After I did my Whole Foods Bear Market post late last month, I started hunting around for other interesting parallels: that is, stocks which had topped out around 2006-2007 and then went into a complete, utter, and stunning free-fall. The additional requirement, of course, was that they be exhibiting a topping pattern as of right now. My thesis is that these are sample “canaries in the coal mine” which illustrate far better than the insanely-manipulated /ES market how unhealthy equities are.
First is Pier One, that purveyor of throw pillows, scented candles, and coconut monkey dolls:
September and Q3 are officially in the books.
Summer bears are likely mostly happy, Dennis Gartman’s outlook on the S&P 500 notwithstanding.
There’s been a lot of talk about is this more 2011, or 2007/2000?
Calling Doc Brown. Fire up your flux capicators to 1.21 gigawatts, as we take a trip back in time.
1. SPX analog vs. 2011 on the monthly chart
Want to see something really cool? It occurred to me that Whole Foods topped out well before the S&P did back about eight years ago. Likewise, Whole Foods (where my family drops thousands upon thousands of dollars every year) topped out well before the most recent bull market termination. Out of curiosity, I measured the distance, and they’re just about identical.
This is the kind of thing that approximately no one else on the planet would think about, because, sorry soul that I am, after looking at millions of charts, one starts having insights that don’t require research. They simply occur to me. So: voi-freakin’-la.
I’ve mentioned Pier One (PIR) on Tastytrade and here on Slope many times over the past year as a prospective short, because it has an insane parallel with its performance during the financial crisis. We appear to be in full swing now, and I suspect – as before – this purveyor of tiki torches, throw pillows, herbal tea, and various and sundry crap from around the world will be heading into penny-stock-land once more.
The Alcoa Analog (read about it here) was one of the cleanest trades I’ve suggested all year. It preceded a virtually uninterrupted plunge lower. I assumed that once it reached its long-term trendline, it would find support and gain strength. Nope – check out the chart below. The price fell well below the trendline, and, wouldn’t you know it, the trendline is now acting as resistance. It looks like Alcoa is going to remain quite ill.
The best thing about weekly scheduled “news” events is that they can offer volatility and entertainment. The worst thing is that unsuspecting retailers regarding them as actual “news” and don’t recognize news events and scheduled releases for the scams that they truly are.
This week’s exhibit in the you-can’t-make-this-stuff-up category is none other than light, sweet, and lately crude West Texas Intermediate.