Friday, March 7, 2014

DVY Dividend ETF Weekly Chart Dividend Stock Bubble Continues Topping Ready for Popping Tight Standard Deviation Bands About to Squeeze Out a Huge Move Price Extended

The DVY and SDY charts have been provided the last few months as the Dividend Stock Bubble continues to top out. The standard deviation bands (pink) are squeezing in tight so a big market move is coming within the next couple weeks. The squeeze does not tell direction. Note the squeeze in late 2012. Back then, price poked down through the bottom band as the tightness formed and the move turned out to be actually to the upside with the early 2013 market rocket launch. The set up now is the mirror-image. Price has poked up through the upper band as the tightness is forming.

Price is extended above the moving averages requiring a mean reversion to the downside like the other tops so this hints that the move would be lower out of the tight bands. The red lines show the negative divergence with the indicators, as well as overbot conditions, that created the spank downs. It is surprising that the markets never truly corrected last year. The Fed and BOJ central bankers print money and this force is far too powerful to overcome. The Fed members keep the stock market elevated and make the rich richer. In payment for his services and duty creating obscene wealth for the top 2%, ex Chairman Bernanke just took $250K for a 40-minute speaking engagement in Abu Dhabi. The wealthy take care of their own. DVY has ran from 22 to 73 from the March 2009 bottom due to the Fed and other central banker money printing; over +230%. Comically, Bernanke, Yellen and other Fed members say there are no bubbles in the markets.

The chart is exhausted. Note that price is at new highs and money flow is far lower. Ditto the other indicators. Compare that to the go-go juice in 2012 and early 2013 (green lines). The bulls are creating near term momo over the last two weeks so this may enable price to remain elevated with an upward bias for another week or two. Over the multi-month time frame, the indicators are clearly negatively diverged and would be expected to stay that way leading to intermediate term and long term weakness. The recent volume is paltry compared to one year ago. The enthusiasm is simply not there. It would be prudent for price to pull back into the sideways blue channel to churn through those higher volume price levels.

If Chair Yellen, the BOJ and ECB do not pump equities with happy talk and stimulus, the chart set-up should exert itself with a sideways to sideways lower move expected for the weeks and months ahead popping the Dividend Stock Bubble. Considering the tight band that will squeeze out a strong move, the expectation is for the downside, and that the dividend stocks should place a multi-year top this month. Sadly, Ma and Pa Kettle just took their entire life savings and placed it into dividend stocks because the nice gentlemen on television say blue chip dividend stocks are the safest and smartest investment. Remember, a simple price drop of -3% or -4% in a divvy stock wipes out the divvy gain let alone a price retreat of from -5% to -25%. 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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.