The title is a paraphrase of “the scariest gold chart in the world” (target below $400) someone sent me in 2009, just before the gold price began its $900 per ounce upward journey. So that’s the contrarian caveat and indeed, I hesitate to write bearish things at a time when small speculators are way too short the market and everybody already seems to know how bearish things are.
But the chart is the chart and without further ado, meet the scariest US stock market chart in the world. I was ready to try a long on the SPY yesterday, but decided to wait because of this (being posted here because it never made it into NFTRH 381’s already bloated 42 pages) chart and some others in the face of which I just could not rationalize a bullish stance. Capital preservation is job 1 now, not bullish speculation. I’ll let the bulls prove something first.
In my post of January 8, 2012, there was much talk of a potential recession coming to Canada.
Since then, you can see from the 5-Year comparison chart below of Canada’s TSX and EEM (Emerging Markets ETF), that they have traded, essentially, lock-step. Both are in bear markets since their highs in September 2014 — the TSX is -20.8% and EEM is -33.79%.
I’ve touted Pier One many times as a short idea (recently, here) since the analog was so breathtakingly good. May I present to you an update of my goofy idea:
Nearly five years ago, I wrote a post called Color and the Mania in this Valley (you might want to re-read it; I think it’s pretty good). In it I mentioned how, many years earlier, a company opened up adjacent to my start-up, Prophet:
Next door to us was a startup called DoDots. They appeared out of the blue and had $20,000,000 dropped into their laps for a product which – as far as I could tell – was absolutely useless. It needled me that someone could dream up an idea – – and, in my mind, a really lame idea – – and, without a single dollar of revenue, let alone profit, get a check for twenty million dollars to pursue their “dream.” I admit I was a little jealous at not having that kind of cash at my disposal, particularly since I had worked hard on a legitimate enterprise for years.
Well, here we go again.
The central bankers (this time, by way of Draghi) have jawboned the market into another explosive rally. I’d like to point out something that may be of interest to you, however. Kindly look at the chart below: