PDA

View Full Version : Market Watch: "2008 year performance not repeating now" (Sep 08)



WhiteLove
8th September 2015, 20:13
Lately I have been keen to find out are we witnessing a 2008 market crash build up right now, or are we maybe witnessing something more soft. I have now made the conclusion that this is in my view likely something of the more soft kind, not only was today's trading maybe a bit more positive than I expected, but you can also see at the end of the trading day a pretty bullish curve taking form. I am expecting some declines, but I find it unlikely that they are going to be of the hard landing nature that we saw in 2008 - my understanding about how the stock market behaves tells me that we are witnessing a soft landing more like the one in 2012. If you use the upcoming dips to your advantage now I think you'll be able to make pretty good returns.

Please be aware that I might be totally wrong about this. I cannot see into the future, few can. I write this mostly to share my unique perspective on this and I am interested to find out what you think right now, maybe especially if you have been negative about the stock market.

I will follow up and let you know in case these lighter clouds suddenly start becoming dark again. Until then I am of the opinion that as long as no unexpected signs will show, we'll have a volatile however overall rather weak period in the short term, followed by a resume in stock market advanced up until maybe sometimes around the middle of 2016. In my view today's trading told us if you thought you'll going to lose your job or your house this year due to poor market climate, then re-consider that idea, because it is likely not that bad I estimate this as. The negative thing about this though is the rate hike that is likely to come, that part I truly don't like because it helps too keep us in bonds, which is evil. But if this turns out, it means in my view that once the next bull period is over (likely in 2016), it could really more or less crash, because it was close this time around and was therefore never really resolved...

If my prediction turns out to be true, then I do think it is a good thing, because I was finding yet another hard landing as soon as now could be something we might not be totally ready for, it's not like the last year has been a year of great awakening, as much as we like that to be the case, the awakening rate has been a little slow in my view, but I think it's definitely going in the right direction and is accelerating.

So what do you think the upcoming months will be like, do you think a 2008 crash scenario will occur this year?

When I analyze all of this and how it all appears to take form, it's like I'm starting to see a pattern that "whatever needs to happen, will happen".

I know that several public figures have gone public lately declaring we are close to wipeout day. Here is one example:

pcBhn9xHiJ0

I don't rule anything out, I know there is a lot of weird stuff planned for the end of September, but what I do know at this point is that at least my market analyzis currently does not correlate with that, whatever that's worth. But let's see, it will be interesting to find out how it all progresses from here...

indigopete
8th September 2015, 20:44
Lately I have been keen to find out are we witnessing a 2008 market crash build up right now, or are we maybe witnessing something more soft.

Have you looked at the 1-month MACD (Moving Average Convergeance-Divergeance) chart for (for example) the London market ?

It hasn't looks more cataclysmically bearish for many years. One day is nothing - it has to go wildly green periodically because the short sellers always need to cover their shorts, regardless of how rapidly the market is declining.

Then there's the question of interest rates. If they get hiked it may put a lead weight round stocks and if they don't then the central bank's bluff will have been called.

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=UK%3AUKX&time=12&startdate=1%2F4%2F1999&enddate=9%2F1%2F2014&freq=3&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=1&maval=9&uf=0&lf=4&lf2=0&lf3=0&type=2&style=320&size=3&x=35&y=9&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11

There's been a huge decoupling between real growth and stock values since all the QE began 7 years ago. At some point that has to snap back. Zero interest rate policy (ZIRP) has pushed all the cash from the deposit accounts into the stock market so that it's potentially overvalued by at least 100% compared with reasonable earnings ratios. At some point that speculative premium has to disappear and everybody's looking at everybody else right now waiting to see who blinks first on that one (IMO) because there aren't a lot of other places for the value to go.

WhiteLove
8th September 2015, 21:18
Lately I have been keen to find out are we witnessing a 2008 market crash build up right now, or are we maybe witnessing something more soft.

Have you looked at the 1-month MACD (Moving Average Convergeance-Divergeance) chart for (for example) the London market ?

