 SheepDog-One
    SheepDog-One's picture

    'Isntagram'....sounds like a real shady coin shop.

    Thu, 11/08/2012 - 17:06 | 2962050 Spastica Rex
    Spastica Rex's picture

    You know, even if stocks lost 5% every day, it would take them forever to get to zero.


    Thu, 11/08/2012 - 17:08 | 2962060 Conman
    Conman's picture

    Whats to say a stock couldn't drop 99% in a day. Happened before. just saying.

    Thu, 11/08/2012 - 17:09 | 2962075 Spastica Rex
    Spastica Rex's picture

    Still a buy.

    Thu, 11/08/2012 - 17:12 | 2962084 Conman
    Conman's picture

    True, until it isnt. Heard lehman was a buy too. Kodak. Etc etc etc etc etc. My dollar dont buy what it used to 10 years ago but i dont have to worry that it will dissapear out of my wallet over the weekend.

    Thu, 11/08/2012 - 17:13 | 2962097 Spastica Rex
    Spastica Rex's picture

    I'm joking.

    Thu, 11/08/2012 - 17:26 | 2962158 falak pema
    falak pema's picture

    can't remember Kayser with a pipe. 

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