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Is This The Chart Of A Healthy Stock Market?

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

If fundamentals like profits and sales no longer matter, then all that's left is faith that central banks will never let stock markets fall ever again. 

Is this the chart of a healthy stock market? The consensus view is either 1) yes, by definition, because charts don't matter because the central banks will never let markets fall ever again, or 2) the market has been choppy due to a "soft patch" in the economy, which is about to start growing at 3% instead of .3%.
Nice, but this chart says distribution to me: beneath the jolly surface of new highs, the smart money is selling to greater fools who believe the consensus.
 
This chart is characterized by lengthy chop-fests in which wild gyrations up and down make a mockery of trends.December 2014 to January 2015 was such a chop-fest, and March to May has been another chop-fest in which Bulls have been unable to put together an uptrend of more than a few days.
The script for insiders distributing (selling) shares to greater fools hasn't changed in decades. First, juice the market higher with some big orders, then sell into that buying until the market weakens. Reverse the downtrend with another big order, and then resume selling.
This process is even easier in the current era of high-frequency trading and machines executing most of the trades. A few big buy orders is all that's needed to trigger more buy orders from the trading bots, which are essentially trend-followers, and the smart money can sell into that automated buying.
Despite the occasional new closing high that's notched to assure the greater fools who have been buying, the market has gone nowhere for months. Beneath the surface, many market internals have been weakening for months--for example, MACD and Chaiken Money Flow.
Those selling into strength can always cherry-pick some market internal that supports the Bull case--if you were selling, wouldn't you encourage buyers to take the shares you're dumping off your hands?
Wedges usually break big up or down The current wedge has been formed by the Bulls inability to break out decisively into a new uptrend and the distributors managing to limit any declines lest the herd of greater fools get spooked by the deteriorating fundamentals of stagnating profits, sales, etc. or the painfully obvious blow-off tops forming in global markets.
If fundamentals like profits and sales no longer matter, then all that's left is faith that central banks will never let stock markets fall ever again. Never, ever; that is of course the language of fairy tales.
 

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Sun, 05/17/2015 - 13:50 | 6103243 This is it
This is it's picture

Yes it is.

Now BTFTop.

Because this time it's different.

...and blah...

Sun, 05/17/2015 - 16:48 | 6103743 MonetaryApostate
MonetaryApostate's picture

Screw the markets, screw money, and no I'm not being funny.

Sun, 05/17/2015 - 17:36 | 6103850 Headbanger
Headbanger's picture

A healthy market??

https://www.youtube.com/watch?v=1MLry6Cn_D4

Any questions?

Sun, 05/17/2015 - 13:52 | 6103250 order66
order66's picture

Not sure what you're getting at here but the probability of that formation breaking out with strength to the upside are greater than 80%. Just sayin'.

Sun, 05/17/2015 - 14:09 | 6103303 Mr Pink
Mr Pink's picture

OFF TOPIC

Anyone have a clue as to why Yahoo won't let me comment anymore?

I tried posting this several times about the royal d bag

Awww....that's sweet...after all, the slaughter of thousands of Muslim women and children is a small price to pay to keep the inbred peed0f1le out of trouble

I don't get it

Sun, 05/17/2015 - 14:10 | 6103308 Mr Pink
Mr Pink's picture

Just figured it out. Yahoo, thinks it has a link. Derrr

Sun, 05/17/2015 - 17:46 | 6103876 Headbanger
Headbanger's picture

As for the above triangle or sometimes called "pennant" pattern...

It has a downward entry early February.

And the upper or capping trend line is NOT FLAT but slanting upward.

There are now FIVE COMPLETED WAVES in the pattern

So it is in itself a single wave

Which is a well known as a TERMINATING FIFTH WAVE DIAGONAL PATTERN.

So. NO UPSIDE STRENGTH FOR YOU!

FOR YEAR!

Sun, 05/17/2015 - 14:17 | 6103325 Squid Viscous
Squid Viscous's picture

I hope you're all in then, it's not often "Mr. Market" gives you an 80% chance of success!!!

Sun, 05/17/2015 - 14:50 | 6103407 saveUSsavers
saveUSsavers's picture

NO YOU ARE WRONG. Classic distribution to retail dumbarse money volume pattern

Sun, 05/17/2015 - 15:57 | 6103605 H H Henry P P P...
H H Henry P P P Paulson's picture

Wrong. The chances of it going up are 100%.

