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Stocks Give Up "Yellen's Alive" Gain Amid Biotech & Junk Bond Bloodbath
Having almost puked all over her speech last night, the "Yellen's Alive" rally gathered pace overnight...
But then reality bit with a sudden realization that a hawkish-er Yellen actually said absolutely nothing different from what she said last week...and they are hanging on by a thread...
The last time we had a closing in stocks on a Friday as ugly as this was Aug 21st (before Black Monday)
Chinese stocks were supported all week (with Xi's visit to the US) until last night... with SHCOMP roundtripping to unchanged
And while Europe rallied on Yellen and BMW today, it remains notbaly hard hit post-FOMC...
The Biggest News Today was Biotechs and Junk Bonds Bloodbathery...
Biotechs were monkey-hammered this week with a 12% plunge... down 6 days in a row
To Dec 2014 levels - the biggest weekly drop since Aug 2011
As S&P Biotech ETF had its worst day since August 2011...
Biotechs are down 26% from the $91.11 highs on 7/20
Who is to blame? Shrekli's Greed or Clinton's Populism
High yields bonds were slammed this week. HYG (The HY Bond ETF) saw its biggest weekly drop since Dec 2014 and closed at its lowest since Nov 2011...
And HYG was in charge of stocks today...
* * *
The exuberance and carnage today was (once again) all about USDJPY... it appears a failed momo ramp past 121.00 around 2pmET was the trigger (along with Biotech accelerating lower)
And Futures show the price action all day long...
- Overnight Yellen
- 0450ET BMW "Allclear"
- 0830ET GDP Up
- 0930ET Boehner resignation
- 1400ET USDJPY/Biotechs fail
Leaving cash indices roundtripping on the day... (Dow helped by NKE's adding 60-70 points)
And it's a bloodbath since post-FOMC peak euphoria... Small Caps & Trannies worst...
Financials outperformed today (with a gap open after Yellen's speech) and Healthcare worst today (and on the week)...
Financials gains today (on Yellen) were entirely ignored by credit markets... how many more times do you buy that hope?
Leaving Nasdaq in the red year-to-Date...
Let's not forget CAT this week that saw no bounce at all today...
and another hedge fund hotel - SUNE was crushed today and this week as it appears for the 3rd month in a row, month-end liquidations are slamming...
* * *
So with the equity bloodbathery out of the way...
Treasury yields ended the week modestly higher after a big ramp higher this morning (releived a little as bonds rallied on equity weakness this afternoon)...
The USDollar Index gapped up on Yellen's speech last night but went nowhere after that (even as JPY weakness offset EUR strenght)
Commodities were mixed on the week with Gold and Crude higher, silver modestly lower, and copper clubbed... (not ethe morning shenanigans everyday)
Copper tumbled over 4% on the week - its biggest weekly drop since Nov 2014, closing at its lowest since May 2009...
And Gold broke above its 100-day moving-average again... will it hold this time...
Charts: Bloomberg
Bonus Chart: The Market is macro-data-dependent... so what data is The Fed imagining?
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Wow, tip of the hat to the PPT for their work in the last hour. Impressive is the only word to describe it. Almost got a green close on the S&P. Beter luck next time. They're called 'RISK ASSETS' for a reason. God fucking forbid people lose money.
Better pump Yellen full of drugs and prop her up for another speech early next week, it's clear that her last one failed as well. 3rd times a charm.
Today just felt REALLY creepy going into the weekend. Kinda like going to the doctor for a sore throat only to find out later, one has leukemia.
It's okay, iPhone 6s goes on sale this weekend....that'll save us!
Weekend at Yellens
Man overboard!
https://www.youtube.com/watch?v=jzzrFFivBKk
Even Auntie Janet got choked up trying to deliver her vacuous sophistry.
Here's to best wishes for her having a chronic case of the pukes until she does the right thing and resigns, replaces herself with a computer with a dashboard and dot plots, and goes back to teaching at an Ivy school where she can make the parents paying $60,000/year choke and puke.
I was hoping for one of those wonderful 3 pm dumps that have been popping up more and more lately, but the PPT really got to business this time around.
Worst almost Black Friday EVA!
S&P500 needs to retest 1890, 1860 and 1830 in my view. Lower Lows to come. After that, Higher highs into 2016 as the Bond Market pops/rates up.
