A wide range of stock market and sector indices appear to be forming large and menacing topping-patterns.
To quote Jason Zweig’s “The Devil's Financial Dictionary”, he reminds us that "technical analysis is a method of predicting the future price of a financial asset by looking at its past prices". So far so good, it is doubtful that anyone would disagree with this description. However, the entry goes on to say that technical analysis "is about as reliable as attempting to forecast tomorrow’s weather by studying yesterday’s".
But whether you are a technosceptic or a technogroupie, it would be foolish to ignore the signals and advice that technoseers provide, as they have a sizable and influential following which is significant enough to be self-fulfilling.
Oil has recently been the main focus of attention, and last week we witnessed a dizzying and rather unedifying descent to the bottom in an oil forecasting race to see who could come up with the lowest headline -grabbing number. In most cases the analysts were merely updating previously overoptimistic forecasts in response to what is occurring on the ground. If ever you wanted to see 'herding' in action, last week gave you the opportunity. It will break below $30 bbl shouts one, make that $25 yells another, come on you cowards I put my marker on $20 counters yet another. We can beat that with $16 bbl says RBS only to be taken out by Standard Chartered at $10 bbl.
I wont give in to fanciful predictions but instead show an assortment of graphs on the SAME timeline, SAME period, some with Fibonacci retracements and allow you to make your own judgement (I will be happy to elaborate if asked)
So let us see what the markets may be telling us;
S&P monthly speaks for itself.....
As does the Shanghai composite The Dow transportation index,which has been called a good barometer has broken its major uptrend All this while the indices that have been uneffected by direct central bank intervention are still grinding lower...ie; the Baltic Dry Index I can say a lot about crude and how technically it has been very good at following patterns on long term trends,so when comparing the moves that occured over the last 25 years ,this move has potential to go down to the $10.35 area.. Since 1960, whenever industrial production growth has fallen more than 0.25 percentage points below zero, we have either been in recession or a recession has ensued in a matter of months . I have many more....none of them look particulary good and in many instances mirror the times just prior to an oncoming crisis. And certainly not twice.....if it looks like a duck,walks like a duck,quacks like a duck...there is a very good chance...its a duck.....
In regards to more detailed options and futures advice volatility analysis etc ,please contact Darren Krett,Bryan Fitzgerald or John Hayden through www.leviathanfm.com or email at [email protected]
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