Tuesday, September 11, 2012

Apple Stock And Equity Market Update

Let's look at two graphics today.  I don't think I have ever mentioned On Balance Volume or OBV.  I don't use it often but Joe Granville is the creator of this technical indicator.  Essentially it sums upward volume for any index, stock, bond, commodity or whatnot.  The On Balance Volume for Apple is on the top chart and the On Balance Volume for the Russell 2000 ETF is on the bottom chart.   OBV is in red and the underlying security is in black.

Typically, one would like to see a trending OBV when a security or underlying asset's price is trending.  Be that upward or downward trending.  And, over time, ideally one would like to see higher price highs confirmed by higher OBV highs.  Ditto with new lows.

We see that Apple's OBV was only making marginal new highs as the stock was making new highs.  But, they were both confirming each other.  Since Apple's stock hit the mid 200s the stock has had a hard time making both OBV and new price highs.  As shown by the arrows, Apple's stock had quick, furious bursts that then were met with five to ten months of essentially chop.  Prices even dropped substantially at times.  Yet, they always remained in Apple's upward linear regression channel as show in blue.

This latest rally in Apple has made new highs but as shown in the blue box, OBV has lagged drastically.  In other words, it is not confirming the rapid price move upward.  A red flag.  That red flag is compounded by the fact that Apple's stock has blown upward out of its linear regression channels early this year.  This is indicative of extreme exuberance.  This is confirmed by the massive swell in derivatives associated with Apple's stock.  In other words, massive manipulation using leveraged free money from the master manipulator of Wall Street's con game, Ben Bernanke.  Apple's chart since the 2008 collapse looks eerily similar to the S&P from the 1982 bull market till today.  That too blew through its linear regression channels in 1995, a date that used to be talked about a lot on here for its substantial significance to turning points. It's no surprise that I expect both to resolve themselves substantially the same way. Down. And drastically.

The Russell 2000s OBV looks substantially different.  While OBV has trended with price, it hasn't been able to make a new high since May of 2010.  Long time readers may remember that after calling for a rally in early 2009, I surmised that rally may end in the second quarter of 2010.  While the rally didn't end in U.S. equities, that was the date of the flash crash.  Many data points peaked in May of 2010 including my "unmanipulated advance/decline data" that I have posted on here a few times.  June of 2010 was possibly one of the most important astrological turning points in the last 500 years.  Just saying.  Ha.  By the way, I have made a tremendous amount of accurate calls as it pertains to banking over the last seven years.  Not the least of which were a top within a few percentage points of the KBW banking indice's all time high before the 2008 crash, a call that financial markets were experiencing a Great Depression-type crisis just a few days before the financial market collapse in 2008, a bottom when CitiGroup was trading at 99 cents and a top again in the banking indice's earnings the first quarter of 2011.   All were accurate.  By the way, the KBW Banking Index peaked in May of 2010 and has never again reached those prices levels.  How did he do that?  Haha.  A little bit of luck, a lot of hard work and a little bit of magic.  But, as noted numerous times on here, Wall Street is likely finished.  Forever.  And, so is our banking system.  Forever.  Ultimately, that will be a very, very good thing if we can take down the beast and replace it with democratic banking.  I'm confident we will see that before I head for my dirt nap. 

Anyhow, even though the market has been rallying for the last four months, the OBV for the Russell 2000 has continued to fall until two weeks ago.  It has now made a mild pop as shown above.  Volume on this rally has been the worst in more than half a decade.  I have a post coming up on this dynamic but this is just a little teaser.  This market is running higher on Ben Bernanke's free money leverage and fumes. As noted numerous times over the past few years, much of that is likely because of repatriation of hot money from foreign markets.  ie, The criminals are bringing their money home after looting the world.  Bad news for the rest of the world as that monetary vacuum develops. 
posted by TimingLogic at 1:59 PM