Will Weak Closes Drag Markets Down?

Tyler Durden's picture




 

Submitted by Jennfer Thomson via Gavekal Capital blog,

Our Gavekal Capital Net Close Indicator is designed to help get a sense of investors’ conviction level. It is calculated by subtracting the value of the Weak Close Indicator from that of the Strong Close Indicator, each of which counts the number of times (over the previous six months) that stocks closed in the bottom (or top, respectively) quartile of their daily trading range. Typically, the Net Close Indicator expands during a rising market (as strong closes dominate) and falls as prices decline.

Currently, however, the Net Close Indicator appears to be struggling to move up from levels last seen during 2011 and, before that, 2008– all while the S&P 500 remains within 5% of the highs it reached in 2015:

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The large gap between index price levels and our Net Close Indicator is not unique to the U.S., either– other major stock markets around the world are exhibiting varying degrees of internal weakness.

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The concern, of course, is that these divergences are not resolved by strengthening stock market closes (a welcome sign of improved investor confidence) but, rather, by pullbacks in the indexes themselves– a decidedly less envied outcome.

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Wed, 01/06/2016 - 16:00 | 7006496 stinkhammer
stinkhammer's picture

limp caitlyn market

Wed, 01/06/2016 - 17:05 | 7006933 LowerSlowerDela...
LowerSlowerDelaware_LSD's picture

I thought he had it cut off?

 

Anyhow... will the gold monkey hammer come out swinging hard (no Bruce/Catlin reference intended) on Thursday?

Wed, 01/06/2016 - 16:02 | 7006507 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

Not with the PPT it won't. +400 on Thursday. 

Wed, 01/06/2016 - 16:07 | 7006541 Osmium
Osmium's picture

I thought today was going to be +400?

Wed, 01/06/2016 - 16:22 | 7006638 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

My insiders tell me Thursday now. 

Wed, 01/06/2016 - 17:21 | 7007018 johngaltfla
johngaltfla's picture

What if your insiders are just lying to you so they can assfuck your morning long positions? Do they kiss you at least?

Wed, 01/06/2016 - 16:02 | 7006511 KnuckleDragger-X
KnuckleDragger-X's picture

The big boys are starting to get out, but there's always a last 'greater' fool who has to play one last hand.......

Wed, 01/06/2016 - 16:03 | 7006512 Bear
Bear's picture

PPT is alive and well ... ES Bid on close

Wed, 01/06/2016 - 16:13 | 7006584 CClarity
CClarity's picture

But that little dose of reality in the Macy's report is NO BUENO!

Wed, 01/06/2016 - 16:04 | 7006518 Sudden Debt
Sudden Debt's picture

But it's not like the correlation is that big anyway if you look to the historic charts.

Wed, 01/06/2016 - 16:21 | 7006521 ChargingHandle
ChargingHandle's picture

Who are these large buyers into the close you ask? Who is the only entity with an interest in providing the optics/narrative that all is well and not to panic?

Wed, 01/06/2016 - 16:06 | 7006535 Truth Eater
Truth Eater's picture

Fed Reserve admitted to buying stocks directly.  Digits on their damned computers.  Charts and analysis mean nothing.  It all depends on the assholes in the PPT what happens in the market.  They could keep a stock at $50 right up to the day of its bankruptcy.

Wed, 01/06/2016 - 16:42 | 7006790 Fish Gone Bad
Fish Gone Bad's picture

A slow painful trainwreck it is then.

Wed, 01/06/2016 - 16:11 | 7006574 Dg4884
Dg4884's picture

Wow, 3:30 rolled around and I was ready for the 150pt maniplation!  What the...  Don't tell me even Algos is losing faith!

Wed, 01/06/2016 - 16:45 | 7006815 huggy_in_london
huggy_in_london's picture

Not sure that tells you much - it looks like the correlation broke down around 2011

Wed, 01/06/2016 - 18:52 | 7007464 fowlerja
fowlerja's picture

Damn it... I knew El Nino was going to do this to the world wide stock markets... if only I had listened to my long range weather forecaster.... wait...he just lost his job and is now a shoeshine worker... says he is studying to become a bartender in the near future... large demand for that job when the economy crashes... I should have read the "tea leaves"  when the Labor Dept was putting out their past monthly employment reports... no wait... I am going to get ahead of the crowd this time... I am going to be a repo man...exciting career, work at your own pace,  hours vary, can travel or stay local, meet interesting people, requires physical as well as mental acquity, need to be able to think fast and run fast...firearm training is optional, learn to stalk, wear camouflage, anger management training is also optional, and at $12.50 an hour I am going to be rich!

Sat, 01/09/2016 - 00:02 | 7020558 franzpick
franzpick's picture

Weak opens have been doing most of the driving down.

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