Negative Reversal 1h and 4h chart
http://tripstrading.com/2015/09/26/sp500-negative-reversal-1h-and-4h/
Wave 5 down
http://tripstrading.com/2015/09/19/sp500-weekly-chart-2-or-5/
http://tripstrading.com/2015/09/19/sp500-wave-4-up-finished-wave-5-down-...
2015 looks quite similar to 2011 and 1987.
http://tripstrading.com/2015/09/26/sp500-2015-vs-2011-vs-1987/
http://tripstrading.com/2015/09/25/in-need-of-a-profitable-trading-strat...
Another 5% down (ES 1820-1840) should be the next "bottom."
It was something to behold on the S+P chart. New intraday low, then a huge run to the upside. Keltner Channel Surf mentioned pension funds as being a mover of the final hour rip.
Whoever is doing it, thank you. For the shitshow.
?? Confusing me with another ZH-er? I don't follow the S&P, only RUT and a bit of the QQQs, and never said anything about the source of late buying, no way for anyone to know that for sure.
when it goes...it going to be a lot worse than Black Friday. the level of unmitigated fraud is astounding.
Yes. What astonishes me is that it is right out there, in the open, no effort even being made anymore to pretend that the markets aren't being manipulated. Print cash and prop up the markets. The books that are going to be written about this period of history! The one good thing to come out of all of this is the death of neo-classical economics.
well would u look at that...
yet again some mystery buyers show up in the last 30 minutes of trading to push the Dow off the lows preventing it from ending up right where if opened after the pump and sideway trading patter we've bcome so accustomed to....
FAKE ASS FRAUDULENT FUCKING FRAUD MARKETS......
Every manipulation has an equal and opposite reaction.
The coiled manipulation-reaction from the past 6 years is going to be truly epic.
it dont matter...its over for the United States of Shit...
this just ran for the 1st time on CNBSas far as i can tell....
enjoy a look at the future superpowers of international trade and commerce....the Hegemons' days r over.
https://www.youtube.com/watch?v=-BP5-TqR8jM
+1. That is the source project and funding combined with the AIIB for the new canal in Egypt and others. Nice video.
The stock market is now a kind of rentier-socialist, gov't-sponsored utility. It is too big to fail because it provides an invaluable public service . . . to the top 0.001-1% owners of the gov't utility.
To the rest of us cretin, peasant losers, not so much.
Amen. I'd wager Bill and Hillary dumped a bunch of money into biotech bear ETF's right before her phony attack on them.
Speaking of biobubbletechs, they are setting up an epic crash, at least as big as the Dotcom bubble stocks in 2000-02.
But it could be the last crash, as about 40-45% of listed biobubbletechs are vapor stocks with little or no earnings, and some have NO REVENUES.
Instanity has its privileges.
After 6 fucking years of this shit and you still say mystery buyers?
Wow
And typically UVXY will sell off in a big way near the close. Today it did not do that.
USDX and Dow/Gold about to form death crosses.
(Surprised to hear this in the new Hampton Inn TV spot, I assume the first time the band’s music has been used for such purposes here in the States)
“Another Crummy Day” from “Another Sunny Day” by Belle and Sebastian
Another crummy day, I’m levered up with full margin
You were biased short, I went long, beg your pardon
I viewed an hourly graph of QQQs with an envelope border
It broke my heart to see the bottom limit breached
Another range-bound day, I’m trapped just outside a pivot
Stocks turn and recoil, seems you know it’s the wrong bet
You’ve got an attack algo taking out the naïve longs
And by Sunday margin bells ring out on the desks
Another daily swoon, just past eleven stocks free-fall
We’re trading for our lives, the HFTs give us fuck all
I saw you in the corner of my eye in cash on the sidelines
Your dark smirk greets me with pathological greed
Now all my margin’s gone, the stock you picked took a nose dive
My longs all take a rout, and hit my stops after midnight
I spent the evening brooding at the all-night cinema
I found you laughing in Row 3, as your shorts fill
Your Smarties wrappers in Row 3, they’re sitting there still
There’s someone rigging SPY, a little dip so beguiling
Risked my life to buy, hopin’ it hits a new high
I heard that Virtu’s code removes obstructions with spoofs, dear
They quote-spammed SPY, I wonder why you didn’t complain
They turned back SPY, now I know why -- you shorted again
Your trading’s so obsessed, what happened to our mutual feelings?
I thought it was for real, was pricing rings, practiced kneeling
You’re words suspend my trust in spending a lifetime together
So what went wrong, was it a lie? We’ve drifted apart
Six figures trading index futures stole your heart
Cake is a LIE!
