Saturday, June 1, 2013

Nemo's Findings week of 6/02/2013

(Course on chart pattern recognition is available now:  

 And the answer is.....CORRECTION!!!

Here's the SPY:

As you can see, we are fast approaching the:

  • 3,4% pullback from the high
  • 38.2 retrace of the swing low from mid-April.  
  • The 50% retrace of this swing and the 23.6 retrace of the November low are between 161-161.25.  
  • Of course we are coming into possible trend lines before we get there.
  • This is basically a rehash of last weeks findings with the additional 4 days of action confirming.  You can review here:
  • One additional tidbit...the 50 day SMA has  just begun to move into that gap area, so as it rises it should provide additional support

Having said that, let's take a look at the XLF:

Here are As we can see, the chart is similar to SPY but doesn't look nearly as ominous, having pulled in2.5%.  Unless this comes in it might be hard for SPY to get much further.  Not quite time to throw the women and children overboard.

Then of course, there is the Russell:

Again, not nearly as ominous as the SPY... pulled in a whole 2.3%

And here's Buffett's favorite indicator...well his is rail specific, but you get my drift:

As you can see, it's really just coming into its first major support level.

However this causes me concern:

And have a look at this:
As you can see, Japan's government bond interest rate is on the rise.  Out of control yet?  No.  Concerning, yes.

Mr. Ritholz provided a nice economic summary here:

Dear Mr. Abe may be committing economic seppuku.  Since his "all in" for QE, the yields (ie: interest rates) have risen rather sharply on government bonds, and as you can see, the Japan fund has almost given up 50% of it's run since November.  If the yields continue to rise, this could get ugly rather quick.  Don't forget, we are in a grand experiment.  Nobody knows how this is going to conclude.

In general, economically, the news around the world has been getting worse

Anyway, the week that was:

As I said, it ain't that bad yet, but we could be concerned about Friday's sell off into the close.  By the way, they were buying the VXX after the close Big Time!  So, insurance is being bought.   Selling off like that gives everybody the weekend to get scared.  So, you'll have the Asian and European open before Monday-which will either put a brake to this, or accelerate the avalanche...come to think about it, you might want to get the family's life preservers out and ready.

Anyway, the week that is: