Friday, February 26, 2016

Everything Is Rolling Over.........ANY BOUNCE IS A HEADFAKE

Everything Is Rolling Over

What we have is a breakdown in both 7 years of momentum and central bank credibility.

Should the failure to break out higher persist then the market is facing a drop to as low as 1575-1600 on the S&P, something which even Goldman now agrees with.

Looks like central planners are going to have their hands full to preserve years of a carefully, if artificially, erected "wealth effect."

Many indicators rolled over in advance of price, which is bearish:

New year-long+ lows for S&P 500 on-balance-volume = distribution

S&P 500 VIGOR broke the October 2015/October 2014 lows = distribution

The US Most Active advance-decline line has completed a top. Similar tops precede/coincided with S&P 500 breakdowns in late 2007 and 2000.

Weekly global index-level advance-decline line remain weak

The Dow Theory Sell Signal in late August was reconfirmed on February 11

Monthly MACD sell signal last March and the first weekly MACD sell signal below zero since 2008 in early January.
 
Bullish daily MACD & VXV/VIX support a tactical bounce.

A rise off extreme lows for net free credit (free credit balances in cash and margin accounts net of the debit balance in margin accounts) could exacerbate an equity market sell-off.

The high yield market remains a risk with the US high yield index in a weaker pattern than the S&P 500. HY OAS has widened out of a 3-year bottom, similar to late 2007 / late 2008 – just before the financial crisis.

Growth weakening relative to Value for large caps, small caps, and MSCI ACWI. Relative breakdowns for FANG (FB, AMZN, NFLX, GOOGL) and NASDAQ 100 leadership suggests that "Generals" have begun to follow the "Troops" lower.

Bearish January Barometer and the S&P 500 is not following the normally bullish seasonal periods of November-January and November-April

2016 is a Presidential Election year. The average return for an Election year with a non-1st term President is -3.2% vs. 14.1% in an Election year with a 1st term President and 7.6% for all Presidential Election years. I WOULD SUGGEST THAT HISTORY HAS NO PRECEDENT FOR OBAMA, HE IS THE WORST PRESIDENT EVER AND THERE WILL BE SEVERE CONSEQUENCES, RAMIFICATIONS AND A HIGH PRICE TO BE PAID FOR THE DAMAGE HE HAS DONE.


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