It hasn't looks more cataclysmically bearish for many years. One day is nothing - it has to go wildly green periodically because the short sellers always need to cover their shorts, regardless of how rapidly the market is declining.

Then there's the question of interest rates. If they get hiked it may put a lead weight round stocks and if they don't then the central bank's bluff will have been called.

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Index&symb=UK%3AUKX&time=12&startdate=1%2F4%2F1999&enddate=9%2F1%2F2014&freq=3&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=1&maval=9&uf=0&lf=4&lf2=0&lf3=0&type=2&style=320&size=3&x=35&y=9&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11

There's been a huge decoupling between real growth and stock values since all the QE began 7 years ago. At some point that has to snap back.

Maybe it snaps however not yet.

Paul
8th September 2015, 21:48
Lately I have been keen to find out are we witnessing a 2008 market crash build up right now, or are we maybe witnessing something more soft. I have now made the conclusion that this is in my view likely something of the more soft kind, not only was today's trading maybe a bit more positive than I expected, but you can also see at the end of the trading day a pretty bullish curve taking form.
Right now, we seem to be in a symmetrical wedge, which is usually a continuation pattern.

Here's the current S&P 500 chart for the last six months. Notice the wedge forming over the last two weeks, since the sharp decline. A wedge is an oscillation, up and down, over an increasingly tight (smaller) range. It indicates a tension building up between the bulls and the bears. When one of these two gives up, the market usually breaks sharply in the direction of the other.

http://thepythoniccow.us/spx_8Sep2015.png
The wedge looks symmetric to me, with declining highs and rising lows. Today's up was just another oscillation within that wedge. When it breaks out of that wedge, as wedges usually do, I'd expect (better than even odds) the trend (declining, in this case) to continue ... downward.

Had this been a falling wedge, with both the highs and the lows of the wedges getting lower, then this wedge would more likely have been a bullish pattern, anticipating the stock market to begin rising again. A rising wedge in this down market, on the other hand, would have been a stronger bearish signal, anticipating a break to downside.

In other words, if the wedge favors one side, bull or bear, then it usually breaks the other way. Rising wedges break down and falling wedges break up. But symmetric wedges indicate a more even battle between the bulls and bears, and more likely continue the larger market trend when they break (down in the present case.)

What a falling wedge, breaking to the upside, and a rising wedge, breaking to the downside, would look like:
https://upload.wikimedia.org/wikipedia/en/thumb/7/79/Falling_wedge.jpg/300px-Falling_wedge.jpg https://upload.wikimedia.org/wikipedia/en/c/c3/Rising_wedge.jpg

Here is a good example of what a breakout, downward, from a symmetric wedge in a falling market, looks like. The red parallel trend line on the bottom suggests, if applied to our present day S&P 500 (SPX) chart, that the breakout would fall to around 1830 (based on my 8 second eyeball analysis ... not a precise chart analysis.)

http://d.stockcharts.com/school/data/media/chart_school/chart_analysis/chart_patterns/symmetrical_triangle_continuation/symtri-conti-cnc.png
It's been twenty years since I actually did any serious stock chart analysis, so if I totally botched the above analysis, I hope that our members who are currently expert in this will be gentle <grin>.

Redstar Kachina
9th September 2015, 12:01
..........

Redstar Kachina
9th September 2015, 15:41
..........

Zionbrion
9th September 2015, 18:56
Buddha's Palm, potent quote on your blog

"There is no cause to worry. The high tide of prosperity will continue." ~ Andrew W. Mellon, Secretary of the Treasury, September 1929 (yes, right before the October 1929 Stock Market Crash - triggering the Great Depression)

Paul
10th September 2015, 05:05
Here's the current S&P 500 chart for the last six months. Notice the wedge forming over the last two weeks, since the sharp decline. A wedge is an oscillation, up and down, over an increasingly tight (smaller) range. It indicates a tension building up between the bulls and the bears. When one of these two gives up, the market usually breaks sharply in the direction of the other.
With today's intra-day high at about 1988, the S&P 500 chart for the last couple of weeks is looking more like a pennant, with the top edge almost flat, around 1990, and the bottom edge rising. That's a more bearish pattern, for, as usual, if the wedge or pennant tends one way (more upward in this case) then the break tends the other way (more downward in this case.) Also such pennants or wedges are stronger patterns when they come right after a sharp move in the market, which is exactly the case here, as this pennant follows a 200 point drop in the S&P 500. So I'd expect another major drop, perhaps at least another 200 points in the S&P 500, dead ahead ... perhaps more.

