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"A 2011-Style Breakdown": Global Advance-Decline Line Breaks To 6 Month Lows

Tyler Durden's picture




 

Another day, another technical breakdown, only this time not for the US but for the entire world, or rather for some 73 country indices shown in local currencies.

As BofA points out, "the weekly global A-D line shows a 2011-style breakdown", which it notes "is a market risk", although it remains unclear if central banks, and China's National Team in particular, use technicals when deciding to manipulate stocks.

Specifically, the weekly global advance-decline (A-D) line of 73 country indices broke to 6-month lows and is also below the uptrend line from 2012.

BofA adds:

This points to diminishing global market breadth and is a warning for global equity markets, in our view. The mid-2015 pattern for the weekly global A-D line is similar to the 2011 move below the uptrend line from 2009 and the June 2011 breakdown from a 6-month double top. The mid-2011 deterioration in the global A-D line preceded higher volatility and pullbacks for  global equity market benchmark indices into the seasonally weak 3-month period of August October.

To be sure, since BofA is eager to leave it on a positive note, it is quick to point out the divergence between the US and the rest of the world:

The MSCI United States (US) relative to the MSCI World ex-US (ROW) remains in a solid uptrend, with a breakout to new highs that coincided with a decade-long base in the US Dollar Index (DXY). Although both the US/ROW and the DXY have consolidated these breakouts, the bigger picture patterns continue to favor the US relative to ROW and a stronger DXY.

Unless, of course, the bigger momentum picture changes and the other alternative materializes, one which sees the US breakout "revert" to the trajectory of rest of the world, whether due to rate hike concerns, the inability to defend the 200-DMA, or for any other reason.

The answer may come as soon as this afternoon after the FOMC minutes, although the definitive response will have to wait until the September rate (non) hike, which as everyone now admits, has been so far "discounted" by the market with an unprecedented complacency, or as some traders note "is not priced in" at all.

 

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Wed, 08/19/2015 - 13:23 | 6444257 Bill of Rights
Wed, 08/19/2015 - 13:25 | 6444268 El Oregonian
El Oregonian's picture

HELP! I've fallen and I can't get up!

Wed, 08/19/2015 - 13:43 | 6444326 Consuelo
Consuelo's picture

'Clap-Clap...!!!'

 

 

Wed, 08/19/2015 - 13:27 | 6444276 Soul Glow
Soul Glow's picture

Fed rate hike Off!  Risk on!

So....keep stacking silver :)

Wed, 08/19/2015 - 13:27 | 6444277 Tsar Pointless
Tsar Pointless's picture

So? The US equity indices are (say it with me now) well off the lows.

Keep calm and BTFD.

Wed, 08/19/2015 - 13:35 | 6444298 KnuckleDragger-X
KnuckleDragger-X's picture

How about off their meds?

Wed, 08/19/2015 - 13:28 | 6444282 Bill of Rights
Bill of Rights's picture

American Apparel  Warns it May go out of Business

http://money.cnn.com/2015/08/18/news/companies/american-apparel/index.html

 

We believe that we may not have sufficient liquidity necessary to sustain operations for the next twelve months," the company said in a press release.

It also announced plans to reorganize its debt and extend an existing line of credit from $50 million to $90 million, though it expects to post losses for the remainder of the year.

Wed, 08/19/2015 - 13:40 | 6444316 Dr. Engali
Dr. Engali's picture

are they too big to fail? No? No bail out for you!

Wed, 08/19/2015 - 14:12 | 6444294 KnuckleDragger-X
KnuckleDragger-X's picture

Dear BofA,

there are these things called 'people' involved and they tend to make decisions not based on technical or anything else quantifiable on paper. When you add in the fact that you geniuses in the mega-banks are bending up the facts to fit your bottom line, people might just panic when they find out you lied to them...

Yours truly, the barbarians at the gate.....

Wed, 08/19/2015 - 13:38 | 6444310 Dr. Engali
Dr. Engali's picture

So, anybody out there caught Ebola yet?

Wed, 08/19/2015 - 13:45 | 6444335 Consuelo
Consuelo's picture

 

Nah --- but can I interest you in a nice bout of plague...?   We gotta few fresh cases out here in Kali...

Wed, 08/19/2015 - 13:49 | 6444362 Pareto
Pareto's picture

$COMPQ and $SPX rallying after the Fib bounce.

 

this market is never going to crash.  EVER.  Janet has everybody's back.

Wed, 08/19/2015 - 14:50 | 6444637 TheInfoman
TheInfoman's picture

Only a 6-month low?  That's hardly worth reporting!

Do NOT follow this link or you will be banned from the site!