perhaps they aren't technically H&S, but they're close enough for me. (G)
THREAD:
Many have asked me to detail what I have been looking at that made me think a dump was so close. I haven't had time to comprehensively lay it out, but today I do so....
I think we should note something that I have been watching:
I am using YHOO and AMZN as proxies for the nutz:
the NASCRAP composite made a lower low in October than its low in Sept (where sentiment marked its low!--magazine cover "crash of '98" and put/call ratios, Sec Rubin calling it the worst crisis of the century, etc.) before bouncing whereas YHOO and AMZN made higher lows. Now, let's forward up to today. YHOO and AMZN topped in the first week of Jan along with the DOW. Then they made lower highs as of last Wed. The NASCRAP peaked w/ the DOW and Nuts in the 1st week but went on to soar to a higher peak [sentiment being at a high as evidenced by put/call ratios and Easy Al's admission that maybe stocks are fairly priced (inverse of irrational exuberance buy signal of 1996) and GDP numbers are a blowout showing no slowdown in site]
then look at this:
decisionpoint.com
note that the CBOE put/call ratio 10-day moving average made a higher low in Oct than it did in Sept (similar to the previously discussed nuts). And on Fri, it made a lower high.
then:
look at the following: EWU, EWG (the real thing is better if you got it)
they have rallied up to their previous uptrends that were violated and reversed hard off of that trendline and are shaping up just like the DOW (precrash formation). The DOW incidentally has bounced off its previous uptrend twice (once in Nov and once in Jan). the Transports ran back up to their uptrend (line up 96 and 97 lows)and reversed off of it in heavy vol and fell back and is now in a similar precrash formation where a top is put in and then there is a strong bounce (like the one we had Fri!). Incidentally, that bounce was right up to the uptrend from Oct that the Tran broke a couple weeks ago. Then go to the BKX... same thing: bounced off its previous uptrend (the major one broken this Summer) and is sitting in pre-crash formation having broken its post Oct uptrend and rallied back up to it on Fri. The RUT has reversed off its uptrend (line up 95, 96, 97 lows) and hovering in the same pre-crash status having broken its post Oct uptrend and didn't even get close to bouncihng back to it on Fri. Now lets go to Asia: EWH has closed below its support bounced back up to it. long way down to the Sept lows.
Now for the bond mkt which I have been discussing. Use TYX for discussion purposes. TYX has broken its downtrend (line up the H&S formation going back to April) as of the first week of Jan (when the DOW and other indexes topped as discussed previously) It has been hovering just above that uptrend ever since... also ready to crash.
Gold: XAU turned up slightly on Fri and appears to have completed the right shoulder of a H&S that began in Jan of 1998. Means nothing yet but if the XAU pushes up thru 75, it will have broken a 4 year downtrend going back to 1996 and will crash-UP as the XAU tends to go up much faster than it goes down.
Take a look at any of the Webs, they are in similar (appears to me at least) holding patterns typical before a large decline.
we're quickly approaching something VERY BAD. What it is I do not know. But SOMETHING is going to happen soon because the whole planet is set up for a selloff of some magnitude. Perhaps China devalues Tomorrow or Argentina blows up or Pakistan defaults or who knows? But we start to sell off Mon and then Easy Al doesn't come to the mkts rescue by lowering rates again on Tues because of the strong GDP numbers (fits in nicely, eh?) and then we start a crash.
I could be wrong and have been before, but I think everyone would be well advised to get the HELL OUT of this mkt for the next couple weeks.
good luck and GO DENVER! :)
-Lucretius |
