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I’m sure you’ve all been following the news out of G20 (although perhaps not as obsessively as I have). I’ve also been looking at other sites where traders are chattering on about it. The widespread conclusion seems to be that we’re going to go roaring higher into the new week.
As we awaiting whatever happens when the bell opens on Monday, I thought we’d take some time to look at the important FAANG stocks and their price gaps. Now when I mention “price gaps”‘, in some cases they are truly gaps, and in others they are simply crucial price levels. If any (or all) of these are crossed to the upside, it means this group is genuinely healing. If not, the recent strength could be nothing more than a countertrend blip. So let’s go through them……….
First, there is the scandal-plagued Facebook (for each of these stocks, I have deliberately done a mouseover where the crucial price level is, so that is highlighted in each chart):
“My mind wanders” – – Sheriff Ed Tom Bell, No Country for Old Men
I was driving northbound on 101 on Saturday morning, taking one of my children to an SAT test, when I noticed a flock of birds in the air. There were dozens of them, and they all moved in that graceful fashion that you’ll often see in a flock.
I started to think about how similar this behavior was to the individual participants in the markets. The term for this behavior – murmuration – has a surprising amount of information behind it. I found this quote interesting:
The researchers derived a mathematical description of how a turn moves through the flock. They assumed each bird had a property called spin, similar to the spins of elementary particles in physics. By matching one another’s spin, the birds conserved the total spin of the flock. As a result of that conservation, the equations showed that the information telling birds to change direction travels through the flock at a constant speed—exactly as the researchers observed. It’s this constant speed that enables everyone to turn in near-unison, the team reports online today in Nature Physics.
This graph from SG Cross Asset Research/Equity Quant by way of Kevin Muir’s article attempts to show that the accumulated rate hike tightening and “shadow” tightening as a result of QE suspension has now met or exceeded the levels that preceded the last two economic recessions. (more…)