Blog Archives

Does Anyone Else See a Giant Bear Flag in the S&P 500?

“Reality” is in the eye of the beholder, especially when it comes to technical analysis and economic tea leaves. It seems most stock market soothsayers are seeing a breakout of the downtrend that erupted in early February, and so the path to new all-time highs is clear.

Does anyone else see a giant bear flag pattern in the daily chart of the S&P 500? Maybe I’m the only one who sees a bearish signal instead of a bullish breakout.

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Please Assume Crash Positions

You know how to get into crash positions, correct? Here’s your guide:

Very few punters expect a real downturn here in stocks. The reasons for confidence are many: the Fed has our back, buy the dip has worked great and will continue to work great, the Fed won’t raise rates until December (if ever), the Powers That Be will keep the market aloft lest a plunging market upset the election of the status quo candidate, and so on.

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The Stock Market 2015-2016: Ugly Chopfest with an Equally Ugly Megaphone

It’s interesting to take a longer-term view of the S&P 500 (SPX). Looking at a 10-year chart, the decline from almost 1,600 to 667 in the Global Financial Meltdown of 2007-2009 doesn’t look like that big a deal, given the incredible 6-year uptrend since March 2009.

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Global Markets to Fed: No Rate Hike, the Strong Dollar Is Killing Us

There are many reasons for global markets to melt down, but one that doesn’t get enough attention is the strong dollar. In effect, global markets are telling the Federal Reserve: don’t raise rates–the strong dollar is killing us.

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Is This a Blow-Off Top? Four Ways to Tell

Those who lived through the last two speculative blow-off tops know the impossibility of predicting the final top.

How can we tell if stocks are in the final blow-off stage of a bubble? There are four basic give-aways:

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Complacency Reigns Supreme–Nothing Can Possibly Go Wrong, Right?

So by all means, buy the dip now that the VIX soared in full-blown panic from 12 to 17.

One of the more remarkable features of the Bull market in stocks is the ascendancy of complacency and the banishing of fear. Take a look at this chart of the “fear index,” the VIX–more properly, a measure of volatility:

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The Only Two Charts You Need to Understand the S&P 500

As long as corporations continue borrowing money to buy back their own stocks and the yen keeps dropping, the SPX will continue lofting higher.

Why is the S&P 500 rising, even as valuations are getting stretched, profit growth is declining and sales are stagnant? Two charts explain it all. Here is a chart showing the S&P 500 companies that have been buying back their own stocks (often by borrowing cheap money to do so) and companies that haven’t bought back hundreds of billions of dollars in their own stock.

The unmanipulated sector rose a bit, while the stock buyback crowd soared:

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About That “S&P 500 Will Be 2,150 by Christmas” Call….

So this megaphone playing out again is just plain crazy.

Back on October 13, when the stock market was in free-fall, I prepared this chart showing a potential megaphone pattern. With major indicators (such as the MACD and stochastics) looking decidedly bearish, the idea that a rally would soon return the S&P 500 to the 2,030 area seemed crazy:

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Debt Fueled And Low Volume Equity Rally, Gold Holds and Waits

To say that the markets have gotten ahead of themselves is an overstatement.

10 Years – S&P 500 Monthly Close versus NYSE Monthly Margin Debt (June and July 2014 Estimated)

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About Those Forecasts of Eternally Rising Corporate Profits…

If corporate profits decline, what will hold up the market’s lofty valuations other than the tapering flood of liquidity from the Federal Reserve?

I have often noted that profits of global U.S. corporations have been boosted by the weak U.S. dollar (USD). In a weak-dollar environment, a company need not sell more goods or services or expand margins to book more profit: all a corporation needs to do is book profits earned in other currencies in dollars.

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Coppock Market Message: Get Out and Stay Out–Check Back in Q1 2015

This chart’s value is in posing an if-then question: if today’s S&P 500 follows these patterns, what will our reaction be?

Longtime contributor B.C. recently submitted a chart that combines two interesting market tools: the Coppock Curve and historical analogies. Coppock called his technical invention the Very Long Term (VLT) Momentum indicator, and the so-called “killer wave” is a top followed by a second lower peak.

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The Fed Has Failed (and Will Continue to Fail), Part 1

The Fed’s policies have been an unqualified success for financiers and an abject failure for the bottom 99.5% who have to work for a living.

After five long years of politicos and the financial media glorifying the Federal Reserve’s policies as god-like in their power and efficacy, let’s take a quick look at the results of these vaunted policies: ZIRP (zero interest rates), (QE) quantitative easing, both of which are ways of shoving nearly limitless, nearly-free money ( a.k.a. liquidity) into the banking sector, where all this free money is supposed to filter into the global economy, working miracles of prosperity.

Let’s start with a chart of the Fed’s balance sheet, which reflects just how much money the Fed has created and pumped into the financial system. $4 trillion is larger than the entire GDP of Germany, and roughly 25% of U.S. GDP.

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