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Goldman Weekly Chartology: "Investors In Full Risk Off Mode"

Tyler Durden's picture




 

As Goldman's David Kostin summarizes in his latest weekly kickstart chartology, the market continues to be a dueling story between slightly better micro (although certainly not in Europe) and deteriorating macro. "Two weeks ago the narrative of the market was the triumph of politics and profits. News from inside the Beltway suggested a deal to curtail spending and raise the federal debt ceiling was in sight and a steady sequence of very strong earnings reports led by the Information Technology  sector combined to push the market higher. However, the news this week was decidedly less market-friendly....Our client discussions indicate investors are in full “risk-off” mode and they plan to continue that posture until sovereign uncertainty subsides. Lack of conviction regarding the outcome of politically-charged fiscal negotiations has compelled hedge funds to reduce risk by lowering gross exposure and mutual funds to stay close to benchmarks. Investors are refocusing on corporate balance sheet strength as a key factor in the stock selection process and we re-balanced our strong and weak balance sheet baskets. 331 stocks have released 2Q earnings and the results have been strong although several firms slashed 2H guidance during the past week." And as a reminder, the bulk of the upside has come from one company alone: Apple. Also, it is gradually getting uglier on the earnings front: "During the past week a number of firms reduced EPS guidance for 2H. Examples include ITW, JNPR, MUR, and SO. Several firms specifically commented that business activity slowed sharply in June and July." And with a slew of financials reporting shortly, next week is sure to tip investor sentiment further into derisking mode.

Kickstart 7.30

 

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Sat, 07/30/2011 - 12:04 | 1507736 TSA Thug
TSA Thug's picture

Thanks gang for sharing this highly sought after material for free. No place else on the net can I find this kind of stuff.

Goldman produces some very impressive report. But the outcome of the wave of RO is going to produce liquidity problems so I'm going to have to lighten up on my 401K and take some RO also.

.

--You WILL Obey!
http://www.youtube.com/watch?v=dTOcAt44_QA

Sat, 07/30/2011 - 12:27 | 1507779 hackettlad
hackettlad's picture

Seconded - don't always agree with the partie prise line but this site is an oasis of sanity in a desert of lies and manipulation.

Sat, 07/30/2011 - 12:53 | 1507831 TwoShortPlanks
TwoShortPlanks's picture

Agreed. Which bring me to the question; how is the average person ever going to understand how and why a collapse happened...understand those "lies and manipulation", that is?!

Sat, 07/30/2011 - 12:14 | 1507758 Grand Supercycle
Grand Supercycle's picture

S&P500 monthly chart originally posted Jan 2011 shows a series of broadening patterns - aka megaphone wedges.

The three broadening formations reveal an unstable market where buyers and sellers battle for control.

The first two megaphones make clear the eventual victors...

http://stockmarket618.wordpress.com

Sat, 07/30/2011 - 13:09 | 1507858 rocker
rocker's picture

I think your time is close at hand. While many have already left the markets ie mutual fund outflows, there just isn't much more money available for the hedge funds to rip off of the traders at hand.

I said a few weeks back. Recession indicator stocks like CSCO and now JNPR are real tells of what's to come. One does not neet to here hyped GDP numbers to know we are contracting. As verified by ZH and Reggie's reports on the real economy.

Can the bounce this up one more time. Who knows, but they will do it with their money  this time, Not Mine or Yours !!! 

Sat, 07/30/2011 - 12:27 | 1507776 TwoShortPlanks
TwoShortPlanks's picture

Keiser stays calm: http://www.youtube.com/watch?v=5CHKjKi_LZc

Forget Currency Wars, let's move onto the Counter Party Wars!!!

Sat, 07/30/2011 - 12:40 | 1507810 slovester
slovester's picture

"During the past week a number of firms reduced EPS guidance for 2H. Examples include ITW, JNPR, MUR, and SO. Several firms specifically commented that business activity slowed sharply in June and July."

So business activity slowed sharply in June and July?  That wouldn't have anything to do with the fact that the USG (the 9000 ton gorilla in the US economy arena) had to go on a financial crash diet beginning in May when it started bouncing off the debt ceiling would it?

Naaaaaaaaahhhhhhhhhhhhhh....

/sarc

Sat, 07/30/2011 - 17:01 | 1508186 espirit
espirit's picture

Do algo's count as investors? The game has been risk off for awhile with only the algos ramping the markets. Friday though, was a vacation day for them with the PPT preventing a greater selloff.

Pump and dump is so obvious.

