A Body of Evidence?

By: Erik Swarts | Sun, Aug 26, 2012
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A Body of Evidence?

As the market sets sail into what historically has been the most treacherous month of the year (September) - a number of my analog and comparative charts continue to flash warning signals as they extend themselves up to resistance (UST:SPX ratio), into historical extremes (Apple) and into possible momentum downturns (2007/2012 SPX Analog).

UST:SPX, SPX Weekly

Apple continues to defy gravity with its parabolic run over the past year. If past is prologue, this parabolic performance chase of the largest market-cap company in the world will mark a major equity market top when the tide turns. It is not a question of if - but when - and the pronounced head and shoulders formation on the MSWORLD index is approaching another turn lower this coming fall.

Mega Caps

Mega Cap Performance

I have been contrasting aspects of the 2007 daily and hourly tapes over the past several years because of the fractal similarities along various timeframes to the current market. This past spring the market began tracing out a broadening top/megaphone formation that was very similar to the structure of the 2007 market - right before it broke down and established the inverted head and shoulders formation - also a pronounced structure of the 2007 tape. This was initially detailedHereand then subsequently in the following notes, Here and Here.

2007 versus 2012 SPX

2007 SPX versus 2012 SPX Hourly

The weekly analog has extended itself further then where I had anticipated it would turn. This may be considered well past an audible - however, it did so in a similar fashion thispast Marchas it worked its way to the pivot lower in April.

Perhaps it is my own bias of perspective, but if it were not for the seasonality, the agreement of various charts - also including the Aussie model that continued to turn down last week - I would be willing to retire the comparison.

I am not.

2007 SPX Daily versus 2012 SPX Weekly

As always - Stay Frosty.

 


 

Erik Swarts

Author: Erik Swarts

Erik Swarts
Market Anthropology

Although I am an active trader, I have always taken a broad perspective when approaching the markets. I respect the Big Picture and attempt to place each piece of information within its appropriate context and timeframe. I have found that without this approach, there is very little understanding of ones expectations in the market and an endless potential for risk.

I am not a stock picker - but trade the broader market itself in varying timeframes. I want to know which way the prevailing wind is blowing, where the doldrums can be expected and where the shoals will likely rise. I will not claim to know which vessel is the fastest or most comfortable for passage - but I can read the charts and know the risks.

I am not a salesperson for the market and its many wares. I observe it, contextualize its moving parts - both visible and discrete - and interpret.

I practice Market Anthropology - Welcome to my notes.

Erik Swarts is not a registered investment advisor. Under no circumstances should any content be used or interpreted as a recommendation for any investment, trade or approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational and informational purposes only. All opinions expressed by Mr. Swarts are subject to change without notice, and the reader should always obtain current information and perform their own due diligence before making any investment or trading decision.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/