The only fucking thing that matters in this fucking fraudulent ''market'' is the usd/jpy.
i hope we see a level under 100, the bloodbath would be unimaginable.
Yellen got pumped and dumped. Everything is awesome-er-er
Lol at the fools that believe the fed. You'd have to be brainwashed and a retard to start with to bet on them raising rates when I don't know if they have raised rates my entire lifetime, they have only fallen. And it's because at 18 trillion we literally cant have a functioning government if we actually had to pay interest at this point
According to Itau BBA:
http://is.gd/XzTkOs
The Big Fear
Thus, Fed announcement day arrived with most equity markets up 5%-10% off the late August lows, commodity prices higher and rates priced for Fed action. The main concern coming into the Fed meeting was not that the Fed would hike; it seemed quite clear that it would not go against virtually the entire global economic policymaking community and raise rates. No, the concern was that the Fed would stand pat and stocks, rather than rally, would sell off.
Lo and behold, that is exactly what happened, and that is why we need to be very, very concerned about how things move from here. It remains unclear whether the equity market reaction to the Fed decision was (hopefully) just a classic case of buy the rumor (no hike) and sell the news, or something much worse, namely that investors might be starting to price in policymakers? loss of control – The Big Fear.
The Big Fear of policymakers losing control has been lurking underneath the global equity market for years, underpinned as markets have been by central bank support. Think of it this way: there are two global growth drivers: China and the US. Recently, the competence of the policymaking community in both countries has been called into question, suggesting a possible loss of faith in policymakers, which if true is very worrisome, thus the Big Fear concept.
Why is the Big Fear so worrisome? It’s simple. If investors lose faith in policymakers and decide that cash or bonds are a better place for their money, then stocks are likely to sell off much further. How much further? One never knows, but maybe asking a few questions might help. First, at what level does the S&P need to be for the Fed to engage in QE 4? Second, what S&P level will be considered cheap (keep in mind 2016 E estimates need to come in sharply)? I don’t know the answer to either question, but it seems reasonable to expect that the S&P would need to go much lower than the 1870 level it bottomed at in late August or the 1830 level of a year ago.
The economic implications of such a sell-off would likely be a US and global recession. Such an environment could create a negative feedback loop between financial markets and the real economy, which policymakers would find very difficult to break.
It seems clear that the Fed will not raise rates this year, neither next month when they meet again nor in December, which is the last meeting of the year. Will they raise rates in 2016? From this armchair, the odds are against it, as the forces of recession gather while the forces of reflation stagnate. On this front, one has to question the Fed's 2016 inflation forecast of 1.6%, up from 0.4% this year. The Fed’s crystal ball has been mighty cloudy for years, but this forecast takes the cake.
A look at the global economy helps explain why. Four factors stick out: excess debt, an absence of inflation, insufficient demand and excess supply of raw materials and manufactured goods. None of this is new – what is new is how the various hopes and remedies have fallen short while the problems deepen. The toxic combo of excess debt and disinflation is one powerful reason why the Fed did not move, and excess supply in commodities and manufactured items (look at the PPIs around the world) is another. The global economy needs demand-creation or production shut-ins, and to date both have been lacking.
There are small signs that the commodity complex is starting to finally adjust, with closures, dividend cuts and stock issuance in the mining sector and talks about talks in the world oil market. However, the manufacturing segment of the world economy is quite far behind the commodity segment, suggesting that China's need to shift excess production will ensure manufactured-goods disinflation for the foreseeable future.
One can wish for inflation and for the Fed to be able to hike, but one also needs to be focused on the realities of the current global economy. Where is the demand going to come from? Who is going to shut in production? Let?s look at the three main economic regions: Asia, Europe and the Americas. Asia is likely to be a source of manufactured-goods disinflation as it seeks to rebalance itself to a China that is a competitor first, a customer second. Japan's recovery is sputtering; it will continue QE while a fiscal stimulus package seems quite likely in the months ahead. Europe remains quite weak, and with the refugee issue now occupying policymakers, ECB-led QE seems the only game in town.
The Americas is a concern. South America is in a deep funk, whether it is Mexico's subpar growth rate, Brazil's political and economic travails, Andean copper dependency or the impact of weak oil on countries such as Colombia or Venezuela. All this is pretty well known.
