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Some More Fun With Market Timing

Tyler Durden's picture




 

Today's short squeeze, EM-is-fixed, Fed-hope-fueled relief rally (in the face of compounding errors in earnings expectations and outlooks) we thought reminiscing on what happened the last time stocks were this high and over-levered and debt-bloated entities were rapidly revealed for what they were would be useful. While the 'just three charts' we showed two weeks ago provide plenty of concern, when the NYSE Composite, which accounts for 1,900 companies representing 61% of the world's publicly traded stock market capitalization, shows eery similarities to the tipping point in 2007 as NewEdge's Brad Wishack pointed out earlier, we thought it worth sharing.

 

With strangely similar magnitudes and durations, the current Fed-driven rally and the previous Fed-driven rally in the NYSE Composite Index are raising concerns aross trading desks...

Furthermore, as in 2007, stocks paused and trod water for 5 weeks as they umm'ed and aaghh'ed over whether any of it was real.

 

Of course DeMark/Mclellan's 1929 Analog remains ominously timed...

 

 

and Hussman's Bubble Trajectory...

Based on the fidelity of the recent advance to this price structure, we estimate the “finite-time singularity” of the present log-periodic bubble to occur (or to have occurred) somewhere between December 31, 2013 and January 13, 2014.

 

 

as does @Not_Jim_Cramer showing us the extremes in bond and stock sentiment...

 

Will it still be Hendry's year or not?

Charts: Brad Wishack (NewEdge), @Not_Jim_Cramer , John Hussman

 

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Tue, 01/28/2014 - 20:49 | 4377634 Truther
Truther's picture

Got PHIZZZZ?

Tue, 01/28/2014 - 20:53 | 4377652 ApollyonDestroy
ApollyonDestroy's picture

Crash through Feb/March?! YESSS!!!

Tue, 01/28/2014 - 21:10 | 4377696 James_Cole
James_Cole's picture

When things start spinning out of control it'll be avg folks who feel the whiplash. Anyone who needs their income to live off of should be pretty nervous looking at those charts. Your gold won't save you either. 

And those with fantasies about a financial collapse being good.. are either rich or totally delusional. 

Tue, 01/28/2014 - 21:14 | 4377719 seek
seek's picture

"And those with fantasies about a financial collapse being good.. are either rich or totally delusional."

I think of it as "good" like chemotherapy is "good."

Yeah, it sucks, but the alternative is to let this financial cancer kill us all. A collapse that obliterates the current crony capitalism and replaces it with real capitalism would, in fact be a good thing, even if hugely painful during the transition.

Tue, 01/28/2014 - 21:22 | 4377743 Oxbo Rene
Oxbo Rene's picture

If only we could get "real" capitalism to replace it .....

Tue, 01/28/2014 - 21:42 | 4377804 NoDebt
NoDebt's picture

You will never be able to get rid of corruption and cronyism's distortions, but one thing at a time.  Debt is the problem, money printing is the palliative that feels good but ultimately speeds the disease progression.  

Clear the decks the right way (defaults where defaults are the proper answer) and you'll see something remarkable start to happen.  A REAL recovery, off of some pretty damned low lows, but one that you won't need government propoganda to tell you it's happening.

Oh, by the way, there's a boatload of pain between where we are now and that point.  Ref: Detroit pensioners and creditors.  Just FYI.

Tue, 01/28/2014 - 22:50 | 4378176 BringOnTheAsteroid
BringOnTheAsteroid's picture

There is probably nuclear war between where we are now and that point. Not so long ago I would have scoffed at such a possibility but now I fear this outcome is inevitable.

Wed, 01/29/2014 - 02:59 | 4378822 Carpenter1
Carpenter1's picture

"If something cannot go on forever, it will end."

Wed, 01/29/2014 - 01:40 | 4378708 OpTwoMistic
OpTwoMistic's picture

Nope. Just short.

Tue, 01/28/2014 - 21:21 | 4377741 ACP
ACP's picture

You're right. It's the average folks who NEED TO FEEL THE EFFECTS of a financial wipeout. That's the only way the middle class will "get it".

That's the only way people will even begin to understand how much the Fed, the huge federal government monstrosity and the big banks have completely fucked up the US and the world.