Sun, 05/17/2015 - 13:58 | 6103256 CarpetShag
CarpetShag's picture

If you are so shit hot on technical analysis, then please provide your prediction of the next 2 months of price action based on the fancy trend lines and oscillations depicted above. Thank you very much in advance.

Sun, 05/17/2015 - 14:06 | 6103289 mtl4
mtl4's picture

October 1, 2015 mark it on your calendar........go long on VIX after that.

Sun, 05/17/2015 - 14:10 | 6103307 CarpetShag
CarpetShag's picture

If your prediction is as good as that rack, I should make a pile!

Sun, 05/17/2015 - 14:40 | 6103390 Arnold
Arnold's picture

November 6, 2012.

You'll look back and be laughing.

Sun, 05/17/2015 - 14:00 | 6103271 czarangelus
czarangelus's picture

If the "market" crashes again, what's left of the middle class - the upper class by distribution, nowadays - might realize their lot is the same as that of the niggers, illegals, drug addicts, mongoloids, and schizos. It will happen, but not while the central bankers still have any tools at their disposal to prevent it. And printing trillions and trillions can go a long way.

Sun, 05/17/2015 - 14:18 | 6103328 Arnold
Arnold's picture

"printing" is passe/ now that the hEAD sHOP feels that carrying cash is against their best interest.

Digitalizing .gov bonds is more accurate.

Needs a snappy name though.

Sun, 05/17/2015 - 14:16 | 6103321 remain calm
remain calm's picture

The market will correct, then we will get QE 4. Buy after a major pullback. Don't go short, you never know when the US LUNATIC CBers will do QE. They may not risk a correction, becuase rising asset prices is all they have working.

Sun, 05/17/2015 - 14:17 | 6103324 new game
new game's picture

Wedges usually break big up or down

qe 4 will be the decider, dow 20k, s/p 2350-2400.

what other option do they have?

Sun, 05/17/2015 - 14:40 | 6103381 Uber Vandal
Uber Vandal's picture

The one we have not thought of / considered /  seen coming until it happens?

If any of us could talk to ourselves on this day in 1995 or 2005, would ourselves twenty or ten years ago even believe a fraction of the things that have happened since 2008?

ZIRP, NIRP, QE, just to name a few?

Sun, 05/17/2015 - 14:52 | 6103416 fremannx
fremannx's picture

Ending diagonal wegdes always break down, not up.

http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...

Sun, 05/17/2015 - 17:54 | 6103893 Headbanger
Headbanger's picture

++100,000,000.002356743  +/- 0.,0045676% (for relativistic  effects)

FUCKING BRILLIANT DUDE!

 

Mon, 05/18/2015 - 01:03 | 6104784 JoWazzoo
JoWazzoo's picture

Who the EFF knows?  The Chair of the Fed ADMITS that stocks are over valued.  The pres of the NY Fed states they WILL do what ever it takes to jeeps markets UP.  Take yer choices.

Sun, 05/17/2015 - 14:23 | 6103346 q99x2
q99x2's picture

It is the language of software; computer language connected to infinite fiat. There is absolutely no reason for the markets to ever go down unless there is a power outage.

Sun, 05/17/2015 - 17:58 | 6103917 Headbanger
Sun, 05/17/2015 - 15:13 | 6103479 Fun Facts
Fun Facts's picture

So long as their currencies have value, the central banks will keep printing and buying shares.

So long as their currencies have value.

Sun, 05/17/2015 - 17:38 | 6103856 litemine
litemine's picture

Currencys hold value..........Backed by What?

Bit Coin?   Gold/Silver ?    OR

Stocks like twitter,google that hope to pay dividends or that get payments from the Government (FED) to get info on everyone to maintain control...............

This blog should get paired with the Frech Revolution Blog.    Food control (MONSANTO) fiancial control (JPM/GS) and a large force of steroid EATING paramilitary wearing JACK BOOTED IDIOTS.

When will the truth be told to the population by the Elected?

Oh....Look , she looks like Kim Kardashian.............

