Mais um market WrapUp retirado do site FINANCIALSENSE.COM, desta vez escrito pelo Martin Goldberg
SOMETHING BIG IS ABOUT TO HAPPEN
Technical analysis is a game of cold calculations, not feelings and emotions. So if I were to tell you that something big in the stock market is about to occur because I feel it in my bones, it wouldn’t be the product of a technician – it would just be stray intuition. Yet there have been many fissures occurring in many technical charts over the last few weeks that may provide substantiation for my premonition. I don’t know what it is specifically, but it involves lots of debt. I feel it in my bones - something big is about to happen.
Fannie Mae
Following is a one-year chart of Fannie Mae. It dropped on that “little corruption thing,” and then recovered on relatively low trading volume. Now it is heading down again with a loss of momentum and a pick up in volume. Something big is about to happen.
Yesterday Countrywide Financial, a prime beneficiary of the credit bubble, put out what appeared to be a breakaway (down) gap. Late in the session almost miraculously, buyers moved in. Yet it appears that something big is about to happen.
The momentum indicators shouted a warning on Countrywide before it broke Wednesday. When one of the biggest beneficiaries of the consumer credit revolution takes a major stock market hit of 12% in one day it suggests that something big is about to happen.
A leader in the homebuilder revolution – Pulte Homes - overestimates market prices in Las Vegas and then finds that buyers under contract are not coming to settlement. The homebuilder then lowers prices, including discounts for buyers under contract, and makes them sign a contract certifying that they are owner-occupying and not speculating for a price rise and quick turnover. The builder insures investors that this is just a local problem that should not impact other builders. Yet the stock drops and decisively breaks an uptrend that is over a year old.
Two weeks later Greenspan gives a speech where he suggests that levels of homeowner debt are manageable and should not adversely affect the economy. In spite of this, other homebuilders report excellent quarterly results, share buybacks and stock splits. (No insider buying.) Something big is about to happen.
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Something big is about to happen.
There is another reason why I feel that something big is about to happen. That is that something big has not happened since the apparent Market top in January of 2004. This is over 3 quarters. While nothing big has happened, the major stock market indices may have shown their hand by tracing bearish intermediate patterns. Here are the one-year charts of a few of these stock market indices.
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