I deliberately left a lot of space below the recent lows so that the price clusters can be seen below. Additionally, if you want to see them clearly please click on the chart for detailed views.
I do not believe that we will break the Monthly and Weekly 30 and 80 year trendlines for the indexes and therefore am not looking at the next cluster above as highly probable. This is just informational. Right now my longer-term and position systems are primarily short with the exception of day trading and shorter term systems.
No Volume, No Commitment, No Integrity, No Volatility and No Winners...and if it does not work lets try it again sam...just remember to smile while the masquerade goes on...especially as it blows up.
A dow theory sell is still setting up for the markets and a lot of people seem to have gotten stopped out on their transports shorts while BURNanke set his sights on ruining another perfectly good indicator...the Transports Dow Theory Non Confirmation. On the chart below you can see the setup. I have had a cycle low (Thick blue line) called 4 days ago so I expected a bounce...but like everything in this market, the proportions seem to push things to reasonable limits or slightly beyond. (Orange line is the Russell 2K) We are now in a strong resistance area and have a potential setting up to imminently generate a second resistance cycle today or Monday. If that happens, the probabilities go way up for a significant decline in the Transports.
The transports bounce plus the recovery off the lows in the AM for the major indexes has nearly everyone looking for new highs...
The Baltic Dry Index has been selling off for quite a while now and finally has a up weekly candle so far for the week...perhaps Transports take a cue from BDI and continue down...or there is something else setting up.
Today was a whacky day. Not only did a lot of shorts get stopped out, but a lot of stocks were down and down pretty big on the Nasdaq 100. AAPL, CSCO, AMZN all had negative performances - yet the index was up? The funny thing is that people are trying to explain already why AAPL just can't go up EVERYDAY on the first day that it has just a little selling during a A-B-C three wave bounce in the SPX and majors. Is it really that surprising? People are already writing articles like this: Snapshot of an Apple flash crash
The reality is AAPL failed a technical pattern and is at high risk at these levels but people apparently believe that it is not a high risk until it is a trillion dollar company. Something about the concept of any company being worth a trillion dollars just sounds wrong...but in bubble land I guess its a good thing.
However, AAPL showed some clear weakness in its pattern and a predisposition to be sold. Some cracks are certainly showing up. Certainly I rememebr the days when a $3.00 hit to CSCO was a big deal for the nasdaq. CSCO lost nearly 20 billion in market cap today and AAPL lost nearly 10 billion alone...Apparrently secondary names are being run and this is a sign of market behavior running on fumes and may run further.
Below is the summary of the Full NDX activity for the day...very interesting.
The sloppy Apple Computer triangle broke out yesterday and hit the first target. If the pattern is not decrepit then AAPL may move to 362 which would mean a little more left on the upside for the markets. Still well within the long-term charts that I posted earlier in the week.
I hear so many people blaming the lack of regulation for the financial crisis. In NO report do I see any acknowledgement of the regulatory procedures that would have eliminated the threat. The recent financial crisis commission came out with its report and it blame everyone - with the exception of corrupt legislators and socialized markets.
The real issue, regardless of what William Black says about regulation, is not simply better or more regulation - is incentive and risk. Now don't get me wrong, I have a lot of respect for William Black and I post a lot of his video's and contributions on my blog. However, he consistently focuses on one component of the problem.
The real problem that we have is not all that different from Madoff. If Madoff could somehow come up with a product that looked legitimate, smelled ok and was remotely marketable then people could be incentivized to sell it - which he did rather well. What we forget in the financial markets as a whole, is that agencies like Fannie Mae, Sallie Mae, Freddie Mac, FHLN, FDIC were all put in place under the auspices of the Fed and designed to encourage complacency and create a new risk paradigm so that market participants could be encouraged take risks they normally would not have. There is nothing like a Government mandated backstop to get people to change their business methods. In this case, the government and the Fed has known for a long time that they need to create a vast amount of new debt money in order to keep the system afloat. They accomplished this through government guaranteed credit, risk less markets, new instruments such as derivatives and peddling these methods to the rest of the world such as Europe. Mark my words, the EURO was a huge achievement for the Fed and was specifically designed to help with the reckless debt money expansion that they have been on a tear with and continue to this day.
The reality is that Agency debt instruments were insured and underwritten by government bureaucrats who worse than not having proper skills or motivations also got paid tremendously well for illogical and insane accomplishments. Just look at Franklin Raines of Frannie Mae. Under his leadership, he used complex derivative transactions which they could not obviously understand to manipulate the balance sheet and get paid large bonuses. Additionally, their mandate was certain to make them take on the manufacture of financial products that encouraged banks to sell to their hearts content and the government to take on the risk. The reality is that Sub-prime was NOT created by the banks, it was created by the Fed and the government as a way to increase the size the debt money system which was necessary in order to prevent its collapse. No bank in their right mind would have made these types of loans without the specific endorsement and example from the government. Most important they wanted to get stuff off their books and on the governments books. In the end, however, many people believed so strongly in the socialized marketplace as backstopped by these agencies and the government itself, that they did hold securities on their books that they would never in their right minds would have considered in real market and risk system.