Tue, 01/28/2014 - 21:50 | 4377774 Soul Glow
Soul Glow's picture

Average folks are feeling it, and the ones that are being quiet, they're just masochists

Tue, 01/28/2014 - 21:53 | 4377881 SDShack
SDShack's picture

Yep, plus they are addicted to every distraction TPTB have placed before them to keep the sheep penned and docile. Addicted to iShit, internet porn, (soon to be legal) weed, mindless reality tv, sports, and Jerry Springer. Add EBT to keep the masses from starving, and Fema camps to keep some type of roof over their heads and they stay quite content. Those that don't are being watched by the NSA, extorted by the IRS, coerced by the FBI, and corraled by the DHS. Why else do the feds need to stockpile billions of rounds of ammo? TPTB have gamed the system to plan for every likely contingency. Rest assured that the masses aint the cause of the revolution. They need to be starving in the streets, and we are a long way from that, probably decades. What ultimately brings it all down is always the one thing no one ever sees coming. 

Tue, 01/28/2014 - 22:17 | 4377998 forwardho
forwardho's picture

No One expects...

The Spanish Inquisition.

Tue, 01/28/2014 - 22:51 | 4378184 bobert
bobert's picture

+1 Now that was funny!

Tue, 01/28/2014 - 23:00 | 4378214 Anomalous Howard
Anomalous Howard's picture

EVERYBODY expected the Spanish Inquisition.

They were legally required to give 30 days notice.

http://en.wikipedia.org/wiki/Spanish_Inquisition

Tue, 01/28/2014 - 22:11 | 4377963 James_Cole
James_Cole's picture

That's the only way people will even begin to understand how much the Fed, the huge federal government monstrosity and the big banks have completely fucked up the US and the world.

I'm sure that knowledge will be a great solace to them after becoming totally destitute. "See them rich folks heading into that steakhouse? Well, the only reason they rich and we dirt poor is cause of the FED! They think we don't know, but we do! Now, you find any rats suitable for dinner tonight?"

Wed, 01/29/2014 - 08:39 | 4379161 akarc
akarc's picture

Im an average folk w/ average folk friends. Buddy of mine tells me last Thursday he went all back in, index funds, last thursday because he has lost 40% since he got out.  I said how did you lose 40%. Well he didn't get the gains. I  explained to him you didn't lose 40% you just didn't gain 40%.  Your risk is greater now than it was then.  

Thats o.k. he says. If I see it start to go down I'll just get out. Problem is he can only buy/sell funds and his trade isn't executed till after market closes.

Haven't talked to him since then to see how he is doing. 

Tue, 01/28/2014 - 21:08 | 4377687 in4mayshun
in4mayshun's picture

I would not be surprised if we saw a major reversal in FED dove-ishness this week. The COMEX (JPM) is bleeding gold and markets are looking a little frazzled. Time for TPTB to reel this thing in a little bit. Market crash in the near future?

Tue, 01/28/2014 - 21:53 | 4377876 Soul Glow
Soul Glow's picture

Weeks like this will continue - big drop with a stick save before a planned event. They can get down to 14 k and the people won't panic.

Tue, 01/28/2014 - 22:46 | 4378163 The Vineyard
The Vineyard's picture

There's not going to be a hyper-inflationary crash.  Instead, this is Japanese-style endless recession.  There's not enough inflation for a crash.  The banks are still too far in the red for any type of velocity to occur.  We'll just have zero percent interest rates for as far as the eye can see.  Them's the facts.

Tue, 01/28/2014 - 22:55 | 4378190 bobert
bobert's picture

Wouldn't it be horrible if you are correct.

Seriously.

I'd prefer something to happen rather than nothing.

Wed, 01/29/2014 - 01:06 | 4378635 X_mloclaM
X_mloclaM's picture

yep, but the 'crash' ery1 here is talkin is markets, and you've seen the Nikkei over the years since QE. Same as the SPX coasta

Tue, 01/28/2014 - 22:58 | 4378209 The Vineyard
The Vineyard's picture

It's tough to time the markets.  It seems like such an inside game.  That's why I hide my cash in a mattress.

