AN UPDATE ON THE DIRTY SOX
There is a certain value that comes from being old school. It is your choosing whether you utilize that wisdom to be that crooked old man who has memorized every episode of Bonanza or if you use it for more noble causes, such as practicing prudent and patient methods in speculation. I'm from the old school. I believe in the power of pagers. I like reruns of ALF. I often wonder what happened to guys like Special ED and Kwame. Rewinding VHS tapes before you took them back was a lesson in courtesy and sometimes, patience. Ricky Shroder is still cool. And Kirk Cameron is kinda creepy now. Along those lines, there are certain old school market indicators that are worth their weight in gold. One of those is the SOX. I went over the SOX in detail on July 29th, in a post titled: Is The SOX Foretelling A Major Correction In The Months Ahead? Now is a good time to bring up the SOX because it is on the verge of violating a technical point that is as important as any. Since 2010, a break below this point has occurred three separate times. In each case, the market went into a multi-month sloppy, corrective phase that was best avoided. Three times does not a statistic make...I know. However, given the other negative technical events that are taking place, this certainly bears watching. The first chart shows the failure of the technical point and what is has led to in the past. This the same chart posted in the July 29th posting: The next chart shows the SOX at present. We are awfully close here. Important see how we end the...
4 CHARTS THAT WILL ALLOW YOU TO KEEP YOUR POISE DURING THE WEEK AHEAD
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IS THE SOX FORETELLING A MAJOR CORRECTION IN THE MONTHS AHEAD?
If you came up in the old school, you realize the value of the SOX (Semiconductor Index) as a predictive indicator for technology and thus the entire market. While the SOX is not nearly as relevant in the grand scheme of technology as it was a decade ago, its predictive powers should be no means be discounted by those among us who did not witness the days when hardware ruled technology investing. While it has grown increasingly repugnant to have a bearish slant on anything but Treasuries and precious metals in 2013, there are certain pieces of information that I feel compelled to pass on, if for nothing else but to open the eyes of investors to possibilities that are not currently being entertained. It is after all during the most "feel good" periods that the markets decide to unveil a can of whoop ass on investors, leaving those who are unprepared scurrying for the comfort of their mother's bosom. There is certainly an excess of "feel good" here and now. It is noticeable. Much more so than at any point over the past few years, I would venture to say. The action and attention that is being paid to companies like NFLX, TSLA, AMZN and FB is reaching fever levels. Furthermore, investors in the handful of popular names that are favored in the current market have piled on top of each other to the point that when a pullback does come, whether beginning this Friday or 20 Fridays from now, the downside volatility will be extraordinary. With that said, I would like to point out one valuable piece of potentially bearish information that caught my eye today. The action in the SOX is not only severely lagging the rest of technology, it is correlating perfectly with a previous incident in 2012 that just so happened to take place above the exact same trajectory. To make things even more compelling, let me add that each and every time the SOX has broken this trajectory to the upside and failed since 2010, it has led to a repugnant period for the markets in general. The charts below will illustrate my point, beginning with a daily chart of the SOX, followed by a weekly SOX chart and ending with a weekly chart of the S&P 500 to show how the general market reacts: click chart to...
4 CHARTS THAT WILL INFLUENCE PRACTICAL SPECULATION DURING THE WEEK AHEAD
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WEEKLY REVIEW SPECIAL EDITION: THEY HAVE IT ALL WRONG
I wanted to do something a little bit different for the weekly review on this Sunday. There is quite a bit of debate occurring surrounding the origins of this bull market from a time standpoint. Some have been arguing that it is years old as it started in 2009. Others will tell you it is only a couple of years old, with 2011 serving as a reset. What if it is only a couple of months old, as measured by the most reliable tools I know in TA: The trajectory points I illustrate every week. Let's take a look at a completely different and potentially explosive way of looking at the current bull market: click chart to...
7 CHARTS THAT WILL CRADLE YOUR SENSITIVE SIDE DURING THE WEEK AHEAD
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