More Market Observations 06/06/06 - Mark of The Beast
Peaks: 01/11 NDX; 01/27 SOX; 04/21 NAZ; 04/25 XOI; 05/05 RUT; 05/08 MID, TMWX, SP500; 05/09 OEX, NYSE; 05/10 DJIA; 05/11 XAU.
The NDX and SOX peaked earlier in the year, but hit secondary peaks around 05/11.
Most of the indices peaked around 05/11, with the NAZ, XOI & RUT breaking down slightly earlier. Thus, Tech, Oil & Small Caps gave the early indication for the market direction.
Severity: The DJIA has had FIVE Triple Digit DOWN days since the breakdown, ONCE back to back, and TWICE greater than 200 points: 05/11 -142; 05/12 -120; 05/17 -215; 05/30 -184; 06/05 -200.
Support: The NDX, SOX & NAZ are all sitting on or clinging to 400DMA. The rest of the majors are all sitting on or clinging to 200DMA.
Pattern: From the fall on or about 05/11, there is a definite pattern showing in all indices. The 1st wave DOWN ended 05/24, then a slight 2nd wave UP ending 06/02.
It just so happens that the 200DMA & the 400DMA (SOX, NDX, NAZ) are the lines in the sand for what would constitute a 3rd wave DOWN.
Afficionados of Elliot Wave say that the 3 DOWN is usually where duration and degree are the largest. (i.e. it can be long, big, nasty and if you think the drop from 05/11 till now was BIG, guess again.)
The Lines in the Sand: NDX 1555, SOX 455, NAZ 2135, XOI 1035, RUT 695, MID 740, TMWX 12550, SP500 1245, OEX 572, NYSE 7925, DJIA 10875, XAU 133.
This week: Wen 7 Options Unwind, Thu 8 10 yr note auction
06/12: Tue 13 PPI, Wen 14 CPI, Fri 16 Options Expiration
06/26: Tue 27 2 yr auction, Wen 28 5 yr auction, Thu 29 GDP & FOMC announcement
Last time: Add Six weeks and two days to the BEGINNING of the yield curve inversion 01/27/2000, this leads to the beginning of the equities crash on 03/10/2000.
This time: The 1st yield curve inversion with 2 yr above 10 & 30 both END on 03/07, add 6 weeks and 3 days, the NAZ hits its peak on 04/21, then its all downhill from there.
This time: The 2nd yield curve inversion with 2 yr above 10 & 30, both END on 03/29, add 6 weeks and 1 day and you get 05/11, the beginning of this down cycle.
Last time: The NAZ took 5 weeks to plummet to the 200DMA, then 5 months of straddling in a flag waving pattern until the bottom truly dropped out. The DJIA had already fallen to 200DMA when the NAZ begin the fall.
This time: The NAZ has dropped to 200DMA in 3 weeks, and 400DMA in 5 weeks. The DJIA has taken almost 4 weeks to drop to 200 DMA.
This time: The indices levels are higher with the exception of tech (NAZ, SOX, NDX) and the DJIA which came only 80 points shy of the previous peak.
This time: The RUT & MID where the bubble truly exists took 13 trading days, or less than 3 weeks to drop to 200DMA.
Other differences: Oil is $70 a barrel, not $8, the dollar is worth 45% less than in 2000, there is a loud hissing sound from a massive real estate bubble upon which 40% of the "new" economy is based.
There are far less decent jobs available and our manufacturing base and durable economic core has been completely hollowed out. i.e. there is nothing to transition to in the event of an economic slowdown.
With dwindling liquidity as the multiplier effect is working in reverse, the PPT must make a choice: save Bonds & Dollar keeping interest rates low, and the housing market consumer afloat; Or save equities & commodities.
When the Fed pauses, the dollar could get another major debauching and bond yields (interest rates) would jump at the high end. This would be the straw that breaks the camels back.
My sense is that the PPT will attempt to rescue the bond & dollar market in an effort to keep the housing ATM open, while letting the equities and commodities chips fall where they may.
The NDX and SOX peaked earlier in the year, but hit secondary peaks around 05/11.
Most of the indices peaked around 05/11, with the NAZ, XOI & RUT breaking down slightly earlier. Thus, Tech, Oil & Small Caps gave the early indication for the market direction.
Severity: The DJIA has had FIVE Triple Digit DOWN days since the breakdown, ONCE back to back, and TWICE greater than 200 points: 05/11 -142; 05/12 -120; 05/17 -215; 05/30 -184; 06/05 -200.
Support: The NDX, SOX & NAZ are all sitting on or clinging to 400DMA. The rest of the majors are all sitting on or clinging to 200DMA.
Pattern: From the fall on or about 05/11, there is a definite pattern showing in all indices. The 1st wave DOWN ended 05/24, then a slight 2nd wave UP ending 06/02.
It just so happens that the 200DMA & the 400DMA (SOX, NDX, NAZ) are the lines in the sand for what would constitute a 3rd wave DOWN.
Afficionados of Elliot Wave say that the 3 DOWN is usually where duration and degree are the largest. (i.e. it can be long, big, nasty and if you think the drop from 05/11 till now was BIG, guess again.)
The Lines in the Sand: NDX 1555, SOX 455, NAZ 2135, XOI 1035, RUT 695, MID 740, TMWX 12550, SP500 1245, OEX 572, NYSE 7925, DJIA 10875, XAU 133.
This week: Wen 7 Options Unwind, Thu 8 10 yr note auction
06/12: Tue 13 PPI, Wen 14 CPI, Fri 16 Options Expiration
06/26: Tue 27 2 yr auction, Wen 28 5 yr auction, Thu 29 GDP & FOMC announcement
Last time: Add Six weeks and two days to the BEGINNING of the yield curve inversion 01/27/2000, this leads to the beginning of the equities crash on 03/10/2000.
This time: The 1st yield curve inversion with 2 yr above 10 & 30 both END on 03/07, add 6 weeks and 3 days, the NAZ hits its peak on 04/21, then its all downhill from there.
This time: The 2nd yield curve inversion with 2 yr above 10 & 30, both END on 03/29, add 6 weeks and 1 day and you get 05/11, the beginning of this down cycle.
Last time: The NAZ took 5 weeks to plummet to the 200DMA, then 5 months of straddling in a flag waving pattern until the bottom truly dropped out. The DJIA had already fallen to 200DMA when the NAZ begin the fall.
This time: The NAZ has dropped to 200DMA in 3 weeks, and 400DMA in 5 weeks. The DJIA has taken almost 4 weeks to drop to 200 DMA.
This time: The indices levels are higher with the exception of tech (NAZ, SOX, NDX) and the DJIA which came only 80 points shy of the previous peak.
This time: The RUT & MID where the bubble truly exists took 13 trading days, or less than 3 weeks to drop to 200DMA.
Other differences: Oil is $70 a barrel, not $8, the dollar is worth 45% less than in 2000, there is a loud hissing sound from a massive real estate bubble upon which 40% of the "new" economy is based.
There are far less decent jobs available and our manufacturing base and durable economic core has been completely hollowed out. i.e. there is nothing to transition to in the event of an economic slowdown.
With dwindling liquidity as the multiplier effect is working in reverse, the PPT must make a choice: save Bonds & Dollar keeping interest rates low, and the housing market consumer afloat; Or save equities & commodities.
When the Fed pauses, the dollar could get another major debauching and bond yields (interest rates) would jump at the high end. This would be the straw that breaks the camels back.
My sense is that the PPT will attempt to rescue the bond & dollar market in an effort to keep the housing ATM open, while letting the equities and commodities chips fall where they may.
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