Tue, 01/28/2014 - 20:52 | 4377643 Mark123
Mark123's picture

But we are printing $85 billion (or more) just in the USA eachmonth....so all those rules are no longer valid. 

They can keep playing this game as long as people are willing to make contracts in $US.  When you travel to Mexico and they no longer accept $US the game is over.

Tue, 01/28/2014 - 21:02 | 4377680 max2205
max2205's picture

Agree printing trumps those charts....but it will get hairy here

Tue, 01/28/2014 - 21:15 | 4377725 Winston Churchill
Winston Churchill's picture

You may want to check your history as to what the FedRes was doing

between 1929/32.

But this time is different of course.

Tue, 01/28/2014 - 21:11 | 4377702 jcaz
jcaz's picture

That's yesterday's news-  you're touting the company line.

Sure it's safe, Timmy- c'mon in, the water's fine......

Tue, 01/28/2014 - 21:13 | 4377712 SuperRay
SuperRay's picture

Delusions are weird.  As long as everyone you know agrees with your delusional thinking, you can feel safe and secure.  But one, then another, and then a few people begin to question the delusion, cognitive dissonance enters the picture.  $85 billion was alot when QE started. Now, is it enough? It hasn't changed anything, except to stop the inevitable.  Time to bail out? hmmm...

Wed, 01/29/2014 - 01:10 | 4378647 X_mloclaM
X_mloclaM's picture

good sentiment but: "It hasn't changed anything"

is sorta off when it's what degrades the economy: the mispricing, the cash transfer

the only yeild jumps QE enabled was on sentiment, fundos say uber dollar supply and relatively little demand (low price)

but she'll jump when the currency is no longer desired, til then: http://www.zerohedge.com/article/did-fed-its-stealthy-synthetic-bet-keep...

Tue, 01/28/2014 - 20:51 | 4377646 Goldilocks
Goldilocks's picture

M - Pop Muzik 1979
http://www.youtube.com/watch?v=Avvh5H-EPWU (2:52)

Tue, 01/28/2014 - 20:53 | 4377650 Mark123
Mark123's picture

I wish I had these charts back in 1995.

Tue, 01/28/2014 - 21:45 | 4377838 NoDebt
NoDebt's picture

You, me and everyone we've ever met.  Yeah, you could make a ton, but what comes next could wipe you out as easy as all us schlubs who had to live through it happening real-time the whole way.

Tue, 01/28/2014 - 20:57 | 4377666 AdvancingTime
AdvancingTime's picture

Remember companies in past years have ushered savings from interest paid on their debt into the earning column this has driven up earnings. A major reason inflation remains low is they are sitting on a hoard of cash that has lowered the velocity of money. At the same time many companies have cut cost by reducing workers and turning to automation and technology. The artificially low Fed controlled interest rates have been a massive onetime tailwind that is mainly behind us. When rates can go no lower or reverse the positive effect ebbs and can become a major headwind. The massive government debt in many countries and a weak economy means this headwind has the potential to become devastating. This brings into question the quality of growth based on these policies and if the momentum is sustainable. More on why we may be reaching the "turning point" in the post below,

http://brucewilds.blogspot.com/2014/01/slower-job-growth-red-flag.html

Tue, 01/28/2014 - 21:06 | 4377689 JimS
JimS's picture

AT: You correct in one aspect. It is true companies are sitting on "a hoard of cash", but.... their hoard of cash exactly equals the amount of debt they have added to the other side of their balance sheets. So..... if sales begin to fall, they will not have the necessary income to service their increased debts. Buyer beware on picking up company debts, as an asset.

Tue, 01/28/2014 - 22:04 | 4377929 SDShack
SDShack's picture

That is supposed to sort itself out the way it's always done... in bankruptcy. Companies with assets get bought and reorganized and often emerge stronger. Those without assets get picked apart and die. But even all this has been corrupted by the system we have now. Now it's TBTF, so bailouts to infinity. These sociopaths achieved their world with more debt, so the only solution going forward will be... you guessed it... more debt. When it starts to unravel, you can bet that hoard of cash will end up benefitting the 1% at the expense of everyone else. That's the system we live in today. Plan accordingly.

Wed, 01/29/2014 - 01:14 | 4378656 X_mloclaM
X_mloclaM's picture

"A major reason inflation remains low is they are sitting on a hoard of cash that has lowered the velocity of money."

