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Warning: Weak Stock Market Closes Are On the Rise

Tyler Durden's picture




 

For weeks, months, and even years now, 330RAMP CAPITAL (the ironic phrase used to indicate the oh-so-visible hand of 'someone' that decides te last 30 minutes of the US trading day is the perfect liquidity time to slam VIX lower and panic-buy stocks). However, as Gavekal notes, recently we have seen an increasing number of weak-ish stock market closes.

 

Via Gavekal,

We've taken note of an increasing number of weak-ish stock market closes and decided to build an indicator to measure the number of weak closes and compare it to stock prices. The indicator counts the number of times over the last six months in which stocks closed in the bottom quartile of their daily trading range.

For example, if the S&P 500 trades in a 20 point range during the day and closes 4 points from the low, we would count that as a weak close.

Generally, we see the number of weak closes decline during rallies and expand during selloffs, which makes sense.

The indicator usually follows stock prices except at major turning points when it sometimes leads stocks in one direction or the other.

We mention this because we are currently seeing a rather large divergence between the weak close indicator and stock prices.

The indicator has been heading lower since the middle of 2013 while stock prices have continued their upward march. The divergence is prominent for the US and Japanese indices, but less so for the STOXX 600. Note that in the charts below the weak close indicator is plotted on the left axis and it is inverted.

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Fri, 05/09/2014 - 17:55 | 4744931 NotApplicable
NotApplicable's picture

Yeah, but the charts are all red, white and blue, so it'll be okay.

Fri, 05/09/2014 - 18:27 | 4744946 Manthong
Manthong's picture

These are the weak days?

..hammered it too much for too long.

Fri, 05/09/2014 - 17:57 | 4744935 Max Damage
Max Damage's picture

Does Janet give a fuck? No, just print toilet paper for the rich to wipe their arses with

Fri, 05/09/2014 - 17:58 | 4744937 kito
kito's picture

oh look, another creative and imaginative warning!!! death crosses and hindenburgs and weak closings and blah blah blah blah fucking blah!!!!!  and the markets ramp higher!!!  climb the wall of worry or get your ass kicked by skynet. you decide.........

Fri, 05/09/2014 - 18:15 | 4744964 Al Huxley
Al Huxley's picture

Put this up beside the BofA chart showing the transfer from institutional to retail, on top of the momo collapse, and it starts to look a lot like extended period of distribution.  We'll see if the FED has the will and/or desire to continue to prop it up.  I'm guessing a 'surprise news event' of some sort coming soon.

Fri, 05/09/2014 - 18:23 | 4744983 fonzannoon
fonzannoon's picture

Al, I am attempting to write some op ed type piece and will email it to ZH in hopes Tyler throws it up as a post. It's about how insane everything is right now and how I am going literally nuts and can't tell truth from conspiracy anymore. It's gonna be deep. I have spent all day on it. Here is what I have so far.

"fuck"

what do you think?

Fri, 05/09/2014 - 18:49 | 4745038 Yen Cross
Yen Cross's picture

  Good on ya fonz! Long over due. I'm sure Tyler will look at it .

  Honestly Fonz. You've got some great ideas and should share them with the next graduating class.

 

Fri, 05/09/2014 - 18:52 | 4745051 fonzannoon
fonzannoon's picture

thanks Yen. much appreciated.

Fri, 05/09/2014 - 18:59 | 4745077 Al Huxley
Al Huxley's picture

Pretty much sums up my take on the current state of things.

Fri, 05/09/2014 - 18:26 | 4744989 kito
kito's picture

the momo collapse looks like an absolutely perfect pressure release valve. skynet has this shit down to a science. they funneled the entire consequence of the taper right through the momos. nothing else affected. not blue chips, not bawnds...oh wait, yeah gold...they crushed it about 100 points from the mini rally........

Fri, 05/09/2014 - 19:03 | 4745089 Al Huxley
Al Huxley's picture

Well, that's because

a) there is an infinite supply of gold

b) China and Russia collect it only as a hobby, they have no other plans for it

c) Western central banks keep it mainly because it's such a pain in the ass to move around that they can't be bothered

d) Germany can't get theirs back (I'm guessing) because they only have very small boats, so it takes many trips to move 300 tons across the ocean.

So I don't think there's any misdirection at all going on in the gold market - hell, if you can't trust JPM and GS to give you the straight story, who can you trust?

Fri, 05/09/2014 - 18:40 | 4745025 lakecity55
lakecity55's picture

Lions and Tigers and Bears, oh My!

Fri, 05/09/2014 - 17:58 | 4744938 Yen Cross
Yen Cross's picture

     The charts look like winter might start early in '14.

  Foreboding peaks and troughs.

 Humanities thin veneer stretched to cellophane composure.

 

Fri, 05/09/2014 - 18:02 | 4744945 Kaiser Sousa
Kaiser Sousa's picture

NEW YORK, May 8 (Reuters) - Investors in U.S.-based funds pulled more than
$7 billion out of stock funds in the week ended May 7, more than the two previous weeks' worth of net inflows, data from Thomson Reuters' Lipper service showed on Thursday.  That was the largest such outflow since early February, turning the four-week moving average to outflows for the first time since mid-February.