The US is most worrisome because of its combination of still-high equity prices and a very bare policy toolbox to confront any economic weakness. How bare? Well, monetary policy is on hold, and the bar to QE4 is likely a much lower S&P. What about US fiscal policy, one might ask? Great question. Here is the only thing one needs to know about the US presidential election process: it takes fiscal policy flexibility away and locks it in the freezer until late 2017, two whole years from now. In other words, at a time when the US economic expansion is close to seven years old, with the Fed on hold, incomes flat, debt levels high, a strong dollar and absolutely no inflation, fiscal policy is locked away for the next two years at least!
By the way, the UK confronts similar issues and could possibly be a canary in the coalmine for US monetary policy – QE for the people on BOTH sides of the Atlantic perhaps? The UK's negative rate discussion is likely to move across the pond over the next quarter or so. One other way of thinking about it is this: which comes first, the end of ECB QE or QE4 in America? I would go with the latter.
How does one vanquish the Big Fear? With aggressive policy action on the demand-and-supply side. What is the likelihood of that? Exactly. Seen in this light, it makes perfect sense for investors to worry that policymakers no longer have their back, and thus they take some money off the table. One analogy is that the US economy is like a ship that has engine trouble, is drifting towards the rocks and is left to hope that the wind shifts and takes it away from the reef…. not exactly a bull-market, high-valuation tableau. Hope is not a strategy.
Hope is not a strategy.
Hope is a drug.
If we raise rates a quarter point that effectively doubles our borrowing cost, rendering us insolvent. I dare you to crunch the numbers. 5% raised to 5.25 in 2007 when debt is 7 trillion makes no difference. You double the borrowing costs now, at 18 trillion yeah that is laughable. The fed will NEVER raise rates this is literally the only trick left in the bag in a failed ponzi scheme.
I could not agree more. We will see more easing before we see a rate hike. To add to the above, if you held a few trillion of US paper on your balance sheet and you control rates, why on earth would you raise? Do tell.
I assume if you want to get paid back you cant murder your debtor, which is exactly what a rate hike would be. Unless this is part of the NWO plan to get us to this point, raise rates to overthrow the US government and open the fema camps. its definitely one or the other
The TBTE banks' shadow banking's offshore pass-through entities are now levered 50-80+ to 1 Treasuries/MBS to equity index futures vs. 25-30 to 1 in 2006-08.
Even as small as a 10% decline for the SPX that persist for a few months risks blowing out the criminally insane leverage supporting the equity index futures, EM debt, and non-financial corporate debt markets.
The biggest potential losers in this unprecedented Ponzi scheme (no doubt Madoff is jealous) are DB, C, BAC, RBS, and BCS. So, take a guess which TBTE banks GS, JPM, and MS will take down this time around.
Therefore, one MUST assume that the Fed will print even more and the US gov't run even larger deficits to GDP in response to the next global debt-deflationary meltdown, which is likely imminent.
The money multiplier and velocity will plunge still further, requiring local, state, and gov't spending to GDP to surge again to record levels.
I'm new here.... How many times does the dead cat bounce?
Happy Friday!
not much longer, son. Everyone thinks the stock market is the indicator. No, it's the Fed, and they are out of answers. They can't raise rates because doubling our borrowing cost on 18 trillion will literally bankrupt the US government over night. So all they can do is bluff while doing nothing. It's already gotten old 6 months ago. There is obviously no way they can bluff raising rates for the rest of our lifetime. The end is nigh for sure
I'm new too, and from what I've learned as long as there are algos in place indefinitely is how many times the now rotten cat can bounce.
It's an artificial cat made of rubber, so it is likely to bounce more times than the real thing, especially when bouncing down a long set of stairs.
Why does she bother with the old "I'd really like to raise rates, but I just can't" routine? That's like saying, "I'm supposed to know what I'm doing, but it turns out I don't."
It's a female thing.
Just the tip, I promise.
Yellen was decidedly more Hawkish last night - included herself in thise wanting to raise this year and saying lack of inflation was transitory. In our strange market that means USD/JPY strength for a few days meaning stocks jump. But obviously that's no bueno for stocks. Biotech and junk crushed because these fools just might raise right before a recession
Latest: 'Stench of Death' around Rand Paul's candidacy.
Also his hairstylist was found in a ditch this morning with a bottle of perm solution up his ass.
It's a testimony to the hair-raising state of USSA politics that we are focusing on the parade of clowns' male mammal fur, which, admittedly, is more interesting and meaningful than the narrow focus of issues, including voluntary illegal entry of Mexican and Central American guest workers and whether their spawn should be USSA citizens; debating whether there should be female reproductive choice; which angry, jealous, violent, genocidal tribal desert sky god is most worthy of praying to in public schools; worrying about when Obummer-sponsored, Kenyan-based, black Muslim terrorists, funded by the UN, will invade by the dark of night and confiscate our 13 1/2 average firearms per household; and the commie pinkos want to take our SUVs and pick 'em up trucks and force our sorry, fat a$$es into Priuses and Leafs, and onto electric bicycles.
The vast majority of us 'Merikans are f$&kin' morons; and the worst part is that we think we're f$&kin' brilliant, earnest, informed, and worthy. That is, we're ignorant of how truly f$&kin' ignorant we actually are.
Therefore, we fell for the colossal con, and we can't blame anyone but ourselves.
G-d bless 'Merika . . . ???
JPY is set to explode higher.
Oh noes!!
Just to rub salt into the wound, its the political season here in Blighty, and today it was the UKIP's turn at galvanizing the public's opinion, girding the loins of the disenfranchised. Filling the gullible full of shit eh?
And everyone's favourite politician, Mr Farage, explicitly backed QEII, the establishment, and everything that is wrong with the way things are, bar wanting to leave the EU. Don't take mixys word for it mind, I have no doubt it's on YT as I type.
Same as I said a few days ago, there is nothing new under the sun, nothing. Talk about pissing down your neck all the while telling you its raining???
See? Voting can not, not ever fix what ails you. This is beyond hope, totally.
Take back what is rightfully yours my friends, the consent of the governed is revoked, removed, destroyed, withdrawn.
Not, In, My, Name, Never....
Cunts
;-)
Arrggghh! Me loves chart porn maties.
Yields be a risen in HYG and other corporate debt indicies. The bigger they come , the harder they fall laddies.
* HatTip to the Tyler that put all the moving averages in those overlays. :-D
"Shenanigans around colored lines" is as apt a description of post-algo markets as any, and probably has more of a bumper-sticker factor than "volatility envelopes around moving avgs"
What about converging Fibi retracements, based on moves that have retraced past the 61.8%[ some traders use 76.4%] over the last 7-8 years, that are somehow areas of interest?
I'm not sure about you, but drawing a Fibi on a daily or weekly chart is a pain in the ass. I'm happy if I'm within 10 points of my objective. The markets always over or undershoot the retrace.
The market makers are filling orders, on the buy or sell side, long before your level is hit. If they see fills slowing, they might be inclined to buy or sell your bid or offer in the opposite direction. You mentioned last week how DOW and ES traders[buyers] got squeezed above the 20 day average on the daily charts, after that ramp up.
As a currency trader, moving averages are not just symbolic. If you look at the 50 day 100 day crossover on most charts, after confirmation, you'll do pretty well, selling the rips.
It's all about the angle of attack with moving averages. We all know the markets are manipulated, but even the manipulators have to calculate risk.
I've never used fibi's, as the Russell I trade seems to honor Keltners, often to the penny, but though you know MA's won't necessarily be precisely observed, you can bet battle lines will be nearby, and can at least use them as reference points for where stops might be, volume patterns w/ pin-bars, etc.
Not sure if pivots matter as much in currencies, but in equities you can try to simplify it as the 'horizontal' (pivot) traders vs. the 'diagonal' (MAs, envelope) traders, but the minute you do it becomes more like 4-dimensional chess, or perhaps like String Theory, 9 or 10 dimensions, mostly invisible, all rolled into each other. I should've been a mailman instead ...
IMHO, pivots are worthless.
I pay more attention to ranges, and sup,res levels. If you have a system that works for the RUT Index, kudo's.
Piant blocks for the time frames, and duration, you want to trade in. Watch the time frames and price action, then trade it.
Of course you have Macro, Geopolitical, F/X, and various other issues to calculate.
I've watched traders get eaten alive, because the trade overshot their objective. Then, the trade reverses and makes fools of everyone.
Suck it up, and cover the loss... Cover the position, and fight another day.
Margin management Bitchez.
One Penny in F/X is 100 pips. [usd/jpy spread is 1-2 pips] F/X is much more price sensitive than RUT.
Assets classes trade very differently, though I don't trade pivots purely, for RUT pivots are very important, ~70% of morning entries and about 50% of exits reference pivots in some way, often backing up a pivot or 1/2 pivot beyond a key MA before taking off the other direction, or trapping traders just beyond them then reversing, but I agree profits will be low if used exclusively, guessing a bounce.
