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Hindenburg Omen - November 13, 2012 162 comments
This is the continuation of a discussion on the Hindenburg Omen which was originated by our friend John Lounsbury over 3 years ago. The preceding chapter in this series can be read here. For further reference or to read about actual Hindenburg events we have covered including the near misses which occurred in the "week before" and the "day of" the flash crash, the entire series began with John's original post found here.
In the chart below we see the latest picture of what the NYSE is doing as well as a very easy-to-follow method of monitoring whether or not the Hindenburg Omen is obeying one of its most important rules, that being whether or not its 50 day moving average is rising. As you can see, as of the close on November 13, 2013 that moving average is on the verge of heading south. In fact, unless the NYSE puts on a spectacular rally over the next 10 days the HO is about to go off line. And of course if that happens the HO as an indicator can no longer issue a signal. But we will continue to monitor the new highs and new lows anyway since they still provide a great view into the market internals and can help identify when the market is highly polarized with an unusually high number of new lows being achieved at the same time as an unusually low number of new highs.
As a brief summary of recent activity, we can just state that the HO has really been humming for the past couple of weeks, particularly the past 5 days or so. We've had what should probably be considered as a series of "near misses", the closest one having occurred on Monday, Nov. 12th. On that day had the NYSE been able to register just 9 more new 52 week highs the HO would have issued its first signal since it last went off in August of 2010. As I told the readers back then, even though the Hindenburg Omen hadn't officially gone off, the message was still abundantly clear... the market is at a degree of polarity not seen very often (meaning that while the steady heavy horses were still trying to pull the stock wagon up the hill, nearly as many were on the other end trying to pull it downhill). And as one could easily imagine, those that are trying to pull a wagon 'downhill' are likely to be the winners. And when one of those heavy horses named APPLE (pictured below) is pulling 'downhill', guess which way the market is going to go.
.........
Nevertheless, all this scary activity doesn't mean that a rip-snorting rally can't still occur. It certainly can and don't be surprised if it does. In fact, I personally expect some upside action at any time now... at least a bounce. But that's all we should be expecting... A BOUNCE. That's the message from the HO... to be long at this stage in time is a very dangerous proposition.
So we continue to monitor the situation. As always, comments are welcome.
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This post has 162 comments:
So we look back to Monday's readings when the NYSE registered 78 new 52 week highs and 88 new lows. That was the nearest miss we've seen since the HO last went off in August of 2010 (Aug. 10th I believe it was).
So although officially the HO didn't go off on Monday, we have to recall that we saw this same type of activity with one near miss after the other leading up to the last two severe market declines, one of which was the flash crash and the other was the August, 2010 decline. Readers will recall that although the HO didn't go off back in 2010 until the August decline was nearly over, it 'did' issue a series of near misses in the days before that decline began.
When the HO goes off line -- No TA needed -- your local pub visits should go 2X sigma with winter settling in......
So if a person were to take the chance on maybe catching a good chunk of the 'possible' rally, I'd just suggest that they do so with a minimum sized bet for now.
That makes a lot of sense. I'm thinking Santa Clause rally. After people have finished repositioning based on their speculations about the changes in cap gain taxes and other taxes, the market finds a new equilibrium. Then people get swayed by a "compromise" for the Fiscal Cliff and start thinking that is a good thing. European can kicking keeps them out of the news through the holidays, and officials there start taking time off. BB is still engaged in QEi and don't forget Twist is still going on. Everything shapes up for the risk-on trade to set in through the end of the year.
Then Jan and the innaguration and its euphoria are over. All the while the markets have been trending up, just before reality starts to kick in. 2nd qtr next year, might be the next time the HO starts rumbling. Sell in May and go away may have a special meaning in 2013.
http://bit.ly/T3x9rf
http://bit.ly/S0r6m6
http://bit.ly/T3x7zN
There used to be a giant elk roaming Ireland 10,000 years ago that had a rack 12 feet across. I imagine they would have been as big or bigger than the moose in the pics above.
http://bit.ly/S0rGjG
Have a great weekend!
There is another possibility. The Fed is buying MBS and MBS tend to settle around the 20th of each month. If you look at the growth of the Fed's balance sheet, it grows right around this time. This could provide a boost right around the middle of the month.
http://seekingalpha.co...
We won't miss your posts!
HardToLove
Do you think the HO has sensed the 13 year long triple top in the major indexes?
