Technical Tea Leaves v. Serious Economists ~ The Risk Averse Alert

Friday, April 17, 2009

Technical Tea Leaves v. Serious Economists

For the record the current trend that's your friend is no fair weather chum...


Tell me, what do you see first? The advance off March '09 bottom? Or a diving 200-day moving average?

It better be the latter because this is the trend. Plain as day, too. No need for confusion over noise cheering on recovery. The trend clearly remains down.

This adequately settles, then, the "new bull market" versus "bear market bounce" debate surrounding the advance off March '09 bottom. One only wonders how the Hallelujah Bernanke crowd will defend its position once the trend reasserts itself (which I believe is rather likely, sooner or later, over the next year or so).


So, how about another ten days like the last ten? If so, there's not much upside remaining.

When does the big stress test day arrive? I think it's Monday, May 4th. Might be a good "sell the news" moment to remember.


If you go back to the same chart presented in The Cramer Bull Trap, you see VIX RSI proceeding as expected. There's reason to believe this derivative measure (RSI) of a derivative (VIX) might register its most overbought reading in a year before volatility picks up again. Beyond this, though, there is every reason to be on the lookout for trouble ahead.


Derivative measures on the CBOE Put/Call Ratio still remain similarly positioned to recent periods when the market was advancing. Thus, further gains appear in store. Again, though, judging by relatively low Put/Call Ratio readings of late, an inflection point — a reversal of fortunes — could be nearing.


Just how close the market might be to turning over is revealed by another derivative measure (MACD) of a derivative (the NYSE High-Low Differential). Might another two weeks an upwardly biased market be a stretch? Yes, maybe.

Whatever the case my eyes are wide open. Which is more than one can say about so-called "serious economists" Barton Biggs sites...

Yes sir, it still is all about greed and fear.

(Always was. Always will be.)

Fast Money
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