Friday, March 04, 2011

Equity Market Advance-Decline Data Update


Above is the advance-decline data that I have shown before. (And the S&P 500 for perspective)  It attempts to back out the manipulation of Frankenstein finance.  I pulled this data a handful of days ago so it has actually deteriorated even further.  We have shown this a few times since the mini-crash last April-May.  (We have also shown another volume algo which imploded on an anticipated turn date last September and has also never recovered.  Btw, rally volume before these last few days of weakness has been the lowest this year confirming our imploding volume cycle count algorithm post some weeks ago.)  The above advance-decline data showed temporary weakness well before the flash-crash last year.  It was flashing a huge warning sign when sliced into three day segments as I do for myself.   As an aside, I thought the government was supposed to investigate the mini-crash.   But seriously.   Are you kidding me? 

Since the flash crash, the above advance-decline data has not recovered.  And except for a temporary short covering rally(manipulation), it is languishing at levels near the market lows of last summer.  In fact, this data would likely be making new lows except for short covering.  The data is already back to the June of 2009 levels.  This while the market is making new highs.  This is the first time ever that has happened using my data set that goes back quite a few decades.  

Something broke last April-May and while no one can remark with complete certainty what that was, I suspect it is what we have said was going to happen countless times since the 2009 bottom.  That is, Wall Street has traded everyone out of the market and remains its sole main liquidity provider.   That means the major source of liquidity is now derivatives and most, if not all, firms are on the same side of the trade.  I believe there is ample evidence that markets would have already collapsed were it not for their ability to manufacture free money to manipulate markets.   But that really shouldn’t be any great epiphany because JP Morgan, Goldman, Morgan, Bank of America and other major Wall Street firms wouldn’t exist today were it not for trillions of dollars of Federal Reserve backing for their fraud. 

Since the April-May peak, the U.S. market has gone higher while most global equity markets and debt markets have not.  As we have said before, that is because financial fraudsters are repatriating hot money and the herd of financial fraudsters are now back focusing on America. 

As we have remarked quite a few times, this is a sick market.  It isn’t based on any kind of sustainable reality.  But CNBC sycophants find plenty of Wall Street idiots telling us this is a great time to buy.   The same people who are always telling us it’s a great time to buy.  When you are charging people fees for money under management, it’s never a bad time to start extorting fees better known as dollar cost averaging.

Fundamentals of this market are not confirming any of the pricing action.   Neither is unmanipulated advance-decline data that is based on true supply and demand characteristics of the market rather than leverage and derivatives which clearly are Orwellian manufactured views of reality.

I want to pull forward a remark we made on here some time in 2009 or 2010.  I can’t recall when and I’m too lazy to look it up.   This is an environment where financial markets are in unprecedented territory.   With more and more rigging of markets, the rise of Skynet (Frankenstein computer-based trading) and manipulation of reality by Wall Street’s Federal Reserve-enabled freak show, we have greater and greater instability building into markets. (aka unrealized volatility or as we wrote before the 2008 collapse, rising compression.)

  There is a little of the Butterfly Effect in financial markets with so much  unnecessary/unproductive financial market complexity and manipulation.  (Or as we have remarked in the many genetically-modified food posts, when will Pandora’s Box be opened?)   We know some of the macro outcomes, but we can only make reasonable guesses at what will push the system over the edge or be the trigger.   Especially when nonlinear and unexpected events around the world unfold.   Wall Street idiots live in a linear world created by their own grandiose self-deceit.  A fantasy world void of the volatile reality around us.   And as we have said, as this view starts to again fail, this will likely be the demise of politicians who lied to the American people about reform and instead are pinning their election hopes on money received from fraudulent Wall Street profits.

posted by TimingLogic at 11:37 AM

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