Happy New Year to you as well my friend. Gotta run now but I imagine we'll be here tomorrow. Have a great night.
How is the family doing? All fine I hope.
My son is still the hardest working man I've ever met. Just work, work, work. But I got the great news at Christmas that he got engaged to be married. He went to high school with the young lady and I had even noticed her back then because she was such an athlete. But they hadn't seen each other for 10 years. When they crossed paths 10 years later though they were pretty awe struck with each other and they've been together ever since (3-4 years now). She's freakin' awesome too. Beautiful, tall, athletic, has her own residence already and is a high school phys. ed. teacher. So she's one of those rare ones who doesn't "need" my son, she "wants" him. That's a good start. And she treats 'me' like gold, so how could I not be happy with his choice? That young lady is just awesome.
I hope you're doing well too pardner. I hope your boy is doing well. Is he still in Okinawa?
All is well on the home front for our family. Wife and second son head for Japan in March to visit. It will be a bit of a treat for them to not be there in the winter time for once. We went to Copan this December for the "End of world Fiesta" so she is making her yearly trip to Japan now. I will be up your way in May to hunt but not the moose. Flying into Edmonton.
Now back to our regular channel......
I presume you be flying via the Hindenburg, O man?
HardToLove
Just kidding of course. The people up there are great, it's just a big sports rivalry thing. Edmonton is more blue collar because that city is the gateway to the north... the oil area. Calgary is more white collar where all the strings are pulled. Both cities are identical in size at about 1.15 million each. Edmonton is almost always a tad colder too, being just that much further north (180 miles). In fact it was in Edmonton where a couple of years ago you might remember me saying that I was in the coldest spot on earth that Christmas night (officially). It was -46C (-51F) and -64F with the slight breeze that night. I've never felt cold pain like that before or since.
But you'll be up there in May so you're in the clear. It should only be about -35 by then, lol.
Make sure you bring rain gear... that's a transition time of year where we could get a foot of snow one night or a ton of rain. We just never know. Either way, it's precipitation for sure. Probably rain.
mj
I'm not sure if you were here back in August 2010.. But back then when we had a couple of near misses (and even when the HO went off), the market action was just like this. On those past occasions the market first opened with a big gap lower which produced a fair number of new lows. Then it recovered 'just enough' to get the number of new highs that the HO requires. Then the market sold off again and completed the number of new lows required... OR VERY CLOSE TO IT in the case of a near miss.
Then a day or three later it happened again, except in reverse. So if the market cannot hold this incredibly stupid bounce that's happening right here, and drops into the close... that's most likely when the HO is going to be closest it's going to get today to issuing a signal. The last time it issued a signal was at 3:50 p.m. as I recall, just before the close. And that makes sense. So the next time the HO issues a signal I'd expect it to be late in the day.
All that said above is not to imply that this ridiculous bounce courtesy of Goldman can't continue. It could indeed. So stay tuned because if the market sells off to finish the week...
So the market is suddenly hanging around right in the zone where the HO is paying very close attention. I post the occasional updates on my blog as well.
http://bit.ly/Z9ueDL
For those of you on Twitter, I finally got hooked up with that thing and have found it to be far more useful than I thought it would be. So if you're on Twitter you could find me @AlbertarocksTA.
See you tomorrow or Friday most likely, at least for more updates.
Hope you are all doing well :-)
BITCOINS? You'd better believe it.
Don't forget though, bad news is good news. The $85 billion the Fed is buying is flexible. They could ramp that up just as easily as they could ratchet it back.
HardToLove
As for floating a trial balloon, at this moment there are 58 new highs and 28 new lows. So yeah, the market is kind of hanging around in the HO's neighborhood. We'll see what happens I guess :-)
http://bit.ly/14JAIdv
And an eye-opener of an article by Antal Fekete on the bond market:
http://bit.ly/KgDC0J
http://bit.ly/Z9ueDL
The market is stuck at 77 & 76 for the moment. So with 8 more of each required I'd say the odds are high that article will be published within hours.
http://yhoo.it/ZWvVOa
-- Paulson has lost just over $291.5 million on these stocks so far today.
http://wapo.st/ZWx6gv
Today, seems to be as much about margin covering as anything else that I can determine.
My bottom feeder whiskers are twitching.
Thats the side of the coin most do not consider. How long....how low...how well do they sleep worrying the price could take off upwards again. I think we might see some more downside just from the margin calls but after that.......short covering could send the price northerly.
