Thursday, May 16, 2013

DVY Dividend ETF Weekly Chart Dividend Stock Bubble Grows Larger Overbot Negative Divergence

The Fed's QE4 Infinity and Beyond, the replacement program for Operation Twist, as well as the BOJ easing, are the two main market drivers this year now fueling a near-parabolic move higher. Note the red lines for the indicators in late 2012 all either negatively diverged or signaling lower lows ahead. The difference was the central banker easing that created the ongoing vertical move. This week is up another +1.5% and there are two more days remaining. The chart remains overbot since February and the indicators have very limited headroom available for further highs. The stochastics, MACD histogram and money flow are all negatively diverged now wanting a pull back. The RSI is squeezing out the tiniest higher high, and the MACD line remains positively sloped, so the momentum of the move should create sideways movement before rolling over. The sideways to slightly higher price highs will allow the RSI and MACD line to firmly set up with negative divergence and clear the decks for the downside.

The central banker policies are clearly the driver for the dividend stock bubble. Fed's Plosser (a hawk), admits overnight that the Fed is not good at identifying asset bubbles. The investment houses and hedge funds are taking advantage of the easy money and simply riding the parabolic move. They will likely jump ship when the trend reverses leaving Aunt Nellie and Uncle John, who are running into dividend stocks over the last two months based on the media and television bullish hype each day, holding the bag. The market move higher is one heck of a run but the dividend bubble is finally topping and ready for popping. May, June and July will be eventful.

The interesting aspect is that near everyone believes the Fed and other central bankers are in full control, as they have been since QE1 was announced in March 2009. This is all uncharted territory, however, market behavior that even the gristled veterans are puzzling over, and no one, especially the central bankers knows how it will end. The likely outcome for the downside will be a sudden realization that the central bankers are no longer in control. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.


  1. ''The likely outcome for the downside will be a sudden realization that the central bankers are no longer in control''

    Oh my God, what was with those CPI numbers?!? ... With all the QE rolling? Hmm... I wouldn't feel to comfortable being in gold (bear market) or long on markets ...


    1. Claims and Starts are weak today but CSCO earnings are creating lift in tech and the Nasdaq. CPI is a non-issue. On the larger macro view, hte big picture stuff, the potential outcome as time moves along may be a result of the Fed losing control. Everyone is comfortable now knowing the central bankers are going to continue easing. Since all this is uncharted waters without a play book, and no one knows how it will progress or end, there is a strong possibility that the markets will not wait for the central bankers. It is all a mystery how things will progress, watch the JGB's moving forward as one possibility.

  2. Much impressive recommendation! The beneficial dividend stocks services are offered by the firm by meet the individual's needs which they have placed their order for. These days, all of us are blessed with the superior quality benefits of the companies who are trading in such kind of profession.

  3. I am not much of a Fibo Goldtrader as I view the pair differently and it does not
    always react to such studies as one might like. More irrational, news and heavy inverse correlation to the USD.


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