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

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
ApollyonDestroy's picture

Crash through Feb/March?! YESSS!!!

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. 

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.

Oxbo Rene's picture

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

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.

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.

Carpenter1's picture

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

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.

Soul Glow's picture

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

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. 

forwardho's picture

No One expects...

The Spanish Inquisition.

Anomalous Howard's picture

EVERYBODY expected the Spanish Inquisition.

They were legally required to give 30 days notice.

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?"

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. 

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?

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.

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.

bobert's picture

Wouldn't it be horrible if you are correct.


I'd prefer something to happen rather than nothing.

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

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.

Mark123's picture

But we are printing $85 billion (or more) just in the USA 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.

max2205's picture

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

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.

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......

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...

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:

Mark123's picture

I wish I had these charts back in 1995.

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.

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,

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.

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.

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?

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.

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.

ParkAveFlasher's picture

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

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. 

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.

Yen Cross's picture

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

lordylord's picture

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

jcaz's picture

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

FieldingMellish's picture

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

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?

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.

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...... 

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...


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.