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Tony:Â Founder of KhronoStock.com and KhronoStock Blog Network
This short article by Tony is reposted here at StockTock. It’s original source is KhronoStock.com.
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In my opinion, the case that SPX is going to 1000 or above is just not there at this point. The 38.2% Fib retracement is there at 1014, but whether it’s going to get there, we have to look at the charts. The current chart of the VIX and SPX below are telling us that there is no concrete case for 1014 target on the SPX and fear might kick in suddenly if not gradually.
Tony – My friend just started this blog. He has been trading for a while and has a unique approach to looking at market. He just wrote a post on Goldman Sachs and why we are most likely heading higher in the market. Let me know what you think. I found his pieces to be very though provoking and makes you look at Goldman Sachs and market in a different light.
http://tradingwithtoastmaster.blogspot.com/
July 17th, 2009 at 4:39 pm
CrazyJim:
Thanks for posting that link. Very plausible and would explain the Fed’s opposition to being audited.
July 17th, 2009 at 5:16 pm
This would be too hard to hide, and Obama and the Dems would be destroyed as a party if this were found to be true.
They can balance a spinning plate on a stick only so long. It’s coming.
July 17th, 2009 at 11:00 pm
Very astute. Added him to my favorites.
Following comment is submited by KhronoStock.com.
Hi Jim,
Eloquent article. But I don’t think your friend is implying that the market is heading higher from here at all. Instead he is iterating points that are similar to mine, which is GS and Fed will continue to intervene and delay the inevitable hoping for a miracle turnaround. Whether or not that miracle comes, it’s anybody’s guess.
People don’t need to see whether or not we are possibly heading the GD II by looking at the stock market. They look at their personal lives. If someone continues to be unemployed and suffers through poverty, it doesn’t matter how high the DOW is.
The misconception here I think that everyone has is that as long as the equity market is ok, people will be ok. This is completely wrong in my opinion. People are not machines. They have feeling. They feel ok only if they are ok. If this economy continues to drag on the way it is now, no one can stop the potential civil unrests and the upcoming disasters.
Equity market doesn’t control people, it’s the other way around. Thus, I appreciate Toasmaster’s analysis but I certainly don’t think he is implying the market is likely going to head higher.
“will take a crisis of extraordinary magnitude”….ummmm
13% unemployment, untold hundreds of thousands underemployed. C’mon.
CitiFX Technicals
16 July 2009
What is it about 17th July????
We have on many occasions talked about the difficult periods of 1980-1982 (most severe economic period
since the great depression mainly caused by a collapse in housing); 1990-1991 (recession caused by
housing); 2001 (Slowdown caused by the equity market) and 2007-2008 (Housing and credit crisis).
In addition we have see a difficult credit period in 1998 (LTCM, Russia etc) and a sudden stock market
collapse in 1987.
On that basis it is worth remembering some of the history below.
1981: DJIA having started to turn sharply lower had a short-term bounce, which peaked at 964.80 on 17th
July. By 23rd July it was 4.8% lower and by end of Sept. it was over 16% lower.
1982: DJIA having started to turn sharply lower had a short-term bounce which peaked at 843.80 on 21st
July. (Missing the magic date by 4 days) But by 09 August it was nearly 9% lower
1987: DJIA was in a solid bull market, which peaked at a new high of 2,520 on 17th July. By 21st July it was
2.7% lower and while it then rallied strongly we of course ended up with a stock market crash in October.
1990: DJIA was in a solid bull market, which peaked at 3,011 on 17th July. By 23rd July it was 5.25% lower
and by mid October it was 20% lower.
1998: DJIA was in a solid bull market, which peaked at 9,413 on 17th July. By 28th July it was 6.6% lower
and by mid September it was over 20% lower.
2001: DJIA hit a corrective high of 10,758 on 19th July (again a small miss of the magic date). By 25th July it
was 5.5% lower and by the 21 September it was over 26% lower.
