Financial Services Industry Eats Clients

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By Biiwii

Ref: Why the big broker behind your financial adviser might be working against you

Tell me, which of them (the big brokers and investment houses) warned anyone about it being time to sell in 2000, or in 2007? There are exceptions out there, especially in smaller boutique style shops. But generally speaking, this thing we call Wall Street (big firms and the media that is their propaganda arm) exists to sell people the dream, then mark it up, front run it (in one way or another, legally or otherwise) extract fees from it and ultimately fleece it on the way down again (as regular people puke a tanking market and pay trading commissions for the privilege).

Here I cue up the old story about when I bought my first and only BMW (it was fine, but really it was not me) back in 2002. The deal was done and I sat with the business manager to finalize the transaction. He was a kid who had been fired from Merrill Lynch not 2 years earlier for keeping his clients in cash and totally safe at the market top. Problem was, he was not turning tricks, err I mean commissions for Merrill. All done.

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Chopping Around Near Support

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SPX made a low at 2045 yesterday morning and has been chopping around since. There is much talk that the low is in but I doubt it. My 5 DMA stat is expecting a break below the 2039.69 low and we haven’t seen that yet, and I still have possible bull flag support in the 2030-5 area. If that isn’t the reversal area I’d be looking down rather than up for the next targets. SPX daily chart:

150327 SPX Daily Broken Rising Wedge Options

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VIX’s Bollinger Band and the S&P

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Below is a chart that shows a nice correlation between the price action of VIX and SPY and their 20, 2 Bollinger Band. What the chart shows is that typically when the VIX hits the upper level of its Bollinger band along with SPY hitting the bottom of its BB, it marks a low in the market and a bouncing point. It is same on the opposite side of the Bollinger Band, so when VIX touches the bottom of its BB and SPY touches the top, this marks a top in the market.

VIX touched the touch of its BB yesterday but SPY did not. This pattern usually jump starts when both hit the BB and the VIX will typically hover around its BB for 2 – 4 candles. For SPY to hit its BB it would need to get to 203.38, which is right around the March lows. This correlation is pretty strong and it shows there is some potential for further downside but it is limited. Plus our signal is flashing oversold I know not music to Slopers ears so be careful!

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