The low of two weeks ago, about 1880, will be blown through hard and fast, with spikes in volatility and volume, down to perhaps 1780 ... or more ... on the way down to and below the previous 2009 low of about 700 in the coming months.

As Gregory Mannarino explains in his blog post, linked below, we are in a decade long massive megaphone pattern, and we are now staring down an epoch stock market crash.

Get Ready, Profound Losses In Stocks More Likely Now Than EVER BEFORE.
phl5ehvVhcQ

===

SITUATION CRITICAL: A Stock Market Mega-Crash Is Dead Aheadyupf7yjssD0

===

On The Threshold Of A Mega-Stock Market Crash (Gregory Mannarino's blog) (http://seekingalpha.com/instablog/29482055-gregory-mannarino/4355346-on-the-threshold-of-a-mega-stock-market-crash)

===

Both the short term, as I just described above myself, this week or next, and the long term, as Gregory Mannarino describes, are aligned and pointing down, a long way down.

Paul
10th September 2015, 07:30
With today's intra-day high at about 1988, the S&P 500 chart for the last couple of weeks is looking more like a pennant, with the top edge almost flat, around 1990, and the bottom edge rising. That's a more bearish pattern, for, as usual, if the wedge or pennant tends one way (more upward in this case) then the break tends the other way (more downward in this case.) Also such pennants or wedges are stronger patterns when they come right after a sharp move in the market, which is exactly the case here, as this pennant follows a 200 point drop in the S&P 500. So I'd expect another major drop, perhaps at least another 200 points in the S&P 500, dead ahead ... perhaps more.

The low of two weeks ago, about 1880, will be blown through hard and fast, with spikes in volatility and volume, down to perhaps 1780 ... or more ... on the way down to and below the previous 2009 low of about 700 in the coming months.
Tomi Kilgore, over at Marketwatch, came to similar conclusions tonight, expressed using the Dow Industrial (DJIA) rather than the S&P 500 (SPX). He too sees a second decline, similar in size to the one a couple of weeks ago, which would put the Dow down to the 14,000 to 14,200 range, quite a ways down from the 18,000 area it was at a month ago.

From Dow’s bearish ‘symmetrical triangle’ remains in force (http://www.marketwatch.com/story/dows-bearish-symmetrical-triangle-remains-in-force-2015-09-09?siteid=bigcharts&dist=bigcharts):

========


Breakdown of triangle continuation pattern would target the 14,000 to 14,200 range

http://thepythoniccow.us/Dow_3_month.jpg
Dow’s bearish ‘symmetrical triangle’ is alive and well
The Dow Jones Industrial Average’s early attempt to wipe out the bearish “symmetrical triangle” pattern failed miserably, suggesting a breakdown, and eventual new lows, may be looming.

Symmetrical triangles often appear after a sharp move in either direction. Chart watchers view them as continuation patterns, or pauses to refresh, as breakouts usually occur in the direction of the previous trend. In the Dow’s case, that would mean a move down.

These patterns can sometimes produce head fakes, or brief intraday breakouts in the opposite direction, like the Dow did in morning trade Wednesday. But the fact that the gains were quickly erased, and the Dow closed closer to the bottom of the triangle than the top, suggests the bearish implication of the pattern is still in full force.

The Dow DJIA, -1.45% rose as much as 172 points in morning trade Wednesday, before pulling a sharp U-turn to close down 239 points.

