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Packed - or Departed?

By: Erik Swarts | Saturday, November 10, 2012
Packed, or Departed

As momentum, a shifting currency tide and now even sentiment - continues to work against the grain of a slouching equity market structure, many market participants are now just beginning to question if the bull's ship has finally sailed. In a week full of emotion and frustration extending from the presidential, congressional and senatorial elections, there is a surplus of pundit causations to fit every wiggle with each tail. And although some of these may have logical underpinnings, like good propaganda - a seed of truth and convenient correlation is stretched far beyond legitimacy.

Perhaps I overestimate the great distiller of outcomes that is the financial markets, but have found little merit in pinning the perceived surprise of short term market gyrations to an event as protracted as the US presidential elections. Alas, it is my belief - based on my own cycle and comparative work - that the weakness in equities this past week was the byproduct of ongoing asset kinetics set in motion long ago.

Below are several charts I have been following from comparative market environments that continues to point towards market weakness - both in equities and commodities - and a resurrected US currency that I fear has yet to be factored into the collective market consciousness.

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The Nasdaq/S&P 500 comparative continues to closely follow the arc of the 2007 S&P 500 top - with this cycles Petrochina (last Here) being played out by the now exhausted parabolic mega-cap of Apple. Should the analogy to the previous two peaks on the SPX continue, the bull's ship at best is packed, and at worst - departed.

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Continuing to follow the arc of the last secular low - regardless of influence by our quantitative commanders - the US dollar index recaptured 81 this week. It is my belief that the dollar will continue to strengthen over the coming weeks.

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Considering that the precious metals market and the euro are the inverse recipients of US dollar strength; silver and European bourses, such as Spain - continue to follow the arc of the 1991 Nikkei comparative, initially presented this past June in the Trilogy.

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As mentioned frequently, the reliable asset relationship of silver leading moves in Europe continued last week.

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Both the S&P 500 and its banking sector continue to be strongly repelled from a rare coincident rejection of their respective long-term meridians.

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As always - Stay Frosty.


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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