Last week I posted a note that pointed out the long-term trend lines provide support in the $1,100 +/- right now. If we did get to those levels it would be a great time to make a big bet.
http://seekingalpha.co...
http://bit.ly/12m9NBU
Posted with hat tip to doubleguns.
Screw the manipulation or "incomplete market data" or whatever you want to call it. The HO has gone off.
mj
http://bit.ly/1398VPW
I'll send an email when we post this evening. I won't grab it until 7pm EST. If you make any updates before then I'll have them.
And on that topic, the market is working on that second signal right now. The required minimum number of new highs sits at 78 which is almost there. The number of new lows sits at 37 with 85ish required. So theoretically it would be possible for another signal today although I don't get the sense at all that the market wants to decline much today. For one thing I expect that if the market is planning on heading lower, it still has to put in a proper looking correction of yesterday's carnage. And that "proper look" would be some sort of 3-wave sequence higher which I don't think is in place yet. We'll see what happens.
I'm not at all confident though that there will be a second signal but am totally convinced that the market could decline sharply anyway. For example, it's possible that the 50 day MA could theoretically roll over which would "switch off" the HO but the market could decline hard anyway. In that case the HO might well have issued its second signal had that darned 50 day MA remained pointing higher. Missed it by a day sort of thing. We've seen that happen before.
If the HO 'is' going to issue that second signal it had better do so soon since the 50 day MA is threatening to roll lower. And of course that's something that always happens at market tops. The market doesn't necessarily have to be declining for an HO signal but once that decline starts the 50 day rolls over fairly soon thereafter. So really, the HO only has a relatively small window of opportunity within which to issue signals. We could certainly get one today but all we can do is watch and see what transpires from here.
A very important factor is that if the market drops even one point tomorrow the HO is going to be switched off because of the rule regarding the 50 day MA.
On the other hand, the second signal only has to occur within 36 days of the first. So the market could make a recovery over the next week or two and that would keep the MA still headed higher. The perfect set up for the second signal theoretically.
If you look at the chart at the top of this post, or here...http://tinyurl.com/br9... we can see that as of this moment the MA is still heading higher. All is well.
Looking at the left side of that box shows us where the price was 50 days ago. So we can tell that over the next 6 days there is gentle pressure for that orange line to rise. The NYSE had better stay above it. After those 6 days have passed though the action of 50 days ago starts to drop and therefore ease up on the pressure on that orange line and will allow it to fall. Again, that's good because it keeps the 50 day MA heading higher.
So there's no harm in waiting for that second signal as long as we're not depending on it. And if it comes it will have come on a retracement of the recent mini-crash... a retracement upward that failed.
I'd like to draw your attention to two interesting items. Firstly, if you refer to my comment just above Mr. Ferguson's gracious TY, we can see that things have developed pretty much as I suggested it "might".
Specifically, the NYSE did indeed stay above the all-important orange line, meaning that the 50 day MA never did roll lower during the recent decline. As well, since the market has surged sharply the moving average is in no immediate danger of turning lower which fits the scenario exactly as I suggested in the comment above, namely...
"the market could make a recovery over the next week or two and that would keep the MA still headed higher. The perfect set up for the second signal theoretically".
And on that note, here's the second interesting tidbit. After this snappy little recovery, the number of new 52 week highs is still very anemic for a market that is so close to all-time highs. Basically nothing has changed in spite of the rally. For example, at this moment there are 140 new highs. Granted, that is better than only 85 as were recorded on the day the HO issued its signal, but a long, long way off what we normally see in a market that is so close to all-time highs. In a healthy market that number is closer to 300-600. In fact, at this moment the number of new highs sitting at 140 is a legitimate HO qualifier.
In no way do I mean to imply anything other than the fact that the HO is very much alive and well here and that the market is definitely still hovering around in the HO's back yard. A dangerous place to be playing.
So the bottom line is that it is entirely possible that the second and confirming signal 'could' easily happen over the next few days or weeks. And it would still be "in time". (36 days max. between 2 signals).
That is all... just a wee update. http://bit.ly/12NvE5t
I hope all of you are well.
The risk then changes when CBs decide to exit their long positions, unless they are also hedging those positions.
http://bit.ly/13xBxmc
MHO,
HardToLove
From that article on ZH "The Bank of Japan, holder of the second-biggest reserves, said April 4 it will more than double investments in equity exchange-traded funds to 3.5 trillion yen ($35.2 billion) by 2014."