Geopol doesn't seem to matter at all to RUT, it trades purely technically intraday, only the open start point is set by global events, so I never have trouble reversing, and don't set hard objectives in stone, but map out potential turns every hour, letting it talk to me via technicals, rather than plan a specific, ultimate route.
The other big difference is I'm a pure 100% daytrader, all cash at the start and end of each day, averaging just over 2 trades per day, which is why fibi's are perhaps less useful, given intraday RUT algos for hourly and 15m charts seem fixated on envelopes w/ an MA center. The hardest thing with this style is the first entry point, whether to dive in at the open, wait a few hours if a gapped up risk of reversal is too high, camp at the algo's favorite gas stations, etc.
Here are some signs of a coming recession.
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record...
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
http://www.zerohedge.com/news/2015-07-27/when-will-we-ever-learn/
Here is how to respond.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
All news is bearish in a bear market...Central Bankers know that now. Sell every rip.
butt, Fed mommie promised!
yellen spews, market has fit, yellen re spews reverse, markets rejoice. Mommie Yellon, don't make baby market unhappy. Free sheit forever. zirp forever & screw those old folks big time. Yeah!
http://www.barrons.com/articles/bears-are-back-in-charge-as-charts-flash...
Bears Are Back in Charge as Charts Flash Danger
Now that the Fed rate decision has been digested, the bears are on the prowl looking for more prey.
By Michael Kahn
September 23, 2015
Last week, everyone was on the edge of their seats waiting for what Janet Yellen and company would do. The immediate reaction was predictably volatile, but as of Tuesday’s trading the bears have taken back control. Correction over. Now a new leg lower begins.
In my column last week, I outlined a potential framework for what may be heading our way (see Getting Technical, “Roadmap for Stocks Now That Rate Hike Is on Hold,” Sept. 17). In it, I pointed to a rather severe downside target should a bearish trend really take hold.
But there is one more support level that must be taken out before my worst-case scenario is put into play. It is the bottom of a very large head-and-shoulders pattern two years in the making (see Chart).
http://si.wsj.net/public/resources/images/ON-BM892_GTchar_NS_20150923131...
Standard & Poor’s 500
This ubiquitous pattern consists of a central peak or head surrounded by two lower peaks or shoulders. A line called the neck connects the lows between the peaks, and that provides the support that must hold to keep the market from falling a lot further.
There is more going on behind the scenes than a contrived Picasso-like depiction of the market. After all, on a real person the neck is higher than the shoulders but that is not the point. What is important is that a head-and-shoulders formation encompasses all the technical changes that came before it.
For example, the moving average death cross that got so much attention occurred as the head portion of the Standard & Poor’s 500 broke down. So did the break of the bull market trendline drawn from the very important October 2011 low. And arguably, so did the completion of the Dow Theory sell signal shortly thereafter.
The neckline for the S&P 500 is currently in the 1865 area — not quite 4% below Wednesday afternoon trading near 1935. So is the closing low last October after the Ebola scare panicked investors out of the market temporarily. Considering all the volatility still plaguing the market, that is really not too terrible.
It is what happens at the neckline that will be critical. It is a very important support floor under the market where buyers must emerge to basically save it.
Head-and-shoulders patterns do not demand that the decline continue unless the neckline is penetrated to the downside. Therefore, if buyers do emerge then the decline will be halted. And the good news is that failed bearish technical patterns often result in new bullish conditions. In other words, that could be it for the bears.
But a lot of trading is in store before the neckline is tested, and it may not get tested at all. Again, this is just a framework against which we can judge the market’s actual movements and act accordingly.
As an aside, there is one outside influence that keeps me on the more bearish part of the spectrum and that is commodities. While the energy rout is well known, what’s troubling is the continuing decline in industrial commodities such as copper, cotton and lumber, and even in basic materials stocks such as U.S. Steel (ticker: X), which is now trading at a 12-year low. Food commodities also seem to be under extreme pressure, and the Market Vectors Agribusiness exchange-traded fund ( MOO ), covering food producers, equipment makers and supplies, just confirmed a breakdown below a three-year support level.
Watch the S&P 500’s neckline. That should be the point of no return, but if demand picks up perhaps the market will avert the severe decree.
Shitshow!
If there is such a thing as "chart porn", ZH is the prime purveyor of it. It's the Playboy of economic and finance charts.