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Get High Or Else!
In yesterday’s (Dec 12) technical charts I outlined some key follow up charts. If you haven’t seen them I highly encourage you to check them out as the context is important. As outlined 75% $NYSE stocks are now below the 200MA. After reviewing dozens of charts this weekend one message permeates the landscape: Markets need new highs or else.
Why? Because every structural chart points to a repeat of previous major tops. The key ingredients on the monthly basis: Declining RSIs, lower highs, and a marked decrease in participation. At the moment price is following a dangerous path into year end and basically requires a massive rally to prevent major technical damage.
Why? Because December not only marks month end, but also quarter and year end. And the close of the end of the year will leave a mark on charts.
Let me highlight a few facts that probably nobody has told as I have not seen these facts posted anywhere else:
#1: On an annual basis the $SPX has now not tagged its annual 5EMA for 2 years in a row. Such a disconnect is extremely rare. In most years this 5EMA is regularly tagged at least once. The last time $SPX was disconnected for 2 years in a row was at the 2000 top. At the 2007 top the $SPX was also disconnected from its 5 EMA for an entire year. Where’s the annual 5EMA now? 1782 as of Friday’s close.
#2: Both the 2000 and 2007 tops not only saw annual 5EMA disconnects but were accompanied by a severe decline in participation as measured by the $BPSPX and stocks below their 200MA.
#3: Currently the $SPX is showing an inside quarter, meaning that we are inside the price range of the previous quarter. This is also extremely rare. As far as I can tell this has happened recently only at the 2000 top, near the 2002 lows and finally at the end of 2012 just ahead of QE3 which then propelled stocks higher.
What’s the message of all these facts? To count on a higher market without at least a corrective tag is historically a stretch to say the least.
The technical picture continues to deteriorate commensurate with previous tops:
But don’t count on Wall Street or the media to tell you any of this. In fact in this week’s Barron’s annual guru survey none of the analysts see any downside for 2016. Not a one. Only upside. Just like last year.
But perhaps they are right, but as this month, quarter, and year comes to an end markets have an important choice to make. New highs or a lower high.
And judging how closely some of these charts match the 2007 structure a lower high could make for a really rough beginning to 2016. Then, as now, the November rally was sold into mid December and the subsequent Santa rally faded as quickly as it came:
The message remains clear: Get high or else.
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Grab your ankles moment? Do we get any lube?
Order a case of steaks for K-Hen!
Ground glass for your masters pleasure.
lube is for pussies.
They gonna ease some more!
broken 2k means nothing! green into the close! we have made it to valhalla brothers and sisters.
Yes, they will fang it at 3:30 to make it look shiny and chrome. Lol
Those charts all look like really fun roller coaster rides!
Rate kike back on, I mean hike.
I've had enough Manhattans to think that's a pretty good line....
Do not underestimate, the surviving boyz will chew off an arm to get green the next 14 trading days. < paint the year end tape >
Think about a Granma and a waterboard.
As much as I used to worry about another crash I worry more about it going sideways at roughly this level for the next 10 years. Caught endlessly between dismal reality and central bank propping operations. Up 10%, down 10%. Up 10%, down 10%. Lather, rinse, repeat until you have no hair left to shampoo.
I say the shampoo runs out first...unless you live on the west coast.
No shit
Windsurfing on Mount Baldy.....
Perhaps a side effect of Yellens "No Fears" Shampoo.
Nice chart porn.
Been blinded by this stuff since the "top in 2012".
Looks like Gold upside down.
The "Or Else" is not an option, so we will be seeing new highs.
"Markets need new highs or else."
something like ..don't cross the streams cause it would be bad?
https://www.youtube.com/watch?v=jyaLZHiJJnE
This "market" is so blatantly rigged that its laughable!
Today is a prime example of complete insanity and manipulation via VIX hammering!
For those of you that are interested, a signal on the S&P500:
https://sasafuturestrading.wordpress.com/
Looks pretty damn good.
Yeah so why the fuck does it keep going up?
J.P. Morgan analysts wrote that the three best leading indicators for recession have been credit spreads, the shape of the yield curve and profit margins.
Here are some signs of a coming recession.
1. Investors in high-yield bonds are expecting to see their first negative return since the start of the credit crisis in 2008.
http://www.marketwatch.com/story/deteriorating-junk-bonds-flash-warning-signs-for-stocks-2015-12-07?dist=afterbell
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Iron ore prices tumble
http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30
6. Baltic dry shipping index tumbles
http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19
Here is how to prepare.
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!
Newton's 3rd law has been modified;
moar ups, moar downs.
What a novel idea. Trading off a chart pattern.