What The Charts Say: "US Stocks Are In Riskiest Position In Seven Years"
Via John Murphy,
MAJOR STOCK INDEXES ENTER CORRECTION TERRITORY... After suffering the worst start to a new year in history, the U.S. stock market has entered correction territory which is defined by a drop of 10% from its old high. The charts pretty much speak for themselves. All three major stock indexes fell to three month lows in heavy trading. The next downside target is the two lows formed in August and late September.
What the indexes do from there will determine whether the current downturn is just a correction or something more serious. Unfortunately, some portions of the market have already broken those support levels.
SMALL AND MIDCAPS BREAK SUPPORT... Relative weakness in small and midsize stocks gave early warnings in December that the yearend rally was mainly a large cap affair and too narrow to continue. That situation has gotten a lot worse since then. Charts 4 and 5 show the Russell 2000 Small Cap and the S&P 400 Mid Cap indexes falling below their 2015 lows. That puts them at the lowest level since October 2014.
That's another important test for them and the rest of the market.
TRANSPORTS ENTER BEAR MARKET TERRITORY... Chart 6 shows the Dow Jones Transportation Average falling to the lowest level in two years. It has lost -25% from its late 2014 high which puts it into bear market territory. What's surprising is that the transports haven't gotten any help from plunging energy prices. That may carry bad news for Dow Theorists who link the direction of the transports with the Dow Industrials.
It may carry good news for the Dow Utilities, however, which are showing more resilience. Chart 7 shows the Dow Utilities holding up a lot better than everything else.
It was the only market sector to register a gain during the week. Its relative strength line (top of chart) is rising as well. Since utilities are considered bond proxies, their relative strength large reflects the recent rotation out of stocks and into bonds.
BOND/STOCK RATIO FAVORS BONDS... As usually happens when stocks fall, bond prices are rising. That's especially true of longer-dated Treasury bonds. The green line in Chart 8 is a ratio of the 7-10 Year Treasury Bond ishares divided by the S&P 500 SPDRs. The ratio spiked last August when stocks tumbled.
The ratio has spiked again to the highest level in three months. Bond prices are also benefitting from the deflationary impact from falling commodity prices. Two other assets attracting safe haven buying are gold and the Japanese yen. Some measures of foreign stocks (both developed and emerging) have already fallen to 52-week lows. That doesn't bode well for U.S. stocks which are now in the riskiest position since the bull market started seven years ago.
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S&P going sub 1867 will give the PPT a chance to show what it can really do... which may be nothing, Is it time to return to the mean pre election so the next POTUS has a clean slate to start the next pump.
Bush took a lot of heat, Obama will too.
Strange days indeed.
Knocking your stocks... er, socks off!
So what you are saying is presidents are combination puppet / pinyata.
I can get wiff dat.
Scooby's going to win the lotto tonight! I bought 100 tickets with my credit card today. I will win something I know it!
Fuck stawks! seriously! The only thing more idiotic would be buying a Powerball ticket (& if you somehow won, I hope you fucking put it all into stocks & the Dow & US dollar go to zero).
other than that, HAVE A NICE DAY! :-) lol
Hey be nice to Scooby he's going to win $900 million highly coveted US Dollars tonight!
rewind! i think i saw this show, reruns are boring, not much to enjoy. we know the ending. qe 4-6.
"whatever it takes"(heard that before?), for the fed to somehow remain in control(and they will). qe, bond buying frenzie. que the bernank II shitshow...
If shit continues down this path the Dems are fucked. No way the country swings left with gun grabs, multi-culturalism being forced down our collective throats and a shit-fuck economy.
But you forgot that white males are already a minority demographic in America LOL.
And that it doesn't matter a shit whether the Republicrats or Demopublicans are elected to office, because they both work for their corporate masters, not their voters.
So much red - is that a signal for bullish?
No, it means time of the month.
Not all red. This article is way too bullish for equties...
The Jews will just take the money and run for the Rotshchild Sandbox, the NWO Capital will be Jerusalem.
