Thursday, March 25, 2010

Happy Anniversary.

People love--or hate--anniversaries. Wedding anniversaries, graduations, birthdays and the dates of loved ones lost. The Stock Market takes notice of anniversary dates as well--sometimes languishing until a 'special' date has arrived or sometimes rallying into an anniversary or often 'collapsing' into a date. Several dates over time seem to have been 'strange attractors' for the markets.
  • October 10-11: 1966, 1990, 2002 &2007
  • July 16: 1950, 1990 & 2007
  • Jan 11: 1973, 2010
  • Dec. 2-4: 1968, 1987
The dates above were major turning points in the S&P 500 over the last 60 years. Many more turns came within 1-2 trading days either side of the dates mentioned above..
On Wednesday March 24th the S&P 500 quietly celebrated the 10th anniversary of the Dot-Comm Bubble top. On March 24th 2000 the S&P peaked at 1552.87. The bottom of the Dot-Com bear was @ 768.63 on October 10, 2002. The markets rallied until July 16,2007 when it made a high of 1555.90 and then struggled higher to its all time high @ 1576.09 on...October 11 2007.
.....Just saying.........

Here is a very interesting chart:
This is the Chicago Put-Call Equity chart from early 2007 until Thursday's close. Note how the 200 day exponential average 'pivots' at the major turns of the S&P 500. Also note that the current 200 day ema. is within decimals of the previous low on July 16th 2007. (approx. 0.626)

Once again...just saying.........

click chart for a larger image
The next chart is of the S&P 500 since December 2009. There are several things to take note of:
  • The candlestick chart is generating bearish signals--especially with today's 'shooting star' reversal.
  • The RSI (14 day) is showing divergence from the market. The RSI made a high reading at the March 17th Energy date while the market itself made a recent high today--before reversal in the last 40 minutes of trading.
  • MACD is turning down from relatively elevated readings. This combined with the RSI and other momentum indicators suggest the the market is running out of fuel.
As stated previously, the exponential moving averages provide excellent guidelines in determining the trend of the market--including short (21) , medium (55) and long term (200) trends. These averages become even more significant if the are coincident with other price levels such as a Fibonacci harmonic, previous support level or recent low trade and previous resistance level. The 1146-1153 area is one such confluence of significance.

2 comments:

Anonymous said...

You have been calling disconcerting trends for some time, Pete, and I must say that if I understand your TA well, then the markets are heading South again.

Indeed, add to this the now well-known Bonus Scandals after the first and post-[sic] Stimulus period, and one wonders: If this is what Friedrich Nietzsche means by willing "Eternal Recurrence," then he is, frankly, full of the wrong kind of will to power! (:-)

Gregorius Maxicus Waltercus

Fibocycle said...

Since a large part of my 'squiggly lines' is based upon Pythagorean philosophy--ergo mathematics--the concept of Eternal Recurrence is a fundamental tenet to the hypothesis.
I know that it is inevitable that the market will decline--there is increasing evidence revealing its waning momentum which is taking place during a period of relative public optimism about current market performance. A recipe for disaster.
While it is exceedingly difficult to pinpoint both time and price, the behavior of the market's moving averages will foretell the short term with a fair degree of accuracy. If short term risk and market exposure is successfully managed, it will, by virtue of its success, enhance long term performance. If the market demonstrates that the path of least resistance is down, the appropriate indicators will reveal themselves.
Believing that the markets are cyclical--acting as a barometer of the human condition, it becomes just a matter of time until the market succumbs to the "das schwerste Gewicht"