The Nasdaq 100 has dropped to an obvious support level (50 day MA’s & lateral visual) from the top of a Reverse Symmetrical Triangle.
Other leadership indexes like the Russell 2000 (small caps) don’t look so hot either, and yet here stand the Semiconductors, with SOX still above the important breakout line and still doing its Bollinger Band creep routine.
Yesterday we reviewed 3 charts, the 60 minute versions of DIA, SPY and QQQ with their respective decision lines. Well, here’s a view of the Cube after it cut its line to shreds.
You know, when you think about it you really can’t blame the Vampire Squid. It issued its analysis about a very over valued stock market on Monday. You cannot cry that Goldman is in cahoots with Bernanke toward an evil bullish plan. At least not now.
You can however blame the runaway greed of the least sophisticated investor sponsorship since this bull began in 2009 (actually, the NDX low was in Q4, 2008 if I am not mistaken?). Remember the sponsorship for silver in 2011? That was dumb or emotional money getting gung ho for the ‘Silver to $100!’ pitch amid rising inflation expectations. Not to say it can’t get there one day in the far out future, but in spring of 2011 that was pure hype.
In early 2011 the risk marker (to commodities) – as we noted back then – was as it is today in other areas; the TYX ‘Continuum’ chart was at a limit and so were inflation hysterics. Silver was one of the inflated assets that bubbled up back then. Now it’s a different animal enjoying the spirits.
I don’t know what can be said about this other than it’s bullish (duh) and they are winning… (duh).
Yes there are negative divergences from the small caps, the emerging markets, the Tranny and even the Canary’s Canary (AMAT vs. SOX). There are negative divergences on most indexes by RSI and MACD. But this is bullish until it is not. Standing in the way of it has brought pain down on the bears just as standing in the way of a downtrend has to gold bugs.
This market will change one day, and I think it will be soon and it will be abrupt. But right now? It’s more of the same.
Is the NDX (QQQ) in a progression of higher highs and higher lows (yes, so far) forecasting new highs or about 80% of the way through completing an H&S top? I ask because I really don’t know. I’d say that the H&S is just conjecture and speculation while the series of higher highs and lows is fact. So there, I guess that’s the answer.
We have been watching the leading NDX in ratio to the lagging SPX in NFTRH for weeks now. Here is a weekly view showing the ratio having dropped below a formerly supportive moving average, MACD gone red for the first time since the ’08 crash, RSI below resistance and AROON on a weekly downtrend. Also, a trend line is tossed in for good measure.
Why then am I not short the US markets? Because as has been the case so often in this wretched year of 2012, policy makers and politicians are too heavily in play. But taken at face value, this chart sucks; as do the US markets when you factor in smart/dumb money data and a degenerating sentiment backdrop. Now let’s see what the conspirators in Washington come up with in the can kicking sweepstakes.