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Hussss
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Technical Signals That Align With 2008-2009
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All good and well? Correction over? Get a China deal and all is well? Perhaps.

But there’s a signal chart that may suggest an intrigue to come. As I outlined in 2018 Market Lessons extremes become more extreme and we saw some of this in the signal charts. In my 2019 Market Outlook I highlighted the $BPSPX chart showing oversold readings in December as extreme as during the financial crisis. But it’s not the only chart that’s acting extreme.

$NYMO has gotten a lot of attention in the past few days as its extreme oversold readings reached extreme overbought readings within just 11 days.

How extreme? Well, the only other reference point again is the 2008/09 financial crisis:



+117. It’s a sample size of 1, but let’s dig a bit deeper here. What happens when $NYMO goes from over -100 to over +100 in a matter of days as it just has?



The only history we have to go by says this happens:



People may forget, but that rally from Nov 2008 into January 2009 that produced that big fat $NYMO read was an intermittent top before markets dropped 30% into 666 on $SPX by March. Except this time the $NYMO read has come much faster, but both $NYMO reads occurred in early January following a late year correction.

With a sample size of one it’s not a large enough statistical sample to give this correlation any solid predictive weight, but it is worth pointing out and something to be aware of. After all big corrections often see the initial strong counter rally fail and produce a retest with new lows:



There’s one other difference perhaps of note. In 2008 and 2009 Q1 served as the basis for the ultimate market low. Bailouts, QE, mark to market suspension, you name it, it was all part of the active measures.

All we’ve had so far is talk. QT is still happening. So for all the dovish talk by the Fed there hasn’t been any dovish action that we know of anyways. And why should there be? We’re not in a recession yet.

Which makes for an intriguing question: Where is the crisis? But if there is no crisis, why did Treasury Secretary Mnuchin hold emergency calls around Christmas? Why did Fed Chair Powell cave last week and kick this technical reconnect rally into vertical overdrive?

If there is no crisis why are they acting like there is one? One wonders. We have no overt crisis reminiscent of 2008/2009, but we have several technical signals that are acting like they did back then. And perhaps that is something worth paying attention to in the days and weeks ahead.



iAmBatman
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re: Technical Signals That Align With 2008-2009
quote:

Hussss


Downvoted


Hussss
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re: Technical Signals That Align With 2008-2009


TigerDeBaiter
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re: Technical Signals That Align With 2008-2009




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b-rab2
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re: Technical Signals That Align With 2008-2009
What is your email Hussss


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EA6B
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re: Technical Signals That Align With 2008-2009
Astrologers have better track records that those engaging in technical analysis.


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Doc Fenton
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re: Technical Signals That Align With 2008-2009
quote:

Which makes for an intriguing question: Where is the crisis? But if there is no crisis, why did Treasury Secretary Mnuchin hold emergency calls around Christmas? Why did Fed Chair Powell cave last week and kick this technical reconnect rally into vertical overdrive?

If there is no crisis why are they acting like there is one? One wonders.


Yep. There's a crisis.

I don't follow McClellan oscillators or numerical sentiment indicators for my stuff, and I also don't see 2008-09 as the best parallel, but one similarity we can see is that policymakers have been taking measures as if there were a crisis, while at the same time hoping that the market becomes reassured that there isn't a crisis.


b-rab2
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re: Technical Signals That Align With 2008-2009
Doc, did you ever stArt you fund?


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LSURussian
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re: Technical Signals That Align With 2008-2009


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LSURussian
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re: Technical Signals That Align With 2008-2009
quote:

policymakers have been taking measures as if there were a crisis,
Such as?


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LSUcam7
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re: Technical Signals That Align With 2008-2009
SP500 Earnings

Look at the earnings trend from mid 2007.

Now look at earnings trend from 2018.

Can you spot the difference?

ETA: It’s time for the bears to stop comparing every selloff to 2008. That environment was the worst economic downturn in nearly 80 years. The next recession will be nothing CLOSE to the pervasiveness of the last financial crisis.
This post was edited on 1/10 at 8:13 pm


Hussss
Auburn Fan
Living the Dream
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re: Technical Signals That Align With 2008-2009
Seriously?

So you are insinuating that a crisis of confidence in the markets cannot happen when earnings are ok?


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b-rab2
LSU Fan
Lafayette
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re: Technical Signals That Align With 2008-2009
Earning are higher due to tons of buy backs purchased by debt.


Hussss
Auburn Fan
Living the Dream
Member since Oct 2016
3901 posts

re: Technical Signals That Align With 2008-2009
You are definitely on the right track

These cats have a lot to learn my friend.


b-rab2
LSU Fan
Lafayette
Member since Dec 2005
11622 posts

re: Technical Signals That Align With 2008-2009
What’s your email? You can edit it afterwards


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LSUcam7
SRB FL
Member since Sep 2016
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re: Technical Signals That Align With 2008-2009
So Amazon hasn’t disrupted the way consumers shop and produce record earnings year after year?

Apple hasn’t changed the way we communicate and store information via iPhone?

Various biotechs haven’t reduced cancer remission by significant degrees?

Union Pacific isn’t putting more cars on rail with more full loads?

Get the frick out of here with that narrative. You may be correct to a degree but it’s the American ingenuity and work ethic that’s put up real growth.


b-rab2
LSU Fan
Lafayette
Member since Dec 2005
11622 posts

re: Technical Signals That Align With 2008-2009
Go dig into BA, XPO, AAPL. Any of those, they’re buying back shares with cheap debt. Buying back means higher EPS there easier to beat earnings


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Hussss
Auburn Fan
Living the Dream
Member since Oct 2016
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re: Technical Signals That Align With 2008-2009
Of course but you really have no idea how fast those multiples can contract when the real debt bomb goes off. Central Banks WILL lose control of the bond markets and it WILL be unveiled that the Emporer has had no clothes the entire time.

Start thinking bigger than earnings.
This post was edited on 1/10 at 8:22 pm


LSUcam7
SRB FL
Member since Sep 2016
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re: Technical Signals That Align With 2008-2009
quote:

You are definitely on the right track


Would love for you to post your statement portfolio’s return since 2010. I would bet my long stocks that you’ve not don’t anything stellar for yourself.

And if you have... you’ve been long and you should be thanking corporate America.


b-rab2
LSU Fan
Lafayette
Member since Dec 2005
11622 posts

re: Technical Signals That Align With 2008-2009
You should check out the QTR podcast. Good stuff.


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