 

u sure causality runs liek that bro?

Tue, 01/28/2014 - 21:01 | 4377676 SAT 800
SAT 800's picture

Very good. good post. very thought provoking charts. Still short ES from 1841@ $200/point. I don't care if the market rallies all the way back there and takes out my zero loss stop. I'll just short it again. It's my method. It's a good method; it produces profits every year.

Tue, 01/28/2014 - 21:04 | 4377684 SAT 800
SAT 800's picture

It's important to sell things short when they are very high; and everyone tells you you're crazy; you don't want to start thinking about it after the down movement starts; because 90% of the time markets just revert to the mean. But as the author of a black swan pointed out; I make 100 % of my profits from the occasions when it doesn't revert to the mean and actually keeps going in a new direction; but you detect this by picking the top or the bottom; not by trying to board a train that's already moving. This is the fundamental reason human beings don't do so well trading; they like to wait until the new direction is "verified"; which usually means you get in just in time to get whipsawed. My method is painless.

Tue, 01/28/2014 - 21:25 | 4377760 ParkAveFlasher
ParkAveFlasher's picture

I read ZH partly for perspective like this. +1.   

Wed, 01/29/2014 - 08:26 | 4379138 akarc
akarc's picture

"I make 100 % of my profits from the occasions when it doesn't revert to the mean and actually keeps going in a new direction; but you detect this by picking the top or the bottom;"

You must be very good. 

Tue, 01/28/2014 - 22:50 | 4378177 Clowns on Acid
Clowns on Acid's picture

SAT -800 , you make money every year shorting the S&P at 1841? You are a heavy drinker... and you sound like Obama.

Tue, 01/28/2014 - 21:02 | 4377679 Yen Cross
Yen Cross's picture

   Wow, that 1928-'30 Dow overlay is scary similar!

Tue, 01/28/2014 - 21:11 | 4377700 lordylord
lordylord's picture

Look at the % gain. This run up is nowhere near 1928-1930.

Tue, 01/28/2014 - 21:15 | 4377717 jcaz
jcaz's picture

"Saul relative, dude-  that's the point of the chart. 

Tue, 01/28/2014 - 21:16 | 4377723 FieldingMellish
FieldingMellish's picture

"History does not repeat but it does rhyme." Close enough for me.

Tue, 01/28/2014 - 21:29 | 4377765 Yen Cross
Yen Cross's picture

  Ya, well we didn't have $ trillions of dollars in derivatives propping up the markets back then either. Are you somehow impling that the markets are cheap at current prices?

Tue, 01/28/2014 - 23:04 | 4378221 lordylord
lordylord's picture

No.  There are a lot of real reasons to predict a crash.  I'm just saying the graph is a bit misleading.

Wed, 01/29/2014 - 09:00 | 4379130 akarc
akarc's picture

Yepper, been seeing ovelays like that for how long now? Of course sooner or latter it will be right. And then everyone can say, told you so. Minus the ones that will be saying, how could we know...... 

Tue, 01/28/2014 - 21:12 | 4377707 Keyser
Keyser's picture

<--- I've already had my face ripped off trying to time this market...

<--- I'll think I'll load up on SPXU at the open...

 

Tue, 01/28/2014 - 21:23 | 4377744 MeelionDollerBogus
MeelionDollerBogus's picture

uvxy, hvu are both -11x to the spy,dia ETF's.
vxx is around -4x beating spxu as well.
faz is -3x and not entirely consistent, down when it ought to be up, frequently.

In particular hvu (1/11) x SPY = 219 on trend (not today) for the year, the current reading was 215 last I looked. 216 is the trend for the last 3 years.

Tue, 01/28/2014 - 21:19 | 4377734 q99x2
q99x2's picture

BTFD

Tue, 01/28/2014 - 21:19 | 4377735 Oxbo Rene
Oxbo Rene's picture

I love it ! !
I keep telling my ole lady what's fixin to happen = we got to take steps to get ready = she just says-->"I'm sick and tired of you telling me all that chit ! ! ! ! ! !
So, here we are, but, I got my phys ............

