The Chart That Gives Citi "The Chills"

Tyler Durden's picture

Two weeks ago, HSBC's murray Gunn warned of "ominous signs" exuding from the US equity markets. This weekend, Citi's Tom Fitzpatrick confirmed the concerns exclaiming Travolta-esque "[we've] got chills [about the market], and they're multiplying... and they're losing control."

While fully realizing that you can find a lot of similar overlays if you look hard enough...this one gives us “the chills”.

At a time when we have seen:

– Elevated concerns about Europe and its banks (possibly even creating some US/Europe conflict)

 

– The most polarizing US Presidential election in modern times

 

– Increased “taper talk” emanating from Japan and Europe and rising concerns about the efficacy of the Central bank policy around the World and the possibility it becomes unhinged.

 

– A 20 basis point move in US 10 year yields in 5 days;

 

- A 16% move in Oil in 7 days;

 

- A $90 move in Gold in 9 days;

 

- A chart on USDCNY that looks to be breaking to the topside and a huge GBPUSD move overnight in minutes

Is this the next shoe to drop?

Source: Citi

As HSBC noted previously, a close in the Dow below 17,992 would be a clear warning that a steep fall could be underway.

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shovelhead's picture

Why?

Did the Indians finally discover Spain?

Loftie's picture
Loftie (not verified) max2205 Oct 10, 2016 10:25 PM

The Country that Gives Congress "The Chills".
http://goo.gl/l6d22d

HalinCA's picture

Perfect ... but totally lost on the softheaded fools that care about PC.  

slaughterer's picture

This sucka' is going down.  

Unknown Rider's picture

...after Trump gets elected. There will be no Obama crash by order of the Director Of Planet Earth himself.

MASTER OF UNIVERSE's picture

Everything crashed March 10th 2008 around 11:00am Bear Stearns time New York shitty. Every crash since then is merely an extension of that crash which will wipe out all the banks in the entire world as it replicates the quantum waves of financial destruction to eliminate all wealth, and holders of wealth. The worldwide economic crash cannot be stopped, and it is occuring as we write here. Within days from now thermonuclear hot war will be initiated between NATO countries and the Russian Federation & China. Clearly, you are dreaming in Technicolor(tm) if you believe that Obama has anything to do with the crash that was launched on Graduation Day for the George W. Bush Torture Regime & the CIA. The establishment has crowned Hitler-y next POTUS and voting is mere formality at this juncture. TrumpO the AssClown will disappear in a Cocaine fueled rage of oblivion like his tackey casinos in Atlanta did. In brief, the assclown will crash & burn within weeks, and you will likely never hear from him again because he is bankrupt socially, politically, and financially.

RogerMud's picture

maybe put down the crack pipe

jdow's picture

Wow....that is eerie.  How could charts match up so well from different periods, without there being some hugely significant event to follow?

I'm stitting here just staring at this overlay, hardly believing what I'm seeing.

 

BandGap's picture

ZH used to overlay current times with those of the 1930s, the correlations were remarkable. We're past the cliff's edge and waiting for gravity overload.

They moved the chart porn up to modern times.

 

swmnguy's picture

It's important to look at the scales, how they are converted, and how they are overlaid.  If you go to  some other source and pull up the same charts, they aren't going to look so identical.  They don't look so identical if both charts are on the same scales, either.  

History doesn't repeat, but sometimes it rhymes.   And sometimes it only seems to rhyme.  Though 2008 is a recent enough memory to me, and so is 1987, I'm not discounting the danger.

JohnGaltUk's picture

Martin Armstrong claims there is an economic event every 8.5 years, its part of a cycle. Each one gets larger and larger. He calls this one Big Bang because this is when government debt blows up with private debt.

cognitive dissident's picture

well, unless the bots can hear him instead of reacting to algos tied to oil on any given day, what's the difference?

ah-ooog-ah's picture

As Spongebob said,   "Iiiiiiii'm ready ready ready ready !"

Cold War Kid's picture

I'm new to this finance and economy thing, concentrated more on foreign policy topics. There was no plunge protection team and central banks willing to buy stawks in 1987 was there? Why would they think it could crash the same way now?

neidermeyer's picture

You had real floor traders with their own money at stake in 87 ,, and no HFT BS ,, today you have puters gaming other puters for 0.0002 increments ,, when it gets away from what the fuedal lords have decreed it goes FAST... todays chart is much sloppier and unstable...

FinanceNewb's picture

i will make my first post here i guess...