Geez, there's nothing like telegraphing the next 10 punches they're going to throw. They are probably telling the truth but a statement like that just reeks of desperation in that they're openly trying to influence the rest of us to do the same thing.
The phenomenon of all the CBs buying equities it is definitely a concerted effort. But when it comes time to unwind those positions, I highly doubt any of those CBs will tell the others that they are about to pull that trigger. So I fear that the unwind, when it does come, will be horrid. When it comes time to head for the exits where is the liquidity going to come from in order for the banks to unload? Who are they going to unload to?
And just as important I guess is the question "what is going to trigger it?". My guess is that it will be a surge in rates which of course are the competition for equities. The moment rates start to look more attractive than potential gains in equities I think the bond market collapses. Even if it collapses to the point where rates only rise by half a point or a full point, the decline in bonds and equities 'at the same time' could be spectacular.
I think the days are gone when money that exited the equities markets was funneled into the bond markets, and vice versa. Today if the bond market drops (rates rise) I fear it will be for all the wrong reasons... specifically, rates would be rising not so much because of inflation fears but because of realization that liquidity is about to unwind. Meaning that all the money printing has failed and that ultimately there will be defaults. And defaults are literally the most spectacular example of "deflation", the disappearance of money right back into the imaginary void that it came from in the first place.
So far the CBs have been able to avoid defaults. Even at the expense of raping the poor citizens of Cyprus and clearly setting up every other central bank in the world to do the same "when the time comes". Did you know that in the Canadian national budget last month that they included a clause that clears the way for the gov't up here to steal from Canadians' savings? Yes sir... in Canada, the one country identified as having the most solid banks in the world. If Canada is clearing the way to steal from the citizens then the message is abundantly clear... the CB's are expecting the worst and they're planning on robbing the entire human population in order to save their own sorry asses.
God, if that doesn't just take the cake. It gives a whole new meaning to the word "infuriating". Not to mention an entirely new meaning for the words "grand larceny" and a dozen others I could provide. Argggh!
Corruption of basic ethics knows no bounds when it comes to the financial system we've built.
MHO,
HardToLove
http://bit.ly/ZTI8DA
In any case, yesterday there were over 400 new highs established so the HO wasn't even buzzing. Today... a different story. Currently there are 29 new highs and 36 new lows, which of course are numbers that the HO would be paying attention to since the polarity is beginning to show up once again. So we'll just keep our eye on the markets and see what develops from here.
I hope all of you are doing well.
I'm well, and hope you and yours are also. Heading into summer up there I expect it's getting breathtaking again?
HardToLove
This summer will be special for me since my son will be getting married. Woohoo! And man, did he ever pick a nice bride. A beautiful tall blonde athletic girl who he went to high school with. They hadn't seen each other in 10 years, but when their paths crossed again it was like "Wow, look how gorgeous 'you' grew up to be!". It's quite funny actually, and a great story. I just love that girl too... an excellent choice. So it'll definitely be a special summer for me.
Nice to see ya bud. Stick around while we watch to see if the HO wants to issue another signal.
Yesterday, I was seeing all kinds of signs a rollover was imminent, even deeply considered shorting this morning, especially with what Japan did last night.
But I just couldn't pull the trigger this morning with any old short ETF. Glad I didn't. As we saw, this morning, the bulls ripped the teeth right out of the bear's gaping jowl.
Sounds like a great summer ahead, congrats.
In fact the reason I opened this page was of course to offer a short report on the HO. On Friday there were about a million new 52 week highs and I'm getting so bored with the markets these days that I don't even watch them anymore. They're so incredibly broken by the crazy bastages who think they know what they're doing over there in Bankerville.
So far today there have been 50 new 52 week highs and 114 new lows... right in the HO's sights. So we'll just have to wait and see if there is enough steam left to generate those remaining 35 required highs. But what can I say... the bankers are interfering so much, to an extent never seen before, that I don't even have any faith in the HO anymore. I can't see the markets doing anything but rising until the insane lose control of the asylum. Maybe that's "exactly" what the HO will be identifying when it goes off... who knows?