Indeed, self preservation is a very good regulator, but it can not compete with a far worse corrupter which is legal, legislated and induced fraud that encourages malinvestment and rewards by orders of magnitude aberrant risk taking over reasonable risk taking.
End the fed...they are up to their old tricks and those stand the same chance of working now as they did in response to the previous bubbles.
For ease of viewing...I created the S&P 500 price history on the chart colored Red for retail outflows of significance and green for inflows. Retail participants sold essentially the whole move up and it looks like between rotation out of Muni's and general CNBS/Wallstreet and Press market pumping has piqued their interest again - just as it had before the "Fat Finger Flash Crash". Now that the general public seems to be paying attention...is the train already leaving the station or is it actually of consquence?
The EURO was a sneaky operation by the central bankers of the world to install a comprehensive governing system. Nigel Farrage explains the real issues that havr not only driven the EURO union into near destruction but also ruined the US democracy. One way or the other, once unelected people, whether bankers or officials appointed by bankers like Bernanke and Geithner, capitalize on a state being coerced into dependency on a debt currency the control is with the financial system and not the sovereign nation. This is the case in the US and the EURO...the laws, the choices and the objectives of a state cease being about and for the people when they grant control of their currency to private bankers. Instead the result is something else entirely and its not about the people or the state.
In the US the bankers wrestled control of the US currency away from the nation, bankrupted it in the depression, co-opted its gold and assets and managed a controlled bankruptcy ever since. Now the bankruptcy/insolvency in the US and EURO among other places are reaching extremes and once again the assets of the states will be transferred as collateral to people and interests who have no real nor deserved claim to them.
Brought to you by your friendly Mr. BURNanke, Mr. Paulson-Tax, Mr. Alan GreenCRAP, Larry SUM-UM-UM UMers, Robert Rudin and Mr. Timmy "Magnifying-glass" G-HEIST-ner...
Today, the fed is spewing more lies, Obama is begging business leaders to eat fruitcake and spend reserves even though they can not find a profitable venture to spend and expand...just spend the money to help America please (is he totally out of his mind?)...and the central bankers fiddle all over the world. The game is up...and your plans have failed. The market will unwind your lies with its collapse and will take no prisoners. It will reward your reputations as they deserve to be rewarded.
Your market manipulation is OVER. Your plans are dead and your legacies will be that of failure and corruption.
So you can see the powerful levels at which we are currently, I have produced charts with higher resolution. Click on the chart for detail view.
Below is the Transportation index in Green with the Russell 2000 in Orange. For most of the rally the Transports have lead the R2k. Additionally, the transports failted to confirm lows. Now the transports are failing to confirm highs on the Russell and have shown a stron propensity towards weakness. The cycles show a complete pattern and the Transpotation indexs show a head and shoulders pattern with a neckline at 5,000. Ominous...
For some perspective it appears that the Federal Reserve system is doing itself in, with fireworks via BURNanke's discombobulated and confused antics, off the same trend line on which they began their meddling manipulation. That can be seen in the Yellow trend lines on the Dow Jones Index as shown below. What is especially interesting is that the levels off the depression lows (caused by FED financial system meddling) also converge precisely at 1300. Given that the bastards manipulated the markets to 666 on the SP, 1313 sounds like another wonderful FU to the American Taxpayer.
Below we can see MAJOR trend direction via the Red line. If this level breaks the market will officially in a downtrend on a monthly time frame. Also please note the dotted blue trend line that was a rejection point for the entire credit inflation schema as perpetrated by the Fed and its minions...that started out just after Bretton Woods.
On the S&P 500 as shown below the markets is at a VERY unattractive place from a resistance level perspective. Additionally, please note the dotted trend line which also blew up our credit inflation scam implemented by the FED since Bretton Woods. Red trend line will officially put us in a long-term downtrend on a monthly time frame if it is broken. Trendline Resistance for the S&P comes in at 1313 to 1317.
Below are the transports. They sported a throw over in the mid 2000's which failed abysmally. Real resistance appears to be a wall and daily action looks very very sick. The DJ Trucking index looks like a very unhappy market and the Air Freight and Logistics index has dropped over 25% since last year. I can understand why, with all Bernanke's meddling in the commodity markets, prices may mark better for a bank but they don't for a real business. Real business will be buying MUCH less as will the consumer. Therefore, trucking and logistics will be in way less demand.
I use Multicharts Charting and Backtesting Software.
I post high resolution charts made with Multicharts and Adobe Illustrator. Click on chart for a more detailled view.
If you do wish to contact me or have any questions you can do so at m3analytics@gmail.com
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