 

To qoute Peter Schiff in a video i watched... he thinks they will prop up the stock market at the expense of the dollar... (im guessing QE 4 is what he meant)

 

Still learning this stuff as im coming back to the finance world after getting my finance degree in 2008.  I wished they taught us more about charts/technical analysis rather than how to biuld a portfolio 

Anybody agree/disagree with my Peter Schiff comment or shed more light

 

KEEP ON STACKIN !!!

Clock Crasher's picture

How many markets can you think of and how many permutations can you think of.

 

So many predictions.  Schiff is 3-1 in my book. 

 

1.  Schiff predicted Nasdaq would crash 80% in 2000 - correct.

2.  Followed that up with Crash Proof in the mid 2000's - correct.

3.  Forecast at the inception of QE that once the  puppeteers chose  to go down this path they would never unwind and never raise rates - correct. 

Only thing of consequence you can say Schiff was "wrong" on is the purchasing power decline of the Dollar index and correlated rise in gold which never happened as far as the paper markets go. 

 

If you read enough ZH and similar sites (ponziworld.blogspot which is ZH level 11) you will gain clarity of vision over time about the nuances.

Predictions have two components, the outcome and time. 

I myself am expecting one outcome for the long term, meaning the next 5 - 10 years and that's higher gold prices.  Eventually the equity markets are going to break down per "social mood" and "Eliot Wave" theory.  At that time if we have a meaningful crash of the SPX of say 20% which would still not qualify for a bear market, the Fed might, as Schiff predicts, launch QE4 and or cut rates ZIRP/NIRP.  In that environment gold would likely break free and head higher (you would think).  The markets are levered up on USD.  If there is an event that the USD gets sold hard it can take the equity markets with it.  If the rates rise this will also tank equities.  If your a mega institution and you are watching USD or Bond values start to fail and fall then its going to take equities with it.  And someone correct me if I am wrong but if you need to raise cash to cover losses else where what are you going to sell?  equities (AMZN NFLX etc)?

However looking at the SPX there is no reason to believe any of the above.  There is a clear and well defined bullish trend line going back to Feb and is now about 9 months old with no sings of failing.  Every time we touch that line we rally.  There is no fundamental news that can phase the SPX.  Bad news is interpreted as bullish and there is no good news to be had to counter that bullishness. 

Everyone is long.  Cash balances are at an all time low meaning institutions are ALL IN long equities.  Yet this condition is hyper stable.  Trending sideways or higher.  What evidence is there that this will change within the next 5-10 years. 

People look at $50 oil and cry foul.  Per fundamentals oil should be in the teens yet it is multiples higher and has momentum.  Why?  Front running QE4 perhaps or maybe a matter of national security. 

20T divided by 8,000 tones of gold = 7,000 dollars per ounce last I checked my math.  take 40% of that value to back the dollar by 40% gold and you get a gold price of about 2,800 yet we struggle at 1,300.  Why? 

Are we going to have a hyper collapse, a slow crash, a melt up that never stops, will gold crash with the markets sub 1000 before taking off again?  will the SPX ever see a 10% correction ever again? 

 

If you say you know the answer to that question for sure.. I'd check for hubris.

 

However we do know that in the history of planet Earth and humanity at large no purely fiat currency has ever beat the clock.  And the clock is ticking.

 

Don't be surprised if this goes on seemingly for ever.  This bear market trough to peak is well into year number eight.  If we make it march 2017 and the SPX is within 20% of the summer 2016 high we will be completing year number eight outright and embarking on year number nine of US equity markets. 

 

Having been burned going short this market twice once in 2013 and again in 2016 I personally hope for a return to fair value (meaning a crash of epic proportions).  However facts are facts.  S&P500 is fully in control, fully in a bull market, trending higher and higher with implied guarantee from the money masters. 

 

In hindsight the correct action to take post 2008 would be as follows (this only mho)

1. fully divest of all paper assets (despite missing thousands of percentage points in wealth accumulation in the most amazing stock market in recent memory - consider being fully invested in the 5 or so FANTASY stocks trough to peak.)

2. fully invest in silver/gold

3.  expatriate or migrate inside the country to some place safe and go off grid, establish your property rights in your county without harm/confritation, keep a low profile, take up closed circuit aquaponic/vermiculture farming and skilled labor and shelter in place to come out the other side better off.

BTW welcome aboard

 

Thanks for reading this rant

FinanceNewb's picture

Thanks for both of your replies and will def research the ideas and things you mentioned. I'm not quite ready to move out and buy a farm but I get where your coming from.