Yep, stilldazed and confused. The stock, bond and commodity markets are all over the map. I can't figure how to play them or time when the music stops. I did some research on the great depression a while back and we seem to have similar situations setting up. Lots and lots of margin accounts, the market going up seemingly forever for no reason. Everybody and their brother in the market through direct or indirect (401k) investment, talk of the market at company lunch tables. Something new are the HFT computers having the ability to cause flash crashes to take out stop loss orders and then minutes later have the stock price back to normal. A flash crash could start a domino effect of margin calls and stop loss sells that turns into an avalanche. I get chills thinking about it. Sure wish I could time when to short the whole mess. Smoke, mirrors, hopium, QE and greed can't prop this up forever, maybe the HO will give us a little notice. ;-)
So what you have to look for, are large macro changes in the subsidy mix. BB did this in 2006 when he inverted the yield curve. In other words he changed the consumption subsidy mix by taking fed notes out of the system, and we all know what happened next. He may do this again by ending QE, or ending QE and shrinking the balance sheet. Obamacare and Dodd Frank are large macro changes in the subsidy mix. They are basically taxes, or you could think about them as round about minimum wage increases that will increase unemployment. That means Fed note destruction and risk-off.
Until we get these changes, I see the S&P at 2000 and the 10yr going up to 2.30 or 2.40 or maybe even higher (especially if they keep the cameras off in Europe, thus muting capital flight to US treas).
Keep an eye out for the macro changes in the subsidy mix. That will be your signal.
I see the same old summer doldrums potentially occurring this summer, only not as deep a retrace as in recent years past. S&P 1700 should be a cinch by the end of this year. Caveats aside, we actually could breach 1800.
The "old" saying, "Don't fight the FED," has now switched to, "Don't fight the Central Banks."
Looking for the MLP bubble to continue inflating. For several years, and especially this year, I've been enjoying the ride, and will continue to add to this sector on pullbacks.
Here's a partial list from the May 6th Wells Fargo Outlook regarding MLPs I posted in QuickChat:
Guns and anyone interested in the MLP sector:
From the Wells report on MLPs that I received on Friday, LINE is rated outperform, with a low valuation rating of $40/share, and a high valuation rating of $44. The "potential return" is 29%. This report was based on the closing price May 6, of $34.98. LINE's YTD performance so far is down 1%.
I never knew there are so many MLPs out there. Scads!
Here's a selection from the lengthy list of Outperform and Market Perform ratings, all designated with a higher than 10% "potential return." All data is intraday from May 6.
BretBurn Energy Partners L.P. (BBEP) $18.95, yield 10%, YTD performance +3%, low valuation $22, high valuation $24, potential return 32%. Rated Outperform
Crestwood Midstream Partners L.P. (CMLP) $24.90, yield 8.2%, YTD performance 8.2%, low valuation $26, high valuation $28, potential return 17%. Rated Outperform
Capital Product Partners L.P. (CPLP) $8.87, yield 10.5%, YTD performance 10.5%, low valuation $9, high valuation $10, potential return 18%. Rated Outperform
Eagle Rock Energy Partners L.P. (EROC) $9.00, yield 9.8%, YTD performance 4%, low valuation $10, high valuation $12, potential return 32%. Rated Market Perform
LLR Energy LLC (LRE) $15.58, yield 12.4%, YTD performance (9%), low valuation $18, high valuation $20. Potential return 34%. Rated Market Perform
Mid-Con Energy Partners (MCEP) $23.27, yield 8.7%, YTD performance 8.7%, low valuation $23, high valuation $25. Potential return 12%. Rated Market Perform
Memorial Production Partners L.P. (MEMP) $19.07, yield 10.7%, YTD performance 7%, low valuation $21, high valuation $23, Potential return 26%. Rated Outperform
Ns ka Gas Storage Partners LLC (NKA) $15.10, yield 9.3%, YTD performance 39%, low valuation $16, high valuation $18. Potential return 22%. Rated Outperform
QR Energy L.P. (QRE) $16.94, yield 11.5%, YTD performance 2%, low valuation $17, high valuation $19, Potential return 18%. Rated Market Perform
####
I may have to look into selling my Buckeye Pipeline (BPL), as it's up 48% so far this year, and Wells has the potential return going forward as negative 4%.
If anyone has an MLP not listed above, and wants to know what Wells Fargo thinks, I be happy to provide the data.
The Dow 28,000 by the end of 2019 amounts to about 9% compounded per year. If there are two years with a 10% decline each (or one with a 20% decline) the remaining years need be about 15% for the five up years (or +12% for the remaining 6 years).
All these numbers are quite conservative IF we do not succumb a dive back into the Great Recession depression.
