NASDEATH and Other Pigs for Slaughter ~ The Risk Averse Alert

Friday, August 17, 2012

NASDEATH and Other Pigs for Slaughter

While we're on the subject of dead animal spirits, the rotting carcass called NASDAQ says it all...

$NAAD cumulative

NASDAQ's multi-year death spiral continues. The exchange's relentlesly declining cumulative advance-decline line reveals animal spirits cannot be buried deeply enough. The greater preponderance of issues traded on NASDAQ are being supported by ever fewer darlings. Once these few give out, as is all too likely, NASDAQ 300 (a long-held target) will move squarely into the cross hairs.

Mark these words: NASDAQ's advance-decline line death spiral most certainly suggests that, the rate at which NASDAQ's Composite Index is likely to descend in all probability will defy today's wide-eyed optimists whose thinking evidently is hopelessly stuck in 1999.

NASDAQ McClellan

Just how soon could begin NASDAQ's historic swoon (you thought 2000-2002 was bad?) is revealed above by NASDAQ's Summation Index. Further raising a red flag is today's new home of irrational exuberance: the junk bond market.
“It has become such a feeding frenzy,” Bonnie Baha, who helps oversee $40 billion as head of global developed credit at DoubleLine Capital LP in Los Angeles, said in a telephone interview. “It’s almost like credit fundamentals don’t even matter in markets like this. You’ve got too many dollars chasing too few bonds.”

Yield hungry pigs ready for slaughter, sir.

Fast Money
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