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Two Ominous Stock Market Charts
Submitted by Pater Tenebrarum via Acting-Man.com,
A Big Dow Theory Divergence
We briefly want to show a few charts that have caught our eye recently. This is by no means a comprehensive market update (we plan to provide one soon). Here is something though one doesn’t see all too often: the Dow Industrials and Transportation averages have diverged from each other for about six months running. To be sure, no valid Dow theory sell signal has been given yet. For that to happen both averages need to break their previous reaction lows in concert. However, divergences at peaks are a “heads up” signal. Charles Dow would probably at least raise one eyebrow and frown a little.
Transportation stocks have turned from leaders into laggards, in the process diverging ever more from the Industrials average – click to enlarge.
The NYA, Then and Now
The next two charts were sent to us by a friend who manages a fund and often passes on his technical observations to us. The first chart shows the broad-based NYSE Stock Exchange Index (NYA) as it looked in the final years of the tech mania that fizzled out in the spring of 2000. The second chart shows the NYA as it looks today.
The NYA from 1996 to 2000 – click to enlarge.
The NYA today – click to enlarge.
The similarity between these two charts is quite baffling. However, we hasten to add that we have seen many such pattern comparisons over the past few decades, and they often turn out to be meaningless. Incidentally though, Paul Tudor Jones’ career really took off when he traded the 1980s market based on the pattern of the 1920s market, and the pattern actually did repeat, including the infamous crash (the action obviously began to diverge after the crash, but the patterns eerily shadowed one another for a number of years). So at times, a pattern comparison can actually turn out to be helpful.
The wedge-like formation at the end of the respective moves in the NYA highlighted above with blue trend lines does look like it could be a so-called “ending diagonal” pattern. It certainly was one in 2000, whether the recent wedge will also turn out to be one remains to be seen of course. However, with sentiment and positioning data as well as valuations extremely stretched and US money supply growth rates slowing down, a similar outcome certainly shouldn’t be ruled out a priori.
Conclusion
The divergence between industrial and transportation stocks is probably the more meaningful of these charts, as there is a logical explanation as to why its occurrence is worrisome. Specifically, Dow argued that when business was good for industrial companies, it had to be good for transportation companies as well, and vice versa. Any divergences in the assessment of these businesses by stock market participants should therefore be seen as a warning sign.
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Welcome to the Titanic market.....nothing can sink her.
Welcome to Nirvana.
I'm king of the world!
*snorts line of coke...*
Tony Montoya is in the house.
'I Tony Montana - joo fuck with me joo fuck with the best...!!'
No more warning signs.
As long as central banks juice financial markets with future debt it's all green.
Seems like a great plan. What could possibly go wrong?
This divergence really only began in March and is now very clear. These divergences take time to impact the market - but usually do signal a top (which may not be THE top).
>The divergence between industrial and transportation stocks is probably the more meaningful of these charts, as there is a logical explanation as to why its occurrence is worrisome.<
It's all f'n worthless, as long as the fix is in, and the Fed micro-manage eveything.
I'm with you Sodbuster - once upon a time Industrials mattered, so Transportation also mattered. With a totally manipulated market, who gives a fuck about Industrials any more - there ain't any - all went overseas per the NWO. Does Facebook or Google or any of 'The Cloud' companies give a shit about Transportation?
How about market mover Crapple - how many boatloads of iWatches from China does it take to supply the US for a year - two? There are some big fucking boats, and watches ain't all that large physically. How many truckloads from LA port to New York of iWatches to supply NY, or the whole east coast for that matter, for a year? Ten 16-wheelers tops? And in a few years, they will be driverless most of the way...
How many railroad cars does it take to ship all them there apps?
And why the fuck is transport going down with fuel prices being down?
Maybe no demand?
What the fuck difference it make to the market? None. Don't need no steenken demand - just spoof.
Don't need no real output, just let the banks write derivitave paper as 'output'.
I think the most logical black swan crash (I know, contradiction in terms) is an EMP bomb in beautiful downtown New York City. But that's just a fantasy.
(But a FUN fantasy...)
This market is Chineese water torture....do something damn it.
James Cagney did it the best! James Cagney in White Heat - Top of the World
https://www.youtube.com/watch?v=OjzKiEs_pHI
or
https://www.youtube.com/watch?v=ZjVWORC3Wcc short
“A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear.”
- Marcus Tullius Cicero
this is just the latest in ominous charts. all going back to 2012.
How many of these charts have we seen? LIESman says everything is awesome. I believe him.
Everything is Awesome when you live in a Dream...
https://www.youtube.com/watch?v=9cQgQIMlwWw
Calling this a warning sign is a bit like being in Hiroshima and saying "I think there is going to be a loud bang"
how about comparing up days to down volume days?
Interesting, but I believe fundermentals are useless anymore.
Is the DJI still really "industrials"?
What industrial goods do: American Express, Walt disney, Goldman, Home Depot, JP Morgan, McDonalds, Travelers, United Health, Visa, and Walmart produce?
Maybe we should build our own index.