Tuesday, March 29, 2016

Charts 03-29: Back to waiting for a final high with divergences

With volatility collapsing and UVXY making new all-time lows, there is no reason now that stocks can't crawl their way into a thinning wedge up to a new and hopefully final high.  Somewhere around 2170?  Anyone's guess, at whatever level will exhaust all remaining shorts.

We'll want to see all of the other elements of a major top, declining volume, breadth divergences, etc, as we reach the end of April and the next Fed meeting.  I think the Valeant debt (VRX) hits the wall at the end of April as well, which could be interesting for the junk debt markets.

And then we're into May.

So I guess I'll propose a topping count ...

SPX 60 day

... and toss in a couple of doom charts, everything flying apart at once.  

You can draw a trendline up from the 1987 crash that could provide support above the level of the 2009 lows. 

SPX 10Y
SPX all

17 comments:

Hugh Jazole said...

The RUT is underperforming, that's usually a sign of a turn lower. Mornings that start off like this are usually a warning for the rest of the day.

observer1357 said...

Hi Hugh,

I have to agree with your thoughts. One macro indicator that I follow is the US Treasury/High Yield spread. During the bulk of this rally starting from mid February the yield spread has been declining. However, about a week ago the spread started to widen out again and as of yesterday pushed up above 7% again. If the high yield spread keeps climbing IMHO it is going to very hard for the market to rally much further from here.

Hugh Jazole said...

It's time to buy more stocks NOW! Back up the truck, levered to the max and go long!!

T.Berry said...

recent correction is over so no plans to add now---already 98% long! :).....in for the long haul...working on building up cash for next pullback. mkt looks strong through summer at least, maybe a fall pullback before year end rally. think s&p closes just over 2200 which is only an 8% move up. still say this will be strongest secular bull we'll see for quite some time. today was about as impressive as it gets.

Team Winning said...

cg my brother, I told u several weeks ago that we were going to go back up and test the upper Bollinger !

big question now is do we break above it or top at it....your thoughts ?

Christian Gustafson said...

Sure, Winning ... more likely the weekly SPX Bollinger (currently @2142).

We're darned close to the daily one, maybe need to idle for a bit to give it more room.

If we ever sell-off and test/break 1800 SPX again, UVXY will be a 5-bagger. Unfortunately for some bagholders, that will mean a move from $5 to $25 ... LOL

I do like the seasonality and 2008 retro look of a dive from May into mid-July. But first we need new highs, divergences, and a fresh shot at a top.

Bicycle said...

Let's revisit an old friend.

Time's running short, gents.

C.B. said...

If crude continues to drop I'd expect the SPX to follow soon. When oil turned upwards early/mid Feb it sparked this rally. Crude has bounced hard off of the 200DMA for the 3rd time (hasn't closed above the 200DMA in almost two years!) and is at one month lows.

Bicycle said...

you'd think I'm one of the Tylers...

Tricky Dicky said...

Asher Edelman, an investor who was one of the inspirations for the nefarious corporate raider Gordon Gekko in the movie "Wall Street," made a surprise presidential endorsement on CNBC's Fast Money last week: Bernie Sanders

https://www.youtube.com/watch?v=bdI1QHIX1Fo&ebc=ANyPxKp8eo9kVBermTiI4aIDVUjW8YnGZlUydqyd-FUKVeMthq7Q8TYOLjUZRW2_9HecaK6uyyEMRuuxLYrhX1BrVFMX9O75wg

Paying criminals not to commit crime may not be so funny after all:

https://www.washingtonpost.com/local/paying-criminals-not-to-commit-crime-may-not-be-so-funny-after-all/2016/02/08/151ab936-cea3-11e5-b2bc-988409ee911b_story.html

We're getting closer to a guaranteed monthly income for lower class Americans (like ME!) which must be spent before it expires. Stock Market 30,000 and beyond!

The FED will remain solvent longer than you will remain sane, while new Boogey-Men have arrived on the stage:

Physicists have designed a laser defence system to cloak Earth from bad-guy aliens:

http://www.sciencealert.com/physicists-have-designed-a-laser-defence-system-to-cloack-earth-from-angry-aliens

Hugh Jazole said...

"to cloak Earth from bad-guy aliens" Scott, is that you?

T.Berry said...

wow, 1 trillion short?

http://www.bloomberg.com/news/articles/2016-04-06/the-1-trillion-short-underlying-u-s-stocks-spring-awakening

when they decide to cover, we could see many new highs very quick. (april is 2nd best months for stocks too)

need to grab some popcorn : )

Hugh Jazole said...

Anyone who only has a short position, and no long positions has a lot to learn.

Bryan Franco said...

Would like to see an opening gap higher tomorrow or Friday. Spx makes new intermediate high, Rut just barely makes it, vix fails to make new int low, and gold miners decisively break out of their recent triangle-ish formation. The biotechs tag their crash downtrend lines and reverse hard etc. Is that too much to ask?

Tricky Dicky said...

"to cloak Earth from bad-guy aliens" Scott, is that you?

NO.

The alien bad-guy scenario will be used to stimulate defensive and offensive research, development, manufacture and deployment of advanced weapons systems which will increase spending and growth, thus causing the DOW and the S&P to continue to go up while the FED buys and buries any failures keeping the PONZI going, because it has to. Humans do what they have to do to survive, even when short term gains create long term losses and death and destruction. And thanks to modern technology, pacifying populations and molding perception to mask reality is easier than ever. It's a forever bubble economy - the speculation about when the last bubble will pop has gone on for years, and there is still no end in sight. The campaign of Bernie Sanders has shown that the young are ready for Socialism and a "Free" economy, in-spite of the risks. The US is on the verge of forgiving student loans and providing a guaranteed income - restrictions may apply. Continue to buy the dip, the FED has your back.

Of note; Even Stephen Hawking got in on the game: "This week, famed physicist Stephen Hawking helped launch a major new effort to search for signs of intelligent alien life in the cosmos, even though he thinks it's likely that such creatures would try to destroy humanity." - See more at: http://www.space.com/29999-stephen-hawking-intelligent-alien-life-danger.html#sthash.zHMdXNAf.dpuf

OR not.... Stephen Hawking died and has been replaced : http://milesmathis.com/hawk3.pdf

Bicycle said...

The BAC spending growth triangle of doom

Hugh Jazole said...

Some days you can see the manipulation very clearly, today looks like one of those days. The futures were screaming higher, and continued into the open. Now every single indicator is flashing a sell signal, yet the market has barely moved south. Classic setup for a dump into the close.