Sat, 07/30/2011 - 17:56 | 1508271 Highrev
Highrev's picture

My 2 cents FWIW:

Well the All Ordinaries, Hang Seng, Shanghai, Bombay, FTSE, AEX, DAX, CAC, MIB, IBEX,  DJIA, DJT, NYA, SPX, RUT, COMPQ, SOX, BKX, and the Bovespa are all on monthly trend momentum sell signals generated for the most part on rejections from very  important resistance. The question at hand is if this is the beginning of something bigger, or another bear head fake?

Those rejections have initiated out of 2 year rising wedge apex breakdowns in the States and the U.K., but the rest of Asia and Europe are still holding the bottom boundaries of their ascending channel or symmetrical triangle configurations.

IMPORTANT INITIAL CONCLUSION: the "breakdown" is being led by the U.S.

There are 2 indices that I follow that are still not on official monthly sells (but they are on incipient sell signals): the NDX (powered by the company, Apple, that now has more cash on hand than the world's most powerful nation, the USA), and the Nikkei.

HOWEVER, the USD is still NOT ON a monthly buy, and the EUR/USD is still NOT ON a monthly sell. That's a big non-confirm to keep an eye on.

And in spite of this very bearish technical configuration (which is confirmed back in time across shorter time frames), the intermediate term bullish setup (BTFD) that I've been following is still intact, albeit more suspect now since support is being tested for a second time after a bearish reversal just short of the minimum targets being met.

And what's more is the fact that the setup is quickly turning into a head and shoulders pattern that will soon be on everyone's refrigerator door (even if it might be better seen as a horizontal flagging pattern) with very clear multiple support convergence zones on all these major world indices (including the rising wedge breakdowns) that will give us very well known make-or-break pivots to follow.

Nevertheless, this very well could be one of those rare occasions where the "technical" make-or-break pivot may well be "fundamental", or more specifically, in this case, "political", and with that I am referring to the U.S. debt limit: the sell or buy signal may come directly from Capitol Hill and nowhere else.

I also suspect that the resolution for the current setup - a BTFD, or a breakdown - will be very evident to all once we get it. A buy the dip, or sell the breakdown? Either way, it should be scary to say the least (that is unless we launch right out of the gate next week).

(If you would like to backtrack my previous comments on the current technical setups in place, start here: http://www.zerohedge.com/article/strategic-investment-conference-luminar... )

Sat, 07/30/2011 - 18:55 | 1508370 WonderDawg
WonderDawg's picture

So, you're saying it could go either way. Thanks for the profound insight.

Sorry, I three-putted like 6 greens today, so I'm kind of in a sour mood, and I'm a smartass by nature, anyway. The bottom line is, no one knows what the market is going to do, short term, say, the next 2-3 weeks. Personally, I think we're on the cusp of the a hard turn down, but the timing is the thing. No one seems to have a handle on that. I'm keeping my powder dry until I think we've rolled over, then it's time to short the shit out of equities and maybe PM's.

Sun, 07/31/2011 - 06:35 | 1509364 Highrev
Highrev's picture

Yeah it's all about probabilities, and it's looking kind of 50-50 to me at this point with shorter term momentum definitely pointing down but with longer term trend configurations still indicating up (see the RUT chart I posted in the first comment of this series for a more concise picture on that). This, of course, is a situation that could lead to a period of sideways trading with an upside bias, but then again, from a purely TA point of view, I wouldn't be surprised by one last thrust higher, and, of course, as I mentioned above, an external catalyst that provokes a nasty breakdown wouldn't surprise me either (and while I put a 50/50 on where we go from here, I think the probabilities of a "V" spike sell-off and reversal would be rather high should we get that "nasty breakdown" - but probably not back to new highs in that case).

Daneric is doing an incredible job following various markets into exhaustion extremes (currencies, gold, treasuries, stocks).

Don’t be too put off by the fact that his main approach is Elliott Wave – he also employs many other TA techniques from traditional TA to market breath to sentiment.

http://danericselliottwaves.blogspot.com/

Tue, 08/02/2011 - 07:39 | 1516115 WonderDawg
WonderDawg's picture

I read Daneric every day, and subscribe to EW short term update. I happen to believe the EW theory, but I think it has more value for gaining a big picture view, rather than day to day trading. I follow it, along with some other TA blogs. Market Perspectives is also a good one. I think EW is interesting from a socionomic standpoint, which I believe does have a lot of value for identifying social trends. They were talking about Europe imploding long before it became MSM news. Anyway, sorry for being a smartass, we're all just trying to figure out WTF is going on and how to play it.

Sat, 07/30/2011 - 22:33 | 1508773 Zer0henge
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A Shopping cart?  WTF?

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