Investors pulled $8.6 billion out of stock exchange-traded funds while
committing $1.6 billion to stock mutual funds. ETFs are thought to represent the
institutional investor, while mutual funds are commonly purchased by retail
investors. "ETF investors were responsible for over $8.6 billion in outflows from
equity ETFs this week, which overwhelmed the $1.6 billion that equity mutual
fund investors added - a very typical figure for them recently," said Jeff
Tjornehoj, head of Lipper Americas Research.

Tjornehoj said investors have been putting an average of between $1.5
billion and $2 billion per week into equity mutual funds, which is "right in
line with what we've been seeing. For their part, ETFs are about hedge-fund
selling." Taxable bond funds attracted roughly $4.7 billion in inflows, marking their
ninth straight week of inflows. "Investors saw that interest rates are not going to spike anytime soon and they don't want to give up their bond funds since a lot of the owners are the baby boomer generation," Tjornehoj added. "There is nothing about their
generation that wants to give up on income."

http://www.reuters.com/article/2014/05/08/investing-fundflows-lipper-idU...

give up on their income.... HILARIOUS

Fri, 05/09/2014 - 18:13 | 4744962 Cattender
Cattender's picture

the stock market is FAKE...

Fri, 05/09/2014 - 18:26 | 4744990 Ignatius
Ignatius's picture

Or maybe it reflects the reality for the 1% of the 1% who own the lion's share of corporate stock.

Corporations are people, you know....

Fri, 05/09/2014 - 18:21 | 4744976 q99x2
q99x2's picture

But there are fewer people that really give a damn. I'm sure they will take care of it. They have the money now to do whatever they like.It is their software, their printing presses, their stores, militaries, banks, politicians, police and research labs.They have it all. What could go wrong?

Fri, 05/09/2014 - 18:39 | 4745021 nosoeawe
nosoeawe's picture

its in obozo husseins best interest to keep the stock market at all time highs

everything else the spawn of satan touches turns to shit

q in the jiggling puddle of pig shit - no not mccain, the other jiggling puddle of pig shit - ol yellen and her carp like features (dont tell me these two species of trash don't share common physical traits: http://en.wikipedia.org/wiki/Carp)  to insure the fraud in chief looks like he knows what he's doing. other than writing how to manuals for man country chicago

 

 

Fri, 05/09/2014 - 18:39 | 4745023 SheepDog-One
SheepDog-One's picture

'Weak closes'? Fuckin sitting at all time record highs daily....yea whatever.

Fri, 05/09/2014 - 18:57 | 4745069 BullyBearish
BullyBearish's picture

$DJI at all time closing HIGH while only 37% of stocks are above their 50-day moving average!!  Totally Unrigged!

Fri, 05/09/2014 - 19:05 | 4745093 Unknown Poster
Unknown Poster's picture

The signals seem much noisier than the indexes, maybe if they just stuck with Mondays to see how Tuesday was shaping up.

Fri, 05/09/2014 - 19:24 | 4745129 razorthin
razorthin's picture

In other words, there's been a preponderance of inverted hammers, gravestone dojis and various assundry bearish-reversal candlesticks.

Fri, 05/09/2014 - 19:49 | 4745178 Muppet
Muppet's picture

So the 3:30 ramp has been tapering?   Interesting.   I've read someone else is tapering too.  What a coincidence.

Fri, 05/09/2014 - 21:11 | 4745370 Spungo
Spungo's picture

"'Weak closes'? Fuckin sitting at all time record highs daily....yea whatever."

Strength depends on money flow. I'll try to explain with an example. Suppose 1 million cars are sold at a price of 20k. You would say the price of 20k has a lot of money supporting it; that's a real price. Now suppose that same car has 1 sale at a price of 30k. This new price is a new all time high, but it's a "weak" price because there's only 1 transaction at that price. 

You can check this by looking at volume. I'm looking at Twitter's chart right now, and the recent crash prices are supported by very high volume. 

Fri, 05/09/2014 - 22:38 | 4745500 ebworthen
ebworthen's picture

Does this mean Wall Street is losing it's erection?

Quick, call Janet and the Blue Pill team!

Sat, 05/10/2014 - 01:59 | 4745691 HardlyZero
HardlyZero's picture

Yellen Deflation.

No Boner Queen.

It's possible.

Sat, 05/10/2014 - 03:27 | 4745728 bigprofitbuzz
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Sat, 05/10/2014 - 11:40 | 4746067 AdvancingTime
AdvancingTime's picture

Much of the economic landscape is beginning to look like something out of  "Alice And The Looking Glass" A bizarre  and unrecognizable land, a land that is distorted and papered over by ream after ream of paper. This paper has been rolling off the printing presses of central banks all across the world in an attempt to mask reality.

Peter Schiff says, printing money is to the economy what taking drugs is to a drug addict. In the short term it makes the economy feel good, but in the long run it is much worse off. What was once the "long run" or "distant future" may be getting much closer. More on this in the article below.

http://brucewilds.blogspot.com/2013/01/what-happens-after-momentum-ends_...

Sat, 05/10/2014 - 18:01 | 4746835 RMolineaux
RMolineaux's picture

Does this indicate a policy change instituted by Yellen, i.e. the Advisory Committee on the Capital Markets (otherwise known as the Plunge Protection Team) being told to back off its interventions?   And does it have any connection to the upcoming elections?

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