The most closely applicable fractal would be December which resulted in a 50-handle drop in the SPX. The September top shows a few days of plus one numbers but it resulted in a quick 40-handle pull-back for the SPX identifying a significant market top. Reviewing all the boxes, the move higher in TRIN that occurs afterward resulted in SPX losses of -40, -50, -90, -50, -15, -50, and now, ? These six set-ups average a -50 point drop in the SPX so it is reasonable to expect a market pull back in the days or week or two ahead of the same magnitude, perhaps much greater due to the complacency in the markets, and also the lack of pricing-in event risk. Monitor the TRIN in real-time each day forward. 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.
Thank you KS for your timely and accurate calls. They are really useful.
ReplyDeleteV.
Well, Keystone has been looking at this rolling top since Christmas and it has not yet rolled over, so if it does not give way soon the call for a top would be wrong. The fiscal cliff resolution provided a strong positive push and the new money for the new year helped, so the bulls have had the wind at their backs. These are very special markets these days, it has the feel that some wild action is ahead over the next couple months. The markets appear to be at an inflection now, but the Fed supplies the fuel to keep it going. The charts are extended so something should hit the fan at anytime.
ReplyDeleteNo , the call for a top can't be wrong - all the technical signals are positive on this.
DeleteMaybe this psycho-bull party has to develop a little more .... Today O'Neill from Goldamn said that an spx500 over 1600 would be something crazy if US doesn't get an actual GDP (or at least conditions for that) of at least 4% per year(which is quite something!).
I guess he's just a bears caller - he saw the volumes of the last days and what he thought? Damn ! We're out of fuel :) ... In normal times he would be right ... but now FED is indirectly involved (through commercial banks) in the market ...so , no more normal times!
Your top call is technically correct, but ... I don't know... now there are too much top callers and even AAII bullish-bearish percent is not so bullish anymore the last few weeks ....
A new all times high must be marked in spx 500 in order to eliminate all this bearishness. After that, when reaching 1648-1685 during summer/fall 2013 there's gonna be some bear market coming.
For now, FED will continue to distort the markets.
One of my first posts here (discussing it with you, Shane and Arnie) was about the prospect of lost value from commons people 401k accounts (and other hedge funds, also) that will put money in the stocks during this markets climb.
a lot of value will be destroied, a lot of unhappy people left with no money in their 401k account at the end of 2013 and in 2014.
we will talk more on that during fall/winter 2013.
V.
Good points V. The television pundits that are saying a top is at hand are not doing what they say, that is what the low VIX and CPC tell you. They say they are worried but they are not since they are not seeking any protection, so that reinforces the idea of a top. The Fed may have its foot on the VIX as well holding this beach ball under water.
ReplyDeleteThere's a ton of money sitting on the sidelines. I think that has a lot to do with it. The more new money that comes into the market the higher it goes. Buy high sell low. It's a brilliant strategy.
ReplyDeleteThat is true Shane but if you look back at all the years over the last three decades, every step of the way, there is always money sitting on the sidelines waiting to jump in. That is typically the first phrase that money managers are taught to say on television. So it is not the best gauge for markets but it is important to recognize nonetheless.
ReplyDeleteThe sheep usually start filing in near the tops. It would seem the only thing worse than losing money is not making money when everyone else is. The individual investor has mostly set on the sideline and watched over the past several years. Now, that they're throwing out "all time highs" they're finally ready to test the waters. Then, comes the smack down and everyone sells. And we can all go back to talking about how its a rigged game.
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