Monday, October 24, 2011

Update On Unmanipulated Equity Advance-Decline Data

I'm not going to say the unmanipulated advance-decline data I occasionally show is always going to divine the future, but it always has.   And in a world of Frankenstein finance, that is its objective.

This data point hit its peak post the 2009 crash lows in April/May of 2010 and has been deteriorating ever since.   We see it is currently in a very controlled uptrend over the last handful of weeks as the market has made a massive rally in that period of time.   The controlled nature of this move is highlighted within the very tight, rising, blue linear regression channels.  This compares to the much broader and volatile channels highlighting its downward collapse over the last year. 

A few days before commodities and equities started collapsing some months ago, we remarked that the S&P could rise to approximately 1250-ish but that the next major move would likely be down.  The market, especially commodities, then imploded.  The S&P fell a little more than ten percent in a handful of weeks.  It appears the market is trying to now crawl back to test that 1250 level that was subverted, possibly prematurely.  This morning we are almost at the 1250 level.  In the next week we shall see what happens next but this very tight upward channel in advance-decline data will eventually broaden out.  At the least, that means this contrived, low-volatility derivatives-driven (leveraged) rally will slow.    2011-10-21_1902

posted by TimingLogic at 10:38 AM

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