Tue, 01/28/2014 - 21:26 | 4377755 Obama_4_Dictator
Obama_4_Dictator's picture

Sounds exactly like me and my Wife!

Wed, 01/29/2014 - 08:17 | 4379126 akarc
akarc's picture

yepper and my friends too. They all think Im bat shit crazy. oh wait a second, wheres my meds...........

Tue, 01/28/2014 - 21:38 | 4377796 OC Sure
OC Sure's picture

10 tick gap down on the opening for the 30 yr this evening; gap left opened for over 2.5 hours. High reward, low risk place to open a short. Three weeks in a row of extreme optimism in c/p ratio; yesterday was a dark cloud cover...

 

Wed, 01/29/2014 - 01:05 | 4378628 Vint Slugs
Vint Slugs's picture

The US 30-year is one of, if not the, most deep and liquid markets in the world.  As such, it fills its gaps.  Btw, the legit way to define the gap is betw the Globex (CST) 4pm close and its 5pm re-open - the official settlement is a forced accountant's value that has nothing to do with actual market behavior and it's bullshit.

Tue, 01/28/2014 - 21:38 | 4377797 new game
new game's picture

don't see a gold chart overlay from the depression era and now - hmmm.

just curious...

Tue, 01/28/2014 - 21:51 | 4377861 NoDebt
NoDebt's picture

It wouldn't be much to look at in Dollar terms.  We were still on a gold standard then.

Wed, 01/29/2014 - 01:15 | 4378659 Vint Slugs
Vint Slugs's picture

@new game

For years, there was a horizontal, straight-line at $20.67/oz until January 30, 1934 when the price gapped immediately to $35 (passage of the Gold Reserve Act).

Tue, 01/28/2014 - 21:47 | 4377851 TheRideNeverEnds
TheRideNeverEnds's picture

You are neglecting one key fact; this time is different.

 

Take a picture of the e-minis for today is the last time you will ever see them trade under 1800. 

Tue, 01/28/2014 - 22:26 | 4378047 Rising Sun
Rising Sun's picture

S&P500 up 30% in 2013.

 

Thanks Barry you rotten fuck.  Fuck you and your family.  Burn in hell.

Wed, 01/29/2014 - 00:53 | 4378600 css1971
css1971's picture

Ok yes the charts look similar, but you need to take out the effect of currency manipulation to know whether things are really high or not. Market cap to GDP for example, or I prefer, market cap to M3 ratios.

Charts of M3 are a pain to get now, but market cap to gdp shows we're still on a dead cat bounce back down to reality from the 2000 peak.

Oh and if you look at pre/post gold anchor, you'll see that the average ratio is a LOT lower for gold backed monetary system.

Wed, 01/29/2014 - 01:25 | 4378678 ReactionToClose...
ReactionToClosedMinds's picture

never mind ... the 'pundits' (paid propagandists some imagine) at B'berg et al will tell you not to to worry  in accordance with their sell side advertisers sentiments.

....but then we stumble into the POTUS SOTU speech and the 'discovery' of MyRA .... to my simple mind, essentially the beginnings of a soft 'bail-in".........

"new world order" = something wicked this way comes ........ Abe my old friend ..... and more broadly Japan ........ your time will soon be 'up'

Wed, 01/29/2014 - 01:54 | 4378725 Blazed
Blazed's picture

Wi Tu Lo, everyone expect a crash, no crashy now. You no know.

Wed, 01/29/2014 - 05:59 | 4378977 BeetleBailey
BeetleBailey's picture

LOL! Excellent

Wed, 01/29/2014 - 06:21 | 4378994 razorthin
razorthin's picture

Ha!  Quaint old saying is wishful, because that would mean the market will never go down except when it is going down!

Wed, 01/29/2014 - 06:03 | 4378983 Australian Economist
Australian Economist's picture

The chart is telling me, wait 2 years and then BTFATL

 

I don't think I can wait that long, I'll just stick to BTFATH

Wed, 01/29/2014 - 06:21 | 4378992 razorthin
razorthin's picture

Don't miss this one this time.

Wed, 01/29/2014 - 09:58 | 4379355 financialrealist
financialrealist's picture

Been hearing the same bullshit for years. Just wish it would crash so we can reset the system and move on...

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