Many chart watchers believe symmetrical triangles, or other continuation patterns like the rectangular-shaped “flag” pattern, tend to appear near the middle of a sharp selloff or rally. So once the previous trend resumes, many project a “measured-move” target by subtracting the height of the pattern (on a breakdown), or adding the height of the pattern (on a breakout), to the point where the breakdown or breakout occurs.


http://thepythoniccow.us/Dow_3_year.png
A ‘symmetrical triangle’ breakdown would target 14,000-14,200 range
In the Dow’s case, the height of the pattern is a little over 2,000 points, starting from the Aug. 18 close at 17,511 to the Aug. 24 low of 15,370. If the Dow were to close below the lower barrier of the triangle, which will extend to about 16,200 on Thursday, the target becomes the 14,000-to-14,200 range.

========

Paul
11th September 2015, 21:27
Another commentator has posted on the same wedge or pennant forming in the major US averages over the last couple of weeks.

Given that next week, on Sept 16 and 17, 2015, the Federal Reserve is due to announce whether it will raise interest rates, it seems likely that this forming symmetrical triangle will break out sometime next week. Given the recent extremes in volatility (the VVIX, a measure of the volatility of the volatility, hit an historic all time high, a couple of weeks ago), this break out will likely be substantial.

If I had money to play with in the options markets, I'd have that money on the short side right now.

From Jesse's Café Américain (http://jessescrossroadscafe.blogspot.com/), in a post entitled SP 500 and NDX Futures Daily Charts - For the Times, They Are A-Changin' (http://jessescrossroadscafe.blogspot.com/2015/09/sp-500-and-ndx-futures-daily-charts-for.html):

========


FOMC Meeting next week on the 16th and 17th.

The Fed wants to get off the zero bound, but needs to do it in such a way that they are not blamed for the next financial crisis, while ironically preparing to fight it.

They will most likely raise 25 to 50 basis points this year, or 25 this year and 25 next year.

Since next year is a presidential election year the politics of that will inhibit any policy actions after June or perhaps a bit earlier, unless some exogenous event compels them.

I have lightly sketched the symmetrical triangle on the SP futures chart for your ease of viewing. The markets will likely go with whatever direction they can break out and confirm from this. There already has been one false breakout that retraced intraday.

I see so much impetus in the polls that the voters are rejecting the status quo, particularly those icons of privilege Bush and Clinton.

Let's see if this becomes a trend that the political establishment and their mainstream media cannot control.

As for now, winter is coming.

Have a pleasant weekend.


http://thepythoniccow.us/spfutuesdaily11.PNG

========

Redstar Kachina
12th September 2015, 00:13
..........

Redstar Kachina
13th September 2015, 18:12
..........

bearcow
13th September 2015, 19:21
Given that next week, on Sept 16 and 17, 2015, the Federal Reserve is due to announce whether it will raise interest rates, it seems likely that this forming symmetrical triangle will break out sometime next week. Given the recent extremes in volatility (the VVIX, a measure of the volatility of the volatility, hit an historic all time high, a couple of weeks ago), this break out will likely be substantial.

If I had money to play with in the options markets, I'd have that money on the short side right now.

I think it is likely we go up or down 10% based on the fed's decision and how it is spun.

based on the amount of futures manipulation going on right now, I feel there is no need to jump the gun.

Wait and see what happens until after the fed announcement. There is time to build a position, the market will not totally collapse in a week.

Redstar Kachina
13th September 2015, 23:45
..........

Hazelfern
14th September 2015, 00:39
Something has to trigger another round of QE to fund the Middle East war next fiscal year...not sure what that trigger will be, but the Fed requires justification to shift gears.

So far the Nikkei is relatively volatile, market down ~100 points from last trading day's close and down ~150 points from today's market open, but that is background noise compared to earlier pre-market trading and some of the swings over the last couple weeks...trading is still all over the place, but no Nikkei market collapse is evident so far...it's like watching a pot of water, waiting for it to boil. Best to just walk away and come back in a bit to see how it's going. Nikkei has flattened out a bit over the last 20 minutes. Looks like the Shemitah is a fizzle...a good thing in my opinion.

http://www.livecharts.co.uk/MarketCharts/nikkei.php

Thanks BP - I keep an eye out for your blog posts. I feel that we are awaiting an 'event' Something keeps tugging in that direction.
I made a promise that I would never allow myself to be blindsided again.