Sun, 05/17/2015 - 15:34 | 6103544 Market Rage
Market Rage's picture

It appears that the SPX and DJI will make new highs tomorrow, but NDX and RUT are already topped.  This is another fakeout.  I'm already short NDX via puts, but plan on shorting RUT(IWM puts) into any new highs made by SPX/DJI.  They are most likely going to try and blast RUT above the 50 SMA.  Just wait until it runs out of gas (~1250)

Sun, 05/17/2015 - 18:08 | 6103943 Loucleve
Loucleve's picture

I would suggest caution on the shorts.  yes, its all a sham.

but you are fighting central banks buying stocks.

the recent treasury bond route was, in my opinion, engineered to drive people into stocks.  the great rotation.  so far they failed but.....

SPY short interest is back to 32%.

soon it will be time to punish the shorts again, and i have no doubt they will do it.  they have the firepower, because they print it.

Sun, 05/17/2015 - 15:46 | 6103580 The_Virginian
The_Virginian's picture

Monthly MACD for the S&P tells the story, as it did in 2000 and '07/'08. 

Sun, 05/17/2015 - 17:53 | 6103896 Headbanger
Headbanger's picture

Yes it does..

A long time ago in a galaxy far away..

 

Sun, 05/17/2015 - 18:34 | 6104004 gdiamond22
gdiamond22's picture

Everyone is looking at the wrong indices. The Transports have been the leading indicator since 2009. if we break last week's lows watch out but you should be long here from a risk/reward perspective regardless of what we all think/want the market to do. id speculate that equities think lower yields are good and hopefully make a blow-off top sometime this summer and then good night sweet prince.

Sun, 05/17/2015 - 18:52 | 6104049 Yen Cross
Yen Cross's picture

 Yeah, that chart looks healthy... Something tells me the heart is enlarged.

 

Systolic vs. Diastolic
Mon, 05/18/2015 - 14:15 | 6106312 PTR
PTR's picture

"...less than one visit to the doctor."

https://youtu.be/rCV0srlnQkE?t=1m16s

Sun, 05/17/2015 - 20:00 | 6104225 orangegeek
orangegeek's picture

there are no buyers,  just that fat disgusting cunt yellen and her alliance of banksters bidding this pig of a market higher

 

Mon, 05/18/2015 - 01:21 | 6104800 JoWazzoo
JoWazzoo's picture

Two MAJOR source of buying.

1 - Corp buy backs.  Billions and billions.

2 - Stock purchased from funds from selling Pension Obligation Bonds.  Billions and Billions.  Being used by cities and corps.  As an aside, those effers are gonna feel real bad when (not if) the market corrects.  As will the taxpayers when they find out their city magically tried to solve their pension problems by issuibg DEBT to buy stocks whose price is "guaranteed" by the sell side fuckers to go up 8 % + a year = FOREVER!  POBs are something many do not think about.  

 

That tied in with the proclivity of the Fed and other CBs (some themselves directly buying stocks), HFTs and Algos WILL fuck you over.  Be damned careful.

Mon, 05/18/2015 - 02:57 | 6104868 teslaberry
teslaberry's picture

charles hugh smith is so much better when he ignores technicals and market movements. 

he is a big picture kind of guy at his best and while he has had a few foibles and mistakes in his views hes pretty spot on about long term views of how things work. 

 

his market timing is and always has been wrong and terrible. as much as i want to do the opposite of what he says, this is just noise nonsense. feeding the bears. 

Mon, 05/18/2015 - 09:09 | 6105250 esum
esum's picture

you tell me if the fed will raise rates and ill tell you which direction the market will go

money OUT can always go back IN 

BESIDES THE MARKET IS A MANIPULATED FRAUD TO BEGIN WITH DETATCHED FROM REALITY LAS VEGAS ON STEROIDS PROVIDED BY FED

 

Tue, 05/19/2015 - 16:19 | 6110932 maxamus
maxamus's picture

Let's see, it's only been what, almost 7 years that you keep saying the market is ready to tank?  It now needs to tank what, about 60% to get back to your first prediction???

Tue, 05/19/2015 - 16:19 | 6110933 maxamus
maxamus's picture

Let's see, it's only been what, almost 7 years that you keep saying the market is ready to tank?  It now needs to tank what, about 60% to get back to your first prediction???

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