I did get some PM's because I do feel that "something will happen" and I will profit or either be somewhat ahead.

Worse case scenario I see it as an investment to hold on to or pass on to my kids like my dads coin collection. Def know the sound of a 1965 JFK half dollar hitting the kitchen table :)

Also, if I'm wrong then surely at some point the prices will go up and I can sell - either way I think it's a good choice if not for insuarnace/diversification and will add more in the future.

Thanks for the welcome

Clock Crasher's picture

I'm not quite ready myself.  I agree that PMs will at the least keep you even and at most put you ahead.  

My family is anti PM.  However I  do have a neice and nefew who are small kids.  I gifted them each a single Morgan.  I balanced it on a finger tip and stuck it so to make it resonate clearly.  They enjoyed it and I told them dispite their age to understand that it has intrinsic value etc.  A little bit of an experiment.  It's all they are going to get from me for xmas/bd/graduations.

 

 

RockySpears's picture

 ' "something will happen" and I will profit or either be somewhat ahead.'

  Stop thinking fiat, just stop it now.

 

 You want to know how to handle things?  Stop thinking fiat.

 

  There is no long term, find that farm and go,

 

RS

Clock Crasher's picture

But basically that what everyone who plays the paper games and same for people who play the phyz game has to ask themselves is what is the Fed more likely to defend, the dollar or Amazon stock prices?  whichever way you answer that question is the way you should invest. 

 

Then you too shall be ALL IN (one way or the other, fuck hedging thats why its called zero hedge)

Most people here are ALL IN gold from what I can tell, a few contrarians contraian tho which keep me on my toes. 

I still have not bought this gold dip.  In my investing age I learned a lot more patience.  You can get over the overnight collapse scenario, in the event of a "collapse" there will be massive relief rallies, there are still day traders, protection teams, AI and dumb money out there.

Arnold's picture

Very surprisingly lucid and readable.

Not your first rodeo, thanks.

GoldHermit's picture

I listen to and read a lot of his work and believe he is right basically because of political reasons. He and I both adhere to the Austrian school of economics . Basically the politicians convince the central banks to keep printing money in order to try and create inflation . They fear deflation because it destroys their political career . Deflation should be allowed to occur as markets will get back to a healthy state much faster . The main problem with creating currency and trying to prop up the economy with it is that eventually the public will lose confidence and you will have a crash . Usually currency cycles run for about 40 years before major changes take place . Many of us are concerned that too much currently has been created throughout the world and confidence is starting to wobble .

scintillator9's picture

There were more or less central bankers buying the dip in 1929  to keep the confidence game going longer, too.

http://xroads.virginia.edu/~hyper/allen/ch13.html

A few minutes after noon, some of the more alert members of a crowd which had collected on the street outside the Stock Exchange, expecting they knew not what, recognized Charles E. Mitchell, erstwhile defender of the bull market, slipping quietly into the offices of J. P. Morgan & Company on the opposite corner. It was scarcely more than nine years since the House of Morgan had been pitted with the shrapnel-fire of the Wall Street explosion; now its occupants faced a different sort of calamity equally near at hand. Mr. Mitchell was followed shortly by Albert H. Wiggin, head of the Chase National Bank, William Potter, head of the Guaranty Trust Company; and Seward Prosser, head of the Bankers Trust Company. They had come to confer with Thomas W. Lamont of the Morgan firm. In the space of a few minutes these five men, with George F. Baker, Jr., of the First National Bank, agreed in behalf of their respective institutions to put up forty millions apiece to shore up the stock market. The object of the two-hundred-and-forty-million-dollar pool thus formed, as explained subsequently by Mr. Lamont, was not to hold prices at any given level, but simply to make such purchases as were necessary to keep trading on an orderly basis. Their first action, they decided, would be to try to steady the prices of the leading securities which served as bellwethers for the list as a whole. It was a dangerous plan, for with hysteria spreading there was no telling what sort of debacle might be impending. But this was no time for any action but the boldest.

As the news that the bankers were meeting circulated on the floor of the Exchange, prices began to steady. Soon a brisk rally set in. Steel jumped back to the level at which it had opened that morning. But the bankers bad more to offer the dying bull market than a Morgan partner's best bedside manner.

The desperate remedy worked. The semblance of confidence returned. Prices held steady for a while; and though many of them slid off once more in the final hour, the net results for the day might well have been worse. Steel actually closed two points higher than on Wednesday, and the net losses of most of the other leading securities amounted to less than ten points apiece for the whole day's trading.

