Silver/Gold ETFs
Ratio (SLV/GLD) turned systematically neutral on 10/18/12 when it crossed below
its 50-day SMA.
NASDAQ 100/S&P
500 Relative Strength fell below its
lows of the previous 8 months on 10/18/12, there by confirming a downside
correction.
The Technical Snag ,
A Mistake by one of the Firms Operator , Dealer
& Human Error Was just a 'HEAD' given FOR TRADER'S to FEED ON … All those
Bumpy Rides & prices Holding without correcting or giving a Break out Either
way ..referring to Trend Without Opinion
from quiet some time & alarming degrees of optimism were all Symptoms that something is about to change & Its
not going to be GOOD …
How the 'OPERATION TWIST' Unfolded itself.
Over the first 3
trading sessions this week, the major stock price indexes recovered normal
fractions of their previous losses since their peaks
on 10/5/12, and some even appeared to be within striking distance of the year's highs. The rally that ended on 10/5/12 resulted in a lower high than the rally that ended on 9/14/12 (the day after the Fed's QE3 generous gift to banks). If
Thursday's downside reversal proves to be the end of a 3-day run up, that might
be interpreted as a failed rally attempt
and a second lower high. That might lead
the bulls to question their assumptions.
The technical
condition of the stock market does not support the excessive optimism of the bullish majority of stock investors and
traders. Fed and ECB plans to buy bonds in unlimited
quantities (with fiat currencies printed
out of thin air and backed by nothing but a theory and a hope) do not
guarantee that stock prices will continue to rise, especially now that the news
is out. Typically, Each & Every Action is
followed by Equal & Opposite Reaction , and so a downside correction seems overdue. Choosing
safety over risk still appears to be the most reasonable approach for
conservative traders and investors.
CONTRARY THINKING
Investor sentiment
data recently indicated alarming degrees of optimism
and bullish complacency as the stock
price indexes rose above their 2012 market highs. Elevated levels of optimism are bearish because when
the majority is extremely bullish, investors are already fully invested in the
market.
The pendulum of emotion tends to
swing too far in one direction, but market mood always reverts to the
mean, as it did during the -10%
April-June 2012 downside price correction for the stock market.
The CFTC's Commitments of Traders report for stock
indexes shows smart professionals selling heavily to dumb speculators. Large commercial hedging
firms enjoy an enormous inside informational advantage over speculators, who
are usually wrong at major market Turning points.
The
current maximum bearish reading indicates that a major top is brewing and next
move should be down big.
Large speculators hold a record net-long position in futures and
options
According to the
CFTC's Commitment of Traders report. Large Speculators, which are mainly hedge funds, are trend-followers, and their
aggregate position usually becomes extreme
near market reversals.
ONE HAS TO RECALL
Hedge funds and equity mutual funds both lost
money last year, 2011.
Sentiment Trader.com notes that 67% of the
"dumb money" is bullish, compared to 29% of the
"Smart
money". At
such readings in the past, the stock market suffered a 3% to 8% downside correction spread out
over a few weeks.
AAII Sentiment shows that individual investors were recently
extremely bullish
Investors Intelligence Sentiment confirmed that stock market
newsletter advisers were recently extremely bullish.
OBVIOUS !
"Once everyone who is going to buy has already
bought, stocks are vulnerable to a downside shakeout "
DEMAND & SUPPLY
NYSE Short Interest fell by more than 884 million
shares from June to August, a decline of 6%. This source of short-covering, potential demand
for stocks has diminished.
The ICI reported $62.6 billion has been withdrawn
from domestic equity mutual funds so far in 2012. This is another confirmation that supply is
greater than demand for stocks
Bumpy
Rides & prices Holding without correcting or giving a Break out Either
way ..referring to Trend Without Opinion
Something is about to change & Its not going to be GOOD …
Reporting for
MarketWatch.com, Mark Hulbert wrote,
"To be sure, the stock market didn't decline in
September, notwithstanding the insiders'
selling. But, since historically the insiders have been more right than wrong,
it seems risky to bet that the market will continue to escape the bearish implication of their behavior.... Note
carefully that the insiders' bearish behavior
doesn't necessarily mean the bull market is now over. However, to the
extent the insiders turn out to be as right as they were on other recent
occasions when their behavior was as lopsided on the sell side, we should be
prepared for a notable market decline."
Of
course Mr.Hulbert We are in a Long Term Bullish Trend but Before that Bullish Ride A correction is
Necessary & also Healthy in a SMART
money's Perspective Who is Sitting on Cash ..
The ICI reported $62.6 billion has been withdrawn
from domestic equity mutual funds so far in 2012 &Corporate insiders enjoy an enormous inside
informational advantage.
In One of the Weekly Insider , Reporting for
MarketWatch.com Had also Reported that
Corporate insiders are
extremely bearish. Insiders
sold 5.97 shares for each share bought in September--up from 1.6-to-1 in May
2012, up from a low of 1.04-to-1 in October 2011, and up from a long-term
average of 2.25-to-1. For Nasdaq-listed stocks, insiders sold 6.17 shares for
each share bought.
CONCLUSION
The odds of a stock market correction are now quite
elevated Watch out for a correction --
or worse.
A LITTLE HINT FOR MCX
TRADER'S
Are
we heading to fill the Gap '382' in
Copper ? Traders are advised not to trade with their often worked logic COPPER = CRUDE OIL , they move together ..But
there are Certain Times which changes the whole saga & often Trader's get
slaughtered with their stubborn thoughts & actions without being Flexible….
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