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Where the Markets Are Headed
Latest Activity: Feb 27
Fibonnaci in Nature
Started by Terry H. Last reply by Terry H Feb 13.
Started by Terry H. Last reply by Terry H Jan 8.
Started by Terry H. Last reply by Terry H Nov 5, 2013.
Started by Terry H. Last reply by Terry H May 7, 2013.
Started by Terry H. Last reply by Terry H Apr 18, 2013.
Posted in on February 27, 2015 - 11:44am
The stock market continues to move higher, albeit at a very slow pace. That makes the $SPX chart bullish, of course, and it will remain bullish as long as $SPX holds above support. The highest support level is the 2090-2100 range that $SPX traded in last week.
Equity-only put-call ratios generated their most recent buy signals on February 3rd. Those were well-timed buy signals, and they remain in place. You can see from the charts (Figures 2 & 3) that these ratios continue to drop, and that is bullish for stocks.
Market breadth has not been a particularly strong supporter of the rally, however. It hasn't been completely negative, but it hasn't chimed in with the strength that one would expect to see when $SPX is breaking out to a series of new all-time highs. Regardless, both breadth oscillators remain on buy signals, and both are in modestly overbought territory.
Volatility indices have been declining for the entire month of February. That is bullish for stocks. $VIX remains bullish as long as it continues to close below 17.
In summary, the intermediate-term outlook is bullish, in line with the strength of the most important indicator -- the chart of $SPX. The fact that breadth has not really confirmed the rally is a minor nuisance, but as long as $SPX support is not violated, breadth doesn't matter.
Long-term market trends in stocks, bonds, gold, and oil:
Inflation-Adjusted DJIA over the last 100 years. Macrotrends.net
Posted in on August 4, 2014 - 11:31am
I want to spend just a moment pointing out how these market tops can unfold. One good example was in 2007. The market had just made new all-time highs in July and everything seemed wonderful. Volatility had been low (except for one hiccup back in February, 2007), but no one seemed worried. Then, $SPX broke down sharply with a 30-point down day (yesterday was a 40-point down day for $SPX), and that unleashed the bears. The accompanying chart (Figure 5) shows the severity of the decline. Figure 6 shows how volatility ($VIX) behaved, and shows the power of volatility protection, for when the market declines that quickly, the volatility of volatility increases dramatically. Also, note that no two markets ever are exactly the same, but this type of scenario could be unfolding now, since it has happened before.
Figure 1 shows the devastation that took place between July 24th and August 16th, 2007. $SPX dropped from 1541 to 1370 at its capitulation low. There were eight severe down days for $SPX in that stretch. Figure 2 shows how $VIX did over the same period. It rose from 16 to 37 (during the capitulation day).
Read more: http://www.optionstrategist.com/blog/2014/08/stock-market-tops-hist...
Here's a log chart of the DJIA from 1918 to 1932.
For reference...1929 crash
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