####
Beneath I wrote that I will be on Mad Money tonight. Unfortunately, after calling in and listening to the terms and conditions, which mandate that I'm not allowed to buy LINE after learning that I would be on the show, I had to hang up. I bought 800 shares today, and would be rattling the SEC's cage, if I did indeed appear in The Lightning Round.
In short, I won't be on Mad Money tonight, and am a little peeved that the Mad Money employee who called me, did not inform me of these rules.
BTW: LINE hit a 52 week low today, and mysteriously plunged with a huge increase in volume within minutes of me learning the I would be on Mad Money tonight, asking Cramer about LINE.
Sheesh! As the world turns....
If all the bankers were dead, 98% of all the troubles humanity has ever faced would have never happened, and 99% of all future problems for humanity won't happen at all. For one thing... no more wars. Ever.
On a side note, the pattern 'does' look to me like at least another down leg is in the cards.
new 52 week highs = 94
new 52 week lows = 135
Classic :-)
Zero hedge is proclaiming an HO moment: http://bit.ly/16wH55O
John
Is the 36 days calendar days or market days? Today is 34 market days after April 15 (last signal), but 45 calendar days.
Well for the first signal on April 15th, a second signal was required within 36 days. I never did see a ruling on whether or not that was calendar days or trading days but I'm almost certain it's calendar days. In any case, it 'already did' give that second and confirming signal two days later. The market reacted with a drop of only 3.6% and since then has surpassed the high at the time. And more than 6 weeks have passed, as you point out.
So this is a new and separate event rather than "one of a series of events within 36 days that are redundant". So this signal is a new one and requires another second and confirming signal.
http://bit.ly/13r0eQN
AR - A belated congrats to you and your family! Hope the two of them live a blessed life together!
My son has asked me to speak at the wedding. I'm not surprised because the father of the groom always says a few words. But the fun part is that he has asked me to 'kick it up a notch'. He describes his fiance's family as being "cold porridge", meaning good people but boring wallflower types. He said "If we're going to make this thing into a party, it's gonna have to be our family who will have to spice it up." So it appears he has given me the green light to take the microphone and see if I can crack a few people up. Somehow I don't think that's going to be a problem. I've already cracked a rib laughing at some of the funny stuff I've come up with regarding escapades he and I have gotten ourselves into in the past. It should be a lot of fun.
http://bit.ly/19BSY9B
CNBC reported at the close there was ~$3B in shares for sale.
HardToLove
Thanks AR
BTW: I was on Mad Money tonight, and Cramer, though he likes Linn Energy, he wasn't enthusiastic about buying right now, due to sector rotation. I'll probably take the hit and sell in my gamer account, but will keep recent adds in the brokerage account, and then add a little more when we get beyond the annual summer swoon. The yield with the new monthly dividends coming next quarter, already compound to beyond 9% annually, and it looks like that yield will only go higher. Plus, Linn Energy will be the first ever MLP that will also begin producing oil, when the delayed Berry Petroleum acquisition kicks in.
Not exactly what I wanted to hear, but it was fun to be on Mad Money.
I had told John earlier today (Friday) that in the April event the HO had issued its required second and confirming signal two days after the initial signal. I WAS WRONG ABOUT THAT. I had inadvertently referred to a draft article that I had prepared 'in anticipation' of that second signal. I never published it, because that second signal never did materialize.
So in my hurry today I accidentally opened up the wrong article so that I could refer to my own work. And based on that 'draft that was never published', I erroneously told Mr. Lounsbury that in the April event a second confirming signal had occurred. It had not.
Just wanted to man up and admit my mistake in that regard. My apologies John.
You know, even as I was responding to your comment above on that topic, I could not actually remember that second signal as having occurred. But I read it... in my own words, so it must have happened, right? But I was reading a draft based on 'anticipation'. It was all just a real dumb mistake on my part which I only realized after checking it out again. I simply could not remember that second April signal and it was gnawing at me until I looked into it a second time. Sorry about that John.
Wait till you find your car keys in the freezer, my wife still reminds me about that (which I quickly forget). ;-)
Just two weeks ago I decided to start up an old vehicle I have that had been sitting in the parkade and hadn't been started for 16 months. The battery was dead. So I arranged for a friend to come over and give my vehicle a boost because my other vehicle was elsewhere. I had the booster cables already attached when he arrived and it took all of 60 seconds to get the old girl fired up. Just to make sure I didn't have any ugly surprises, I made sure the passenger door was unlocked as well. My friend was in a hurry so as I thanked him and waved 'good-bye' as he drove off, I pushed the driver door shut so the vehicle could run for a while.
