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The hot spot
"McMillan Analysis Corporation
Breadth continues to struggle. Both breadth oscillators are on sell signals at the current time. The "stocks only" breadth oscillator fell into deeply oversold territory, which is a precursor to a buy signal, but that buy signal has not been forthcoming.
Lawrence G McMillan @optstrategist emailStocks have been down and volatile for the last week -- an unusual time of the year for that to be the case. The new omicron COVID variant is being blamed, but that was merely the catalyst for unleashing a lot of selling that has been building up. Market internals have been deteriorating for a long time.
The $SPX chart turned negative when it broke below 4630 on November 26th. In order for that chart to return to bullish status, $SPX is going to have to break out to new all-time highs (or work much lower and build a base). As a result, the entire area from 4630 up to the 4705 level is resistance. There is support in the 4500 - 4550 area. If that support gives way, there really isn't another support area until 4300, because the market rose so swiftly in October that it did not do any backing and filling to create support.
The equity-only put-call ratios are on sell signals and are racing higher on their charts, as put buying has picked up dramatically. These ratios will remain on sell signals as long as they continue to rise. Judging by the fact that previous buy signals this year (see Figures 2 and 3) have come at much higher levels, one would presume that these ratios need to get quite a bit higher before one can begin thinking about buy signals.
The market internals have been poor, and one might say they've been poor since about mid-June. One example is the put- call ratio signals above. But an even more glaring internal indicator failure is market breadth. Our breadth oscillators remain on sell signals, although they did drop into deeply oversold territory. But oversold does not mean buy.
This in the stock market decline has seen $VIX explode to the upside, and that has set off some reactions. First and foremost, the trend of $VIX is now higher. That is, the 20-day Moving Average of $VIX and also $VIX itself are both above the 200-day MA. That defines an uptrend for $VIX, in our terminology, and issues an intermediate-term sell signal. This crossover is marked on the chart in Figure 4 with a green circle.
There is one bullish thing that doesn't seem to be working too well: the usually seasonal pattern between Thanksgiving and the beginning of the new year. There is still time for this seasonal pattern to play out, although this is certainly its worst start ever.
In summary, we are no longer recommending a "core" long position
The boom seems to be concentrated in such a few areas. Just on that last comment that compared current conditions to 1929,Last Friday, December 3, 2021, the Nasdaq stock market recorded 12 stocks setting new 52-week highs in contrast to 585 stocks setting new 52-week lows. Let that sink in for a moment. There were 48.75 times more stocks setting new 52-week lows than were reaching new 52-week highs. That extremely negative reading of market breadth came on a day when the Nasdaq closed down just 1.9 percent. Imagine what the breadth would have looked like if the percentage decline on the overall market had been worse.
Yesterday, Monday, December 6, with the Nasdaq closing up 139.6 points, the new 52-week lows still swamped highs, with 137 new lows and only 53 new highs.
Unfortunately, Americans never see headlines in their newspapers about the deterioration in the stock market’s underpinnings. What they do see on a regular basis are headlines about the market setting a new high. This has the intended effect for Wall Street manipulators of sucking the little guy in at market tops as the smart guys “distribute” their inflated shares to the less informed.
The one thing that will be different when this giant bubble finally pops, is that Fed Chair Jerome Powell, unlike former Fed Chair Alan Greenspan, will not be able to tell Congress that nobody could have seen this market crash coming. There is now a loud chorus of veteran Wall Street investors who are calling this the biggest bubble of all time, or words to that effect.
Just last week, Charlie Munger, the 97-year old Vice Chairman of Warren Buffett’s Berkshire Hathaway, stated at an Australian investment conference that he considers “this era even crazier than the dotcom era.”
In a “Wall Street Week” interview on November 12, 83-year-old Jeremy Grantham, co-founder and Investment Strategist of the investment firm Grantham Mayo van Otterloo & Co. (GMO), stated that “This is more extreme in scale and size of market cap than anything that occurred in 1929, even adjusted for the size of the economy.”
These are strange times indeed.Did you know that the U.S. Treasury’s long bond, the 30year is now
trading at a yield that’s lower than it was during the great recession? And that’s with inflation on the rise, and a disruption of the supply chain, and a Fed/ Cabal/ Cartel that’s slower than molasses in responding to these problems… It just tears me up that the 30 year yield is paying just 1.68%, which by the way is less than the 20 year bond’s 1.71% yield… What’s up with that? There’s so much yield manipulation going on in Bonds from the Fed/ Cabal / Cartel, that the bond boys can’t even get a normal yield curve in place!
*** Did you know that the U.S. Treasury’s long bond, the 30year is now
trading at a yield that’s lower than it was during the great recession? And that’s with inflation on the rise, and a disruption of the supply chain, and a Fed/ Cabal/ Cartel that’s slower than molasses in responding to these problems… It just tears me up that the 30 year yield is paying just 1.68%, which by the way is less than the 20 year bond’s 1.71% yield… What’s up with that? There’s so much yield manipulation going on in Bonds from the Fed/ Cabal / Cartel, that the bond boys can’t even get a normal yield curve in place! ***
did they ever launch the 100 year bonds ( US or EU Treasuries ) ??
i choked with laughter when i saw that suggestion , and knew the global economy was really messed up
@profgalloway concentration of the 5 largest stocks in the S&P 500
$spx still saw another 5 years of consecutive altime highs into the 2000 > 2009 rendition of the 64 > 74 market@charliebilello S&P 500 closes at an all-time high for the 67th time this year. Only 1995 has had more all-time highs in a single calendar year. $SPX
S&P 500’s real earnings yield has plunged to a new record low of -2.8%
Its probably someone from the Plunge Protection Team making sure all that work is worthwhile!
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