5 CHARTS THAT ARE BEGGING YOU TO DO ABSOLUTELY NOTHING, BUT SIT TIGHT
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FREAKY TALES
With the recent price action, it has become clear that the market is doing its best to force participants into the belief that a demon child is forming in the womb of the financial system. Moves like we experienced on Friday are meant to create a fearful environment that causes participants to either get more liquid, hedge or get short the market. There remains an excess of optimism that is inhibiting the market from moving over the substantial, historical resistance that is directly ahead of it. What Friday did was create a sense of fear in as efficient a form as possible. That efficiency came from the fact that the markets were essentially unchanged for the week. However, the levels of fear increased and the levels of optimism have decreased substantially. I am nowhere near prepared to relieve myself of the substantial burden of having a majority of the portfolio in cash. Nor am I prepared to break away from the comfortable state of being market neutral via the portfolio hedge in TZA. What I am prepared to do is acknowledge that the market are in for a period of unpredictable, choppy, doo-doo stained behavior that is going to repel traders, investors and all those in between away from the markets. Tools to avoid volatility, such as cash and hedging exposure, will continue to be the mode du jour. There is a substantial wildcard, however. The elections. More specifically, the uncertainty that can arise from not having a clear winner. And perhaps even, the surprise that can come from having an unexpected winner. This would increase general volatility. Barring a complete electoral disaster, I don't expect it to sink the market, however. This is a market that seems resolute to chop sideways for the next several weeks. Here is a technical look at the Nasdaq Composite, uncovering some interesting findings: click chart to...
THE TECHNICAL CASE FOR AN 80% DROP IN RGR OVER THE NEXT 12-18 MONTHS
RGR has been a hedge fund hotel of the short variety for sometime now. More than 40% of the float is currently short, which has resulted in a rather vicious squeeze to take place in 2012. That squeeze has culminated in what can be classified as a "blowoff top" that is rounding out and continues to see continued distribution, while it sits on top of a generational trajectory point dating back decades. It is a picture perfect top that deserves to be capitalized on. Here is the first chart. A long-term look at RGR: click chart to enlarge And this is a shorter term look at RGR via the daily chart: A break above 55 is where this analysis is invalidated and the trade should be...
6 CHARTS THAT POINT TO A CHANGE IN BEHAVIOR FOR THE MARKETS DURING NOVEMBER
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HOW 1987-1992 MAY PRESENT THE HOLY GRAIL FOR THE CURRENT MARKET
This correlation study follows two crashes in relation to the exact same trajectory: 1987 and 2008. A break of the exact same trajectory point triggered both crashes. Both crashes were similar in scope. Both crashes moved right back up to the trajectory in a similar time frame. Both corrections following the rally off the lows were similar in time and price. Both rallies off the lows ended up getting pinned to the trajectory. The future potential of the current market becomes clear only when looking at the similarities of the past. Here is the study: click chart to enlarge What did the future hold for the Dow following the traumatic events of 1987, the subsequent rally back up and the seeming stalemate as prices became glued to the generational trajectory? One of the greatest bull runs of all time started some years later in 1995. Here is a look from the point at which the last chart ends: And finally, what all of this means for the future of the...
4 CHARTS THAT CONFIRM THE BULLS HAVE HAD A VISIT FROM THE GHOST OF JUAN BELMONTE GARCIA
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AAPL: A DOWNSIDE PRICE TARGET BEGINS TAKING SHAPE
On October 7th, I posted a short-term analysis of AAPL stock price - as it sat above 650 - questioning the price structure, ultimately painting a bearish picture for the stock going forward. As we are well into the second half of October, the stock price has sunk to below 610, threatening the 600 mark right before their earnings release this coming week. Here is a look at where AAPL may be looking to touch from a technical standpoint. Don't get your panties in a bunch, but we still have a ways to go on the downside. click chart to...
A PRICE MIRROR ON THE NASDAQ TO CONSIDER
As those of you who have been following along during 2012 know, I have been rather steadfastly bullish for a great majority of the year. I was reluctant to change my opinion with respect to the market, not due to any profound fundamental insight I had, but rather due to the fact that the market had displayed a rather elegant propensity towards simplicity in its daily and weekly price patterns. Volatility had been contained. There were few sudden jolts that had the potential to shake confidence. The market reacted at points where it needed to react, ignoring points that should have been ignored. Bad news was turned on its head and greeted with rallies. This all changed recently in rather dramatic fashion as I began sounding warning bells about the markets in late September. Those warnings have only grown more consistent since then, even in the face of the recent short-term rally we have experienced so far this week. My primary concern lies with the behavior of both the Dow and Nasdaq at the most critical of critical technical points. Each of their respective generational trajectory points are in play here. These trajectory points have been responsible for the resistance on the upside since 2010. These trajectory points also have a very distinct effect on the market when they begin asserting their influence: The price patterns become choppy. The rallies start becoming less predictable. Leaders begin failing. All of the things we are experiencing here and now. Below is a chart to further illustrate the point: click chart to...
4 CHARTS THAT CAN’T BE ANY MORE CLEAR IN THE MESSAGE THEY ARE SENDING TO INVESTORS
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FINANCIALS: 4 STRIKES AND YOU ARE OUT
During last weekend's chart review, I discussed the negative attributes that were plaguing financials. It was painfully obvious by looking at the price action during that week that the financial sector was leaking beneath the surface without a majority of investors realizing it. I detailed the fact that there were three strikes against financials that were an obvious sign of weakness. This past week that leak was actually recognized. Recognition of that leak led to a powerful Friday selloff. The financials are now potentially facing strike four as detailed in the chart below. The greatest worry for the bulls, at this stage, should be determining how the market will stay on its feet with an obviously broken semiconductor sector (SOX) and an almost broken financial sector. Two walls that the bulls surely don't want to see crumble. click chart to...