 


cowdiddly's picture

Ha, in a country with a 1% growth and you were somehow expecting corporate earnings,stocks and the indices to be up what 8-10%?

lalallalalallllalal  land

Creative_Destruct's picture

And as Volker said in the late 90's "The US economy grows on average about 2.5% per year. This is unsustainable."

"Madness (sanity in this case, return to realistic valuations) is like gravity. All it takes is a little pusssssh."

Ayn Rand's picture

Anything is possible in the land of Oz. Want proof, just ask Toto or his pet Dorothy.

offwirenews's picture

What if just maybe central banks end up buying everything on the planet with printed money. permanent asset inflation. keynesian wet dream

Creative_Destruct's picture

More like a brigade of firehoses in a medium size tributary, giving the CBs and TPTB behind the scenes the control they want to implement a world government.

Kefeer's picture

Given that the Major banks, who answer to the Central banks wh answer to the BIS are putting publicly traded companies in large debt (governments as well) and buying back stocks all with printed fiat; at some point in time if played out to the logical conclusion, all that is public goes into the hands of a few "privates" using the fiat debt instrument, which is laid at the feet of the people of many nations.  What can go wrong?

jmthomas1987's picture

Ah come on, don't tease me like that.  I am old enough to remember how it was after the '87 crash.  Was a rough 8-10 years before things even started to get back to normal.

swmnguy's picture

Things were totally different  in those days.  People actually bought and sold stocks and bonds.  Today, computers trade synthetic derivatives of...something, or maybe nothing.  We still believed that printing money would cause inflation, and that open manipulation of markets would damage the markets and the greater economy of which markets are only a part, more than the damage of just going through correction.  Now of course we know that since fiat money is abstract, it can be whatever we want it to be.  We also know there is no economy outside of the markets, and that once everybody is trapped in the markets, there's no risk in loss of confidence because all alternatives have been removed.

It's much better now that "normal"  is a completely artificial state.

Yen Cross's picture

 The lack of Vol and it's across all markets, is what worries me.  You better be hedged bitchez.

 Tyler needs to do much more Nanex reporting again. This low Vol lack of liquidity crap <> vs HFT is so pathetic.

 GFC the British pound crashed 5-6-7 % and that's a major currency ! Who filled that vacuum?

 It sure as HELL wasn't the retail trader or exporters. This is precisely why HFT is a joke!

 The dipshit ALGO writers have ZERO understanding of trading.

    *** Bonus Question> Who's that HFT firm that won almost everyday last year?

FinanceNewb's picture

Yen, I've been following your comments and really wanna understand them.

Can you elaborate in "simple terms?" (See my first ever post below)

Thanks in advance

Wish this site had a "what this means" section instead of just a glossary

Yen Cross's picture

   Could you be more vague?  I'm not hear to teach you.

  I'm here to share ideas with like minded individuals, that have years of experience.

 You sound like an analyst for either a failing bank or private equity group, looking for someone to bail you out.

  What part of ZIRP don't you understand!?

 

FinanceNewb's picture

Ok that's fine, just thought I'd ask

Kefeer's picture

Perhaps a response such as "ask away", then decide if you want to answer or not - just a thought and you are correct in that you don't have to teach anyone anything. 

However as soon as you decide to comment; you are teaching something about yourself for good, bad or indifferent.  I personally understand some of your comments and others I do not.  As an example; when you speak of FOREX trading; I have a basic understanding and would like to know more, but that is on me since my desire is not strong enough to really start digging and then asking relevant questions.  I have a feeling if someone asks you, what you perceive to be relevant, then you would be more than accommodating on sharing your thoughts.

 

MrSteve's picture

All ZH is really glad that you are an informed genius and never had any help and told us about your truly inspiring self.

Faeriedust's picture

I doubt we will have any massive fall-off before the election.  With that poised so close, anyone with the slightest tendency towards optimism is going to hold on in the hope that Everything Will Be Better If ________ Is Elected.  It doesn't matter who they prefer as their savior; the trick is that they believe that poor fundamentals can be rescued by the right political action.  And maybe they can, as clearly the main money-maker in the current economy is extracting rents from political favoritism.

buzzsaw99's picture

europe - been hearing about it for years

1987 - been hearing about it for years

taper talk - been hearing about it for years

elections - been hearing about it for years

low volume - been hearing about it for years

losing control - been hearing about it for years

Dickweed Wang's picture

In other words  . .. blah blah blah blah blah.

Harnar's picture

Hillary Fact Checker... because when America needs the truth, they look to Hillary Clinton