2002: DJIA hit a corrective high of 8,765 on 17th July. By 24th July it was 13% lower and by October lower
still at the base of the bear market.
2007: DJIA hit a trend high of 14,022 on 17th July. By 01 August it was 6.3% lower and by mid August
nearly 11% lower
2008: DJIA had started to move lower but began a bounce on15th July. On 23rd July it had a quick 3 day fall
of just under 5% It then rallied again into 11th August but we of course ended up with a stock market crash in
October/November in a development eerily similar to 1987.
So if we look back over all these major years in over a quarter of a century (9 instances) in 7 of them the
period from the 17th to the 21st July we have begun a significant move lower in equities. In the 2 instances
(1987 and 2008) that we did not immediately head lower we ended up with Stock market crashes later in the
year…..all in all an ominous set up.
The Federal Reserve is a private institution. To suggest that they had to ‘make a deal with the devil’ implies that they weren’t already one and the same.
The Fed makes money by issuing debt at interest, requiring the issuance of new debt just to pay back that interest. GS’s role – along with the other big banks- is to control the equity market and public lending, thereby controlling inflation and bond yields owed to foreigners.
The politicians play along for campaign dollars and bottomless pockets with which to bribe voters.
FYI, the Bank of Canada – also owned by private banks – is headed by a Goldman alum.
This is about theft. It always has been.
“Give me control of a nation’s money and I care not who makes the laws.”
- Mayer Amschel Rothschild
July 17th, 2009 at 10:10 pm
Well said. The intent of the Federal Reserve is not what most people imagine. It exists to serve the interests of its true owners, which usually involves the rape, pillage and plunder of the public under the guise of reform or “saving” the economy.
July 17th, 2009 at 11:01 pm
Well said Tanya.
Thanks for the blog posting. I see EWI put out pretty much the same trend as they did the previous Friday. It just doesn’t make sense to me the market would go down the same time the dollar is going down as they are suggesting once again. It didn’t happen this week but they still think it will happen next week. They could be right but that’s not the correlation I’ve seen recently.
Thanks and I had a question. Anyone know when the next 10 year bond auction is? The market always seem to tank a bit right before that lately. Almost seems magical how those two events seem to always happen together. (sarcastic comment)
July 18th, 2009 at 7:01 am
The dollar and the S&P have indeed been moving oppositely since early september of 2008:
http://i26.tinypic.com/2nt9ytv.png
The negative correlation (-0.744) is highly significant, to the point that one might suspect the data had been faked if it were not for considerable justification for thinking that one data category’s movements somehow cause movements in the other category. This is the case here, because for $SPX to maintain a certain real value, it must rise if the dollar falls. However, the chart also highlights periods of a few days to a few weeks during which $USD and $SPX moved in the same direction. This could be due to psychological factors, where optimism or pessimism about the US economy affects both in the same way. Also, $USD is an index calculated from exchange rates in other currencies, primarily the Euro (almost 60%). Those currencies also have their problems, so occasionally $USD will rise without the dollar’s actual value changing much, simply because it takes fewer greenbacks to buy other currencies.
S135 and I have recently posted similar $VIX charts in which the long-term uptrend consists of advances punctuated by pennants and flags that develop positively divergent indicators before the flags break out upside into strong rises:
http://i25.tinypic.com/9a7lp5.png
This is not a promise that it will happen again, especially with the GS / Fed / Washington interbred effort to prop up markets as discussed above, but rubber bands will only stretch so far. Sometimes, however, it is better to relax the tension in a controlled fashion than to let go completely or to keep on stretching until it snaps.
Perhaps what we get is a slow-motion train wreck, giving time to blame and obfuscate enough to somewhat defuse the situation. Oh well. I’m content to be old now, with mostly pleasant memories that might not so easily accumulate for later generations, although, like other geezers did with me and my ancestors, I have probably underestimated our successors.
