"As a technician, I feel that there are few analysts that offer value for me, but you do. Your work on Gold ratios has helped my analysis greatly." --Jordan Roy-Byrne, CMT (The Daily Gold) 4.9.10

Monday, November 21, 2011

A trip down memory lane with the S&P 500

The daily EMA 400 generally supported the great secular bull market that ended in 2000.  Then it supported the market routinely during the cyclical bull market ('03 to '07) created of Alan Greenspan's desperation (and a hell of a lot of inflation).  Now, as the law of diminishing returns threatens the inflation fueled construct post 2008, this mess is in danger of losing the EMA 400 for the second time.  QE2 temporarily fixed the first issue.  What now?  Are times not much more shall we say, complex now?

Is the vampire going to get an invite?  Will he respond even if he does?  The blue arrow points to something that must be reversed or else the market is vulnerable to some very nasty - as in potential 2008 variety - downside.  Laugh at Prechter all you want, but this chart is not lying.  A structure held together with debt is coming unglued.  If this is not reversed soon, we are going to look back at SPX 1220 as a kiss goodbye to the post '08 crash party.

Nobody can predict what is going to happen, but this is why I harp on the risk management and capital preservation thing.  The ratio of gold to silver is tool #1 in this regard.

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at 11/21/2011 01:34:00 PM
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4 comments:

  1. The problem I have is that everyone in the world is seeing a replay of 2008 in 2011's chart.

    ReplyDelete

  2. I have had the same problem. But technicals are technicals and they don't care about our contrarian instincts. This is an emotional week w/ a holiday. Anything can happen, but this needs to get reversed near immediately.

    ReplyDelete

  3. If everyone's seeing a replay of 2008 in 2011's chart, then (1) it could be a self-fulfilling prophecy, (2) everyone's getting worked up over nothing, and/or (3) policy makers can see it too and will step in with your old standby "Inflate Or Die" before things get too bad.

    Holy crap! No wonder the market's so volatile! And I thought it was just because all the professional traders are snorting coke.

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