TWO CHARTS ILLUSTRATING HOW BEARISH TUESDAY’S ACTION REALLY WAS
Two illustrations of the importance of today's breakdown in technology. The first chart will show how symmetrical the breakdown was, with respect to the "thrust" that occurred off of the key trajectory point on the Nasdaq. The thrust was further validated by a close on the lows. This is fairly classic behavior for a market is set to experience a change in trend. The second chart will show how the breakdown in technology was accompanied by a significant volume uptick in the QQQ. This further validates the breakdown. I have been speaking of the various warning signs that the market has been exhibiting for two weeks now, mainly in my weekly chart reviews. What the markets experienced today was no longer a warning, but rather a direct shot into the headquarters of the bulls. This means we are no longer sitting in a peaceful stage of existence in the financial markets. There will be some very serious sideways volatility over the next several weeks. That is a best case scenario. I believe a sudden reversal back up is out of the question for the remainder of October. The worst case scenario is a rather severe drop in the coming weeks. For the first time this year, I am willing to entertain the possibility of a waterfall decline or even a crash. I don't like using such words, as they stir up emotional reactions in investors that are often times unwarranted. All I am saying is that the possibility, in my analysis, has gone from being basically nonexistent to having some remote probability. Be extremely careful initiating long positions. Time to be defensive. click chart to...
4 CHARTS DEMONSTRATING A MARKET THAT IS BEGINNING TO SHOW SOME CRACKS
click chart to enlarge
AAPL: WARNING SHOTS HAVE BEEN FIRED
Despite it being contrary to my nature, existence and philosophy about the very soul of the financial markets, I have admitted for sometime now that the price structure in AAPL left nowhere to go in the stock but up. This belief is contrary to my nature because the core of my philosophy with respect to the financial markets is that they hate you, me and every single person who attempts to pick fruit from its tree. Therefore, it would make sense that the most popular company in the history of modern man would not qualify as an investment. It runs contrary to the market's modus operandi for investors to consistently be able to make money in a stock that everybody, whether institutional or retail, loves to death. It goes without saying then that over the very long-term individuals and institutions will lose more money on AAPL than they have made. It will be THE stock that hurts investors the most due to the unwavering, cult like love that has developed for the company. When the tide does inevitably turn, investors will be so blinded by that love that it won't matter how many times they get kicked in the stomach, slapped across the face or raped by a pack of wild dogs, they will keep coming back for more. Let's look at the here and now.: click chart to...
THE SOX GIVES BULLS EXACTLY WHAT THEY NEED
Definition. A sense of perspective. A platform from which to rise. It was all granted today in the most subtle of ways. The SOX reversed, starting around mid-day, closing near its highs, while the rest of the market got pummeled into the close. That's bullish. In last night's broadcast, I posted the SOX chart, mentioning that a reversal needed to happen around mid-day today in order to keep from becoming a weight on the market. It just so happens that the market continues its obedient, on the edge type behavior, as it has for all of 2012. Allow me to amplify why the reversal today was as important as it was by commenting on the price action in the chart below: click chart to...
THE MARKET FALLS PREY TO THE BEAR’S GRAVITY BEAM. NOW WHAT?
On my long list of scenarios for this week, the least favorable scenario was an expansion in downside volatility as we experienced today. I realize that we are in a time and place where volume is sparse, meaning that follow through on technically favorable, bullish patterns is hard to come by. Nevertheless, we are at THE point for the market that matters. I'll remind you of that fact by directing you to the chart below so that you can see for yourself the type of gravity the bulls are attempting to break away from. click chart to enlarge That treacherous pink trajectory line, born during the Great Depression, continues to grab the market by its throat, slowly digging its fingernails in until the market is forced to pop off its bull costume . It has happened six times in the past couple of years. I am hoping this doesn't turn into a seventh. Bear in mind that an acceleration away from the aforementioned trajectory is a strong indication of a new secular bull market. Let's look at the recent price action in the Dow and the...
4 CHARTS THAT WILL KEEP YOU FROM GETTING BAMBOOZLED DURING THE WEEK AHEAD
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A FOLLOW-UP ON CRUDE OIL FOLLOWING A CRAZY WEEK OF TRADING
Last weekend I posted an article titled "The Price Pattern In Crude Oil Makes A Prius The Best Investment Of All." In the article I discussed the long-term possibility that crude has much higher prices in its future. I also discussed the short-term possibility that it was ready for a period of consolidation after reaction to its upside trajectory point. The reaction we saw this week was NOT within my normal range of expectations. Whenever a financial instrument, be it a stock, bond or commodity begins exhibiting behavior that is outside my normal range of expectations, I reexamine that asset to learn what could be influencing it to behave in an erratic fashion. Here is an updated analysis of crude...
LOOKING AT THE DOW ON A LONG-TERM BASIS REVEALS WE ARE AT A CRITICAL JUNCTURE
I was preparing to do an updated study of crude oil, following up on last week's piece, when I started getting distracted with other pieces of analysis, indices and commodities. My distraction is your benefit. I started looking at the influence of the generational trajectory points on the Dow over the past 15 years and was compelled to do a little show and tell. A study of crude oil will be posted this weekend, as well. A couple charts here for your monetary pleasure. Compelling, irrefutable evidence of the critical nature of current market...
5 CHARTS THAT DEMONSTRATE A MARKET THAT STILL HAS A WAYS TO GO BEFORE A SHORT-TERM PULLBACK
I usually start the weekend chart reviews with the Dow, S&P and Nasdaq. This week, however, the most significant tells are coming from the Russell 2000 and the CRB. Both of these indices are giving a pretty clear indication of where we will see a short-term top for the entire market...and its quite a bit higher than most suspect. click chart to...