Hi I am new on StockTock. I study the historical Dow Jones and S&P charts going as far back as 1928, and what I have noticed is that prior to the resumption of the most severe leg of bear markets there would usually be one last short squeeze to make the bears into bulls. This last short squeeze can be as powerful as the one that ignited the bear market rally, and it tends to end abruptly.
Prior to using technical analysis, I based my timing on catching important turn dates and just trade around them. Some dates I caught were October 6 2008, November 21 2008, February 9 2009, March 6 2009, May 11 2009, June 12 2009, and July 10 2009. I made money trading around October 6, February 9, May 11, and June 12, but I made a mistake by thinking July 10 was the turn date for markets tanking and lost about $10,000 (would have been profitable had I not gotten rid of my hedges on July 10, lesson learned).
Anyways, the next important date I caught is July 22 2009, and we should start seeing Hindenburg Omens after this date. I see the market squeezing most bears out before tanking big time, and it might not even give us the pullback to buy in. The bear market channel wasn’t breached, it’s just that almost all of us drew the channel incorrectly.
Roy:
http://www.youtube.com/watch?v=tjCe3an9dy0&feature=channel
Seems anything’s possible
Two different possibilities for oil:
http://stocktock.ning.com/photo/20090717tos_charts-2
Newbies Like It Simple
While the technicians make all sorts of tweaks to their Head and Shoulders, Keirsten (who posts at Evil Speculator) sees recent price action as a re-test of a Rising Wedge. Nice and simple for this student!
http://www.screencast.com/users/Keirsten/folders/Jing/media/9a1bbd22-4b46-47f3-b014-91ee461b98e7
July 18th, 2009 at 11:50 am
Hey, I don’t just do H&S charts. Here’s an updated version of an old one based on the same idea as yours, only with many retests failing as wedge support lines fan and fail, as they did in previous bear market rallies:
http://i27.tinypic.com/2nt8s5t.png
Also, we again see the retest of the upper BB being resisted, and the 20dMA topping and rolling over for a bear cross down thru the 50dMA, also seen during the death throes of other bear-market rallies.
July 18th, 2009 at 11:57 am
Thanks, Unersaettlich. Yours is more elegant than Keirsten’s; sorry about not having seen it before.
Dow Candlesticks
To this student (with new John Murphy textbook in hand), the past few daily candlesticks look like the bearish reversal pattern Advance Block (on steroids). We can look for confirmation on Monday with a likely red candle then completing a Morning Doji Star.
http://stockcharts.com/h-sc/ui?s=$INDU
July 18th, 2009 at 12:11 pm
Careful. I was much abused for thinking that red candle might happen a couple of days earlier.
July 18th, 2009 at 12:47 pm
I know what you mean…similar to the consecutive “Two Black Crows” the other day which in effect appeared as “Identical ‘Four’ Black Crows” [instead of the defined three]. As a student of TA, I find reading candlesticks a great daily exercise. And I must add that I hope one day soon to post charts like yours.
[BTW, what site do you use to draw and how do you capture the image for posting?]
July 18th, 2009 at 6:25 pm
I make most charts with stockcharts.com and freestockcharts.com. They can both annotate charts, but I do the really fancy ones with PhotoShop Elements.
With stockcharts.com, you need a full-bore subscription (over $350/yr) to get real-time intraday charts, but it’s worth it. They have a tutorial for using the site. You must “add new” to save the unmarked chart first, then you click the Annotate link and mark up the chart in a separate window. Once you get the chart marked up as you wish, you can save it from the annotation window (and later retrieve it and update it forever). Right-click the finished chart to and save the image as a .png file.
With freestockcharts.com, you can mark up the chart directly with the Draw tools that drop down when you click “Draw” at upper left. I capture the image and save it as a .png file with the Snipping Tool in Windows Accessories.
You can also email links to live charts with both sites. tinypic.com will make a link to static chart images (use the bottom link for posting here). You can also edit the chart image .png files with most image-editing software, ranging from free Windows Paint thru $600 Photoshop CS3.