Redstar Kachina
14th September 2015, 00:42
..........

TODD & NORA
14th September 2015, 13:43
..........

Paul
16th September 2015, 19:34
.
Look out below.

Twenty-two (22) hours from now, the Federal Reserve (Fed) announces whether it will raise the short term interest rates that it controls.

At this time, the last three weeks of the S&P 500 (SPX) form a near perfect pennant - top side flat, and bottom side rising sharply from the lows three weeks ago.

http://thepythoniccow.us/SPX_16Sep2015.jpg

Such patterns break out, either up or down. When they are this well formed, they usually break hard ... my (non-existent) money is on market volatility (VIX) spiking upward sharply, with a quite high level of confidence, and on the SPX breaking down, with a good level of confidence. Such triangles more often than not break away from the flat side, in the direction of the sloping side, which is down in this case.

Since the drop three weeks ago, leading into this pennant, was 200 points on the SPX, from about 2100 to about 1900, my best guess would be another 200 point drop, from the current (top of the pennant) 2000, down to 1800. This would be, in my best guess, a reaction to the Fed raising rates, and part of an ongoing and larger stock market collapse, moving money towards US Treasuries, the "safer" alternative. There is no shortage of Treasuries available for purchase.

The result would be favorable to the Fed's objectives - they cheapen (high rate means lower value on debt paper) Treasuries and cause an immediate and massive flood of money buying the less valuable paper (escaping the havoc in the stock market.)

Hazelfern
16th September 2015, 23:40
That chart looks so familiar. It's nice to see pennants forming. A punch to the upside and a quick and decisive move back down. Followed by a long down turn into new generational lows. I wonder if we will ever witness a breaker event in the market. That's on my bucket list.

Spellbound
16th September 2015, 23:58
Oh, it's coming. I'd highly suggest money market funds for 401K's / RRSP's.

Dave - Toronto

Paul
17th September 2015, 18:46
.
Look out below.
Well ... I was wrong again

The Fed did not raise rates, and volatility (VIX) declined.

FOMC Reaction: VIX Crushed As Bonds & Bullion Rip, USDollar & Stocks Slip (Zerohedge) (http://www.zerohedge.com/news/2015-09-17/fomc-reaction-bonds-bullion-rip-usdollar-dips-stocks-slip)

Paul
17th September 2015, 19:03
I should listen to Jim Willie more often (if that were even possible) ... he has been steadfast that the Fed can never raise rates ... it will be QE to infinity-squared (his latest term) and the Dollar will rise, and rise and rise some more ... to be suddenly replaced after it is no longer accepted in trade.

Paul
19th September 2015, 01:55
That chart looks so familiar. It's nice to see pennants forming. A punch to the upside and a quick and decisive move back down. Followed by a long down turn into new generational lows. I wonder if we will ever witness a breaker event in the market. That's on my bucket list.

Damn - good call. Here's that pennant of the last month or so that I've been noticing, as shown at Zerohedge (http://www.zerohedge.com/news/2015-09-18/investors-dump-stocks-safety-bonds-bullion-yellens-new-world-confusion) today, beneath the words:

Some context for the moves - failed breakouit of key resistance... and a close below support

http://thepythoniccow.us/zerohedge_pennant_20150918_EOD8_0.jpg

Paul
22nd September 2015, 22:42
.
Look out below.
It's looking more and more like I was wrong that I was wrong, and that Nonin was right all along.

Following the false break to the upside in the middle of last week, it broke down on heavy volume Friday, and after an indecisive Monday, has fallen clearly below the bottom of last month's pennant pattern today, Tuesday, 22 Sep 2015.

As I said, before I chickened on the false break to the upside: Look out below.

http://thepythoniccow.us/SPX_22Sep2015.jpg

Hazelfern
23rd September 2015, 01:02
Eh, just a lucky guess. I could see it only because I was/am not 'playing' it.
The pennant formation is counter intuitive in that it seems that a breakout will go higher. Gotcha!
Whether it goes to new generational lows remains to be seen.
As a Libra rising, I need to see balance in the (overall) chart.
Let's take a look at that.