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A reader recently shared with me some charts which I find remarkable. The point is a simple one, as is the presentation.
Below is a monthly chart of the Dow 30 Industrials. Take note of the two study panes beneath it: the top is the stochastics, and the bottom is the MACD. In particular, notice the line markups on the indicators showing the pattern breaktop (stochastics) and the non-confirmation divergence (MACD). Click on the chart to see a bigger version.
“The Harbinger of Doom”? Of course we (well, the media) are talking about the yield curve AKA Amigo #3 of our 3 happy-go-lucky riders of the macro. I have annoyed you repeatedly with this imagery in order to show that three important macro factors needed to finish riding before situation turns decidedly negative.
Amigo 1: SPX (or stocks in general)/Gold Ratio
Amigo 2: 30 Year Treasury Yield
Amigo 3: Yield Curve
In honor of Amigo 3’s arrival to prime time let’s have a good old fashioned Amigos update (going in reverse order) and see if we can annoy a few more people along the way. 🙂 (more…)
SPX retested the retracement low this morning, so the Three Day Rule target has been reached. This is a return to form after the first fail on this stat since the start of 2007 in April/May 2018. Still the strongest stat I follow. So what now?
From a cycles perspective there is a cycle high window in January, then a big cycle low in May 2019 at which we are thinking we should see the main low for this move. The ideal target for that low then would be a test of rising megaphone support from the 2011 low to be hit in the 2370 area, which would also be at the 50% retracement of the move up from the 2016 low. There are two very decent looking options for reversal on the way.
The first is in the the 2655-70 area, from where we could see a reversal to retest the high, to set up a double top looking for the main target area. (more…)
There are a couple of seemingly unrelated events approaching. First, in a few weeks, there is the 17th anniversary of the terrorist attacks of September 11 2001. Second, it seems nearly inevitable that Amazon will become the world’s second trillion dollar company, following in AAPL’s footsteps. I guess they are going in alphabetical order.
I was curious what the cheapest price Amazon was after the Internet bubble burst. It turns out it was on October 1, 2001. I was struck by that date, because it was so soon after the attacks. I decided to look at what Amazon did when the market reopened after the attacks, and I’ve tinted it below. As you can see, it’s pretty much a blip. Within a couple of weeks, it got down to $5.51, and it hasn’t looked back since. (It’s approaching $2,000 now).