As my buddy's car disappeared around the corner of the building, my attention returned to my old clunker. The next thing I had to do was to gather up the jumper cables and put them back in vehicle. To my horror, the door was locked. Good thing I had unlocked the passenger door, right? So I scurried around to the passenger's side and wouldn't you know it... LOCKED. Apparently I must have inadvertently pushed the little "lock doors" button on the remote as I was fiddling with other things. So now my vehicle is running with the keys locked inside it. But I have a spare set of keys in the apartment.
Did I lock the apartment when I left? I always do! Oh god, if that apartment is locked I've got a real problem. So I waited at the front door of the building for someone to open the door so I could get in, ran up to my apartment and... I don't have to tell you. So now I've got a vehicle that's finally running again, with the keys locked inside it, and that set of keys happens to open the door to my apartment where I have spare keys.
BUT WAIT... not all is lost. I know how to get inside that old vehicle very easily by popping off the sun-roof. All I need is a screwdriver... and luckily I have the right one... in the apartment. Doh! So now I'm going to have to bother some friend again. I'm going to have to call someone on my cell phone... but guess where 'that' is.
So I had to go back to the front entrance of the apartment building and do my best impression of "brother can you spare a dime". Only this time I'm asking everyone who passes by, "brother can you spare a screwdriver?". Fortunately one of the guys had some tools upstairs and he brought me a screwdriver set. So I was able to pop that sunroof off and reach down and open the door.
Long story short... I eventually had to put a battery charger on that battery and believe it or not... it was brand new. It's just that I had installed it 16 months earlier. The last time I got into this kind of trouble it 'was' my son who bailed me out. This time... I had no way of contacting him or anybody else, lol. Gawd... nobody needs days like that but I pretty much invited that disaster by not doing it the right way... with my other vehicle. On the other hand... that's what inspired me to fire up the old one, lol.
My wife got tired of me calling her late at night to come and bring the spare keys.
I finally figured a way to avoid all that - when rushing from anywhere where I had opened my brief case, I checked the contents first and made sure my keys were still in there.
Don't even know how they managed to get up and walk out of the case. :-((
HardToLove
I learned the hard way (twice) about locking my keys in a running vehicle far from home when I was a long haul driver (got lucky both times thanks to AAA). I started carrying two full sets on me at all times, and still do today. Maybe we should write a comedy skit?
new highs - 39
new lows - 230
We could still get another legit signal today if the market were to bounce sufficiently and inspire about 48 new highs. That wouldn't be difficult I don't think... if the market were to burst higher.
If it happens, the discussion about whether or not the recent signal of May 31st was the second signal that confirmed the April 15th signal will become a moot point, because at the end of today we will have the second HO signal in 4 calendar days. Today's signal will therefore give us only the second "official HO signal" since August of 2010. In other words "it's game on" and we're about to get a rather rare opportunity to see if the HO still works in the face of central bank intervention. I honestly don't know what to think about that.
EDIT: Here they are... 81 now and counting. But now 86 are required, lol.
It would really tick me off if it falls short because surely one of the other analysts out there will declare that it happened. What's a guy to do? Do we adhere to the rules so strictly that we ignore such an incredibly near miss? Or do we call it? After all, there is so much subjectivity connected with the argument about the big increase in bond funds and ETFs over the past few years that one could argue that that subjectivity alone is a greater factor than missing by just one or two new highs. Geez... what a nuisance. I'm seriously torn about what to do here. Hopefully the market will just shove the new highs up to 90 and I won't have to worry about it.
Amazingly, the Nasdaq is looking stupidly strong with 136 new highs and only 13 new lows. Gawd almighty, what in hell is going on here? Those numbers for the $NDX have been stuck there for a long time. I'm wondering if they are the numbers from yesterday? Doesn't matter really... we're not focusing on the $NDX anyway. Just an interesting observation.
So while all the economic data suggests the fire should burn lower (equity prices), QE keeps shoving Fed notes into the system, which causes other Fed notes in the system to not need to chase bank deposits, so they chase risk instead, hence BB grabbing the taxpayer by the legs and pumping them so they blow on the fire thus heating it back up even though the fuel supply (economic data) suggests the fire should be colder than it is.
:-)
EDIT: Here's a link to that article for those interested.
http://tinyurl.com/n8j...
But it can't be helped - thank you big time!