July 18th, 2009 at 6:54 pm
Thank you!
July 18th, 2009 at 1:27 pm
Alex, if I may comment I think that latest Daily ’stick/Friday is more of a ‘hanging man’. They occur at ends of Uptrends. (not saying it IS over tho!) Or, it CAN too, be a hammer!
Morning Stars are at end of Downtrends…so if we gap up, then it might turn into an Evening Star. I said ‘might’. Those ‘Advance Block’ do end up ‘taking profits’ soon after, no doubt. And I’d like to think only after a previous High is retested.
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:candlestick_pattern_
Check out the ‘red hammer’ of July 10th; perfect clue to a rally. Of course I am of the opinion that the current ‘hanging man’ CAN be the instigator of a Downtrend, tho does not HAVE to start one. It still might be a Hammer.
Note how Tuesday also was a ‘hammer OR a hanging man’. An either/or type of ’stick. It turned out to be a hammer. Hammers ‘hammer’ the Uptrend up, up. We could still have further to go up because we got an either/or happening. I don’t know when it reverses.
I will be looking for a reversal near the old Highs of 957 area. And, not saying that is ‘doom-forever’ but just maybe a retrace. Gotta be nimble on this trading. Buy and Hold can get ya hurt.
Market went slightly over 9% down from Highs of this wave… Certainly enough to kick out the Investors Bus. Daily crowd that have ‘7% loss/Stops’ in place. So now we are in an ‘area of confusion’, is what I call it.
Resolution: ‘To pay attention a bit more’
I had some Qubes July 36 Calls .qqqgj at .55c. I knew I was ‘wrong’ from Day 1. Didn’t get out tho. I looked at it Monday and noticed I had lost almost all my $385, and not too happy about it. Was down to low of .6c. (lol) I had other things to do this week and didn’t pay much attention to the markets. (should have)
Sure enough, this thing closes out the week at $1.61×1.67 26x the money from lows. I stopped out at .22 the next day after lows, and glad I got that.
Next qtr, I will pay attention a bit more…
July 18th, 2009 at 2:35 pm
Thanks, Ed. I stand corrected; that should be an Evening Star.
July 18th, 2009 at 10:46 pm
Don’t pay too much attention to candlestick patterns…
July 18th, 2009 at 10:48 pm
MORNING stars & evening stars are very reliable..
I think we got one on the weekly but it canceled with this’ weeks up date.
July 18th, 2009 at 10:48 pm
this weeks up move **
Aso Deska
How about Head and Shoulders With Solar Eclipse?
http://evilspeculator.com/wp-content/uploads/2009/07/new_hs_2.png
h/t Fujisan
“Ultimate” Head and Shoulders
http://econompicdata.blogspot.com/2009/07/ultimate-head-and-shoulders-pattern.html
Fed Up?
Ron Paul announced today:
All 178 Republican members of the House have now signed on as cosponsors of [the] Federal Reserve Transparency Act, HR 1207.
With a total of 271 cosponsors, Democrats must put pressure on another 19 Democratic co-sponsors in order to bring it to the magic number of 290 … so that it will be veto-proof by Obama.
Please call your Democratic and Independent representatives and urge them to co-sponsor H.R. 1207!
http://www.washingtonsblog.com/2009/07/every-single-republican-congress-member.html
July 18th, 2009 at 12:13 pm
Fed Up? You Will Be…
http://globaleconomicanalysis.blogspot.com/2009/07/paulson-admits-coercion-where-are.html
Vice President Joe Biden: ‘We Have to Go Spend Money to Keep From Going Bankrupt’
Sounds more like Yogi Berra.
BTW…Anyone else think Chris’ videos provide no value whatsoever?
Caption Contest
“Hi, Hank. Ben’s been waiting for you.”
http://www.newyorker.com/humor/caption
Hi Guys,
Thanks for all the comments although a very few relate to my post. But that’s good. At least you guys can check out my site