I am beginning to think the global controllers are confident they have everything in place and will now let the SHTF. I see them slowing the crashes but things are still dropping. This coming week will shine more light on what the devils plan to do.
See the Real Dow, long ago to just now!
http://www.showrealhist.com/recDJIAtoRD.html
Yesterday's close was below that of 1-14-2000, which was the all time high for the next 13 years.
Note MANIPULATED MARKET link here
http://showrealhist.com/RDlnk.html
Most shorted will "Ketchup" to the FANG's, or what ever they call them next week.
Did I mention, I'm short corporate debt?
How would one know what companies can service/refi/issue their debt vs one's that can't without waiting for the obvious? I agree there is potential for lots of default. Insider selling (not real time)?
this does not directly pertain to your question. is an interesting nugget of which i only recently became aware. we all know caterpillar is in trouble. i did not know that, unlike most 'sellers', they completely in house finance their equipment sales. ouch, talk about mark to fantasy
Any prudent trader. Ex- Lifeguard would know.
Doctor Yellen's gonna fix ya
with a bottle of QE4 elixya
your gonna be cured
your gonna be cured
your gonna be cured
You misspelt Curie.
Can one sane person convince me how we can recover from this situation (you know the list)?
If equities continue their slide and the country continues toward recession, Washington/Fed will stimulate, they have no choice (PBGC, banks, etc.). Even then, I doubt people will adjust well to, no jobs, low paying jobs, lower pensions under PBGC, lowered lifestyles, lowered expectations. If we do bottom out, how do we climb out of this without building debt upon debt?
Federal Reserve is at 77 to one,its insolvent,maybe you can try the IMF its at 3 to one
And that is the game. They define recession by stock prices. They fake the stock prices but the real economy is in a depression- so everyone pretends we are possibly going into a recession.
Recover? Hmmm, the body is dead. No recovery.
He's dead Jim.
https://www.youtube.com/watch?v=3at_Ev2kOoI
Control-Alt-Del
Technical analysis... the financial superstition of our times.
I'm baffled as to how the same group of readers can applaud articles that consider mainstream economic theory ("Keynesianism") to be voodoo, yet also wholeheartedly believe that technical analysis has any predictive power -- in the face of all evidence, scientific and anecdotal, that it is pure bunk.
Animal spirits are alive and well.
It made my week to see the S&P close below 1950.
Ways to go to get back to true valuation of 666, but it's a start!
Alright here we go folks. We have the $900 million Powerball lottery tonight. To win the lottery takes a lot of strategy. I have the whole thing figured out you know so they might as well just tax me on the winnings now. We are all going to be rich I tell you. I have already sent inquiries regarding the purchase of the Eccles building in some shitty town out East for bulldozing practice.
No, really, I bought a lottery ticket for only the second time in my life. I picked my own numbers and they are 1,2,3,4,5, with 6 for powerball. You should see the sheeple getting all whipped up over this shit. The lottery is for the mathematically impaired. So is the stawk market. I just needed that ticket to add to my stacks of silver for some humor.
"Charts are marvelous tools for predicting the past." -- Eliot Janeway
I can't stop laughing... The pinheads living off of >Gov pensions are trying to MILK trading strategies from the " Private" Zero Hedge, trading community.
How soon you people forget.
BUY THE FUCKING DIP
https://www.youtube.com/watch?v=0akBdQa55b4
This time is -not- different.
BUY THE FUCKING DIP
Honestly, I am hoping for a relief rally to short moar.
The next downside target is the two lows formed in August and late September...
All the sector indices except INDU, SPX, NAZ, NDX, VTI and a couple more have already taken out their Aug. and Sep. lows, and are pointing to new bear market lower lows down another 3% plus. See VALUG, NYA, RUT, MID and SML below for example. 1 or 2 more big down days, or another bad week, and the Aug-Sep lows will be history for everything:
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=nya&insttype=&freq=1&show=&time=8
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!