HardToLove
You know, I even commented to a friend on my own blog the other day that the only reason I still write about the HO at all is "out of respect for my old friends over at S.A."
It's true... if it weren't for you people who read this insta, I would have quit writing about the HO a few years ago. In fact, I wouldn't even have started writing about it if J.L. hadn't said that he always wanted to know "somebody who knew about the HO", or something to that effect. I started commenting on it only because John wrote the first chapter (and several others thereafter) on the HO, and then he just handed the ball off to me. It's John we should thank really. Man, that was about 4 years ago. Who could have known it would run this long?
In any case, on the bright side... the odds are 77% that the big crash "is not" going to happen. And the odds that we'll see a pullback no larger than 8-10% are 50/50. Unfortunately, at some point in time there is a great reckoning that's going to have to happen. I don't know any better than the next guy whether or not we're there at this time. But I think we all have to recognize that at some point in time we're going to have to deal with history face to face. Some day the market top is truly going to be behind us where it will stay for years and years because whether we want to admit it or not, inflation (money creation) just can't go on forever. I have no idea whether we're there yet or not. Maybe another year into the future? That's entirely possible.
I thank you as well my friends. You've always been here to read this crap, lol.
Hmmm....so which kind of pullback are we going to get?
My bet is on the "meaningful decline" of 5 to 8%. If the FED and Central Banks weren't involved, I might choose a larger correction, but I'm already seeing a lot of juicy dividend plays, which have been hammered, that are looking more and more juicy.
I've got a real sense that you're probably right. The central banks are absolutely determined not to lose control and the only way the markets are going to fully crash is if they have lost control. I just don't get the sense that we're there yet.
With all the respect for you that I can muster, I don't think the dividend situation would make a hill of beans of difference when "the time comes". "The" crash would be for reasons so bad that most of us couldn't even contemplate the final result. I just don't think we're there yet. But some day, when the crash finally 'does' happen, we would end up with dividends a whole lot "more juicier" but stocks would plummet anyway. There would sure be some great buys at the bottom, that's for darned sure... as long as the corporations could still pay big dividends after a 'severe' pullback.
Even just looking at the charts, and at the near parabolic pattern to a lot of them, I just don't see a top yet to be honest. I'm thinking about the old saying that "tops are a process, bottoms are an event". But then I look at a chart of the Nikkei and I can envision a top in that market that is "an event". So hard to know man, but I'm just not envisioning the big crash coming out of this particular HO event.
2016, an election year, may in and of itself, be the cause.
This particular correction we are in, seems to have all the makings of investment houses taking profits on long positions held for at least two years.
In my own tiny little world, I own a tiny little bit of an MLP named Enterprise Products Partners (EPD). It has gone from $20.69 in March of 09', to $38.55 in Sept. of 2010, where I added, to as high as around $63.00 last month. The yield is down to 4.52%, which does not qualify as a high yielder in my eyes. So I sold today at ~ $58.50.
There a lots of reasons/factors why the market is retracing, and I believe one of them, under the guise of "sector rotation," is that investment houses and pension funds are realigning themselves away from once high yielders, turning profits into cash, only to get back into other high yielders once the dust settles in a month or three.
http://on.wsj.com/ZOEnWt
Do you have any idea how rewarding I find it that Mr. Meikka confirms that the only two signals recently are the ones I reported on. HOOWAA!
Unfortunately though, that article is a debunking article cleverly disguised as an interesting human interest story. Just read the nonsense Adam Grimey said.
http://bit.ly/19McBeW
HardToLove
http://seekingalpha.co...
It's actually possible that there might only be a single signal without any confirmation in the form of a second signal, and yet the market could decline any amount... 20%, 30%. And the next time we could theoretically see 6 or 7 HO signals and the market only falls by a small amount, like 5% for example.
A good analogy would be a pressure gauge on a boiler. Once it goes into the red it's saying "there's likely to be an explosion". But that gauge has no way of giving advice about how big that explosion might be... just that the odds are high that there is going to be one. Maybe just a seam on that boiler gives way and there's a heck of a lot of 'bleeding off'. In that case the 'explosion' might only be 3 or 4%.
Had the HO gone off it would of course have just been another redundant signal. But the message is the same... with these phoney rallies the market internals are actually deteriorating at a rather alarming rate. As Forrest Gump said: "To each, his own caca smells sweet. Do not be fooled by this."
http://bit.ly/11Mz0Bn
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