4 CHARTS THAT HAVE GOOD CHEER WRITTEN ALL OVER THEM FOR THE MONTH AHEAD
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CRUDE OIL WARMING JETS FOR A RUN INTO TRIPLE DIGITS
Under no circumstances did I expect Crude Oil to pullback as far as it has over the past couple of months. In my analysis dated September 16th, the price pattern was giving no indication of the type of pullback we experienced. It wasn't until more than a week later that Crude made its intentions clear, signifying that a test of the all important generational trajectory pictured below was bound to take place. Here is my revised analysis from September 23rd, after Crude decided to show its hand. Now that we have essentially been meandering around the generational trajectory for a number of weeks, I wanted to post an update as to what the intention may be: click chart to...
A STUDY OF THE CYCLICAL NATURE OF THE SOX GIVING RISE TO A 1-2 MONTH PRICE TARGET
This study will demonstrate the cyclical nature of the SOX, arguably one of the key sub-indexes for the entire market. There is a concept here that I have not shared to date. It is the idea of time compression or expansion across trajectory points. The best example I can give is during the second half of 2011 during the Euro crisis, the SOX had a compressed cycle of volatility and price movement along the trajectory you will see in the chart below. That compression took place due to the volatile, unpredictable circumstances created by massive macro shocks coming out of Europe. When a market is allowed to function normally, without macro shocks, you get time EXPANSION across the trajectory. This simply means that you get mirrored or correlated price movements along the trajectory in an expanded or normalized state. Here is a real-time demonstration of price compression and expansion, followed by a projected date and price target to prove the validity of the...
CASE CLOSED: THE DOW ENDS 2012 NEAR 13,500
A step by step study of how I arrive at this conclusion follows: On October 24th, I presented a study titled "How 1987-1992 May Present The Holy Grail For The Market." It is not your traditional correlation study simply providing an overlay of current prices with prices from a similar period. This study looks into how the market of present day is reacting so similarly to an identical trajectory. In order to give you a better understanding of the trajectory, I first want to show a quarterly chart of the Dow going back to the 1932 bottom during The Great Depression: click chart to enlarge It is obvious the tremendous amount of influence this trajectory exerts over the market. The question becomes how does this study relate to present day. Let's first take a look at the exact same trajectory and the stunning similarities between the 1987 and 2008 declines in relation to the trajectory: The similarities in calamitous events have been remarkable thus far, as has been the recovery since. Here is a closer look at the behavior of the current market versus 1987: Now for the money shot. If this study should continue to provide the road map to the current market based on the relation to the trajectory, we know the following: 1. There will be very little downside volatility in the months and years ahead. 2. There will be very little upside volatility in the months and years ahead. 3. The market will be in a very slow and arduous bull market in the years ahead that feels like it is prone to collapse at any moment. Sound familiar? We're already seeing that honey. 4. Declines of any more than 5% should be bought hand over fist. We are currently at a 7.5% decline from the recent peak. 5. This entire decade will not see a bear market. Only corrections within a bull market. Where are we in relation to the 1987-1995 period? Here is your road map. Treat it with the respect it deserves: Let me clear my throat............case...
4 CHARTS THAT WILL KEEP YOU IN PEACE AND NOT IN PIECES DURING THE WEEK AHEAD
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THE FACEBOOK IPO IN 2012 AND THE YAHOO IPO IN 1996 CONTINUE THEIR STRANGE RELATIONSHIP
In 1996, I traded the YHOO IPO on the day it went public for clients. I remember the sentiment at the time of its IPO was very similar to FB: Unbounded skepticism, followed by valuation propositions that simply didn't add up, topped off with what seemed like a failed IPO at the time. In August of this year, after it was clear that the FB IPO was a complete debacle, I decided to do a comparison to the YHOO IPO based on the memory I had of the perceived failure in 1996. The correlation between the two was astounding. I followed up with another study tracking the correlation a month later. Again, astounding. Here is the third installment of that correlation study, comparing YHOO to FB six months into their respective IPOs along what it means for FB in the months ahead. click chart to...
TIME TO CATCH THE FALLING APPLE
As I was stretching my fingers to prepare for typing this post, I was wholeheartedly prepared to issue a diabolically negative report on AAPL, warning of utter catastrophe and suffering over the long-term for shareholders. In reviewing the long-term price action for AAPL, however, I don't feel that the long-term picture presents enough information to make any concrete determinations of the bullish or bearish nature. There simply isn't enough information to rely on at this point. I can, however, take it one step at a time in presenting a short and intermediate term view of AAPL. First, before the tomatoes come flying onto the stage accompanied by a symphony of jeers, a little history. I will admit to having a bias against companies like AAPL. What I mean by "companies like AAPL" is popular investments with cult like followings. These types of investments invariably end up harming investors because emotions take control of the mental cockpit as opposed to logical analysis. The emotional reaction is further reinforced by group think that is constantly amplified by positive articles, descriptions and experiences with respect to the investment. It simply becomes a recipe for bad decision making. AAPL will not be immune to this to cacophony of sheepish mental disaster. When the ship begins sinking, as it inevitably will, you will see fluffy white coats and bright pink ears scattered all throughout the investing seas. If I can supply a life vest to just one would be victim, my job is done. Over the short to intermediate term, my interest is in demonstrating to readers the risks and potential rewards in AAPL based on price analysis. As an example, in July, following a perceived disappointment in earnings with the stock trading in the 570 range, I said that it was a buying opportunity and the stock would be trading at 700+. More recently, I warned of the fact that AAPL would likely trade in the 520-550 range when the stock was trading above 600 just a few weeks ago. Now that AAPL has fallen into my downside window, the opportunity has shifted. Please click the chart below for a detailed...
WEDNESDAY WAS THE BEGINNING OF THE PROCESS THAT WILL END THE CURRENT MARKET DECLINE
140 characters doesn't serve justice to certain market situations and scenarios. We are in the middle of one of those scenarios now. In order to demonstrate my thinking appropriately, I need a bit more amplification than 140 characters allows. I made a comment on Twitter during trading hours regarding the spike in put/call ratio as the S&P 500 had a rendezvous with the trajectory from the 2009 lows. The very same trajectory that carved out the low in October of 2011 that I bought hand over fist. The identical trajectory that gave us our low in June that was brought to you in living color days before it happened by yours truly. That same trajectory that is now acting as a floor to keep the market from diving off a technical cliff. And the touch of the trajectory is occurring with a spike in pessimism. The perfect recipe. I did make a declaration on Twitter that today's low may be it for the month of November. We are now in the zone where a bottom will more than likely be taking shape over the next few weeks. It could indeed be true that the low for the remainder of 2012 occurred today. At the very least, we have started the process of ending the decline. I'll say it again, today was the first day of the beginning of the process that will end the current decline. Let's take a look at a couple of charts, with notes included, as always. The first shows you the importance of the trajectory we came a hair away from touching today. The second is a demonstration of the put/call ratio with the S&P 500 charted below it: click chart to...