Equity Risk
Adding to yesterday’s chart, here’s another one, link here.
Let’s also include this chart.
A few months ago, equity risk was zero, link here.
Today, as the chart in the second link above shows, it’s gone negative.
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The Danger Point®, trade mark: No. 6,505,279
Well, Not Really
It’s no secret the ‘consumer’ is up against a wall.
FRED links for various forms of debt are here, here and here.
Then, we have this just out from ZeroHedge; wide disparity between bonds and the market.
Original website, link here.
Paraphrasing from that link:
‘Expect to see an equity crash that will rival or surpass any seen before.’
We’ve all been hearing that for a long time. Are we close?
Well, some sectors are already rolling over.
The focus (on this site) for a while, has been ‘consumer discretionary’ and related.
Yesterday, was DoorDash. Today, is Las Vegas.
Las Vegas Sands LVS, Monthly
During the last melt-down, LVS cratered over -99%.
The monthly chart shows the potential.
At present, we have a repeating pattern: Spring to Up-Thrust (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Looking Behind The Curtain
Healthcare’s recent behavior seems to have revived an old theory:
The ‘cockroach theory‘
Seen as far back as the late 1980s, on Wall Street Week with Louis Rukeyser, but I digress.
So, here we are, waiting for the next shoe to drop.
‘Isolated’
That label replaces the ’07 – ’08, meltdown term of, ‘contained‘.
Using the aforementioned theory, do we really think that UnitedHealth, is an isolated incident?
Instead of presenting an opinion, let’s go to the market itself and see what it’s telling us.
Healthcare Sector XLV, Weekly Close
We’ve just had the largest upside pressure in the history of XLV, back as far as 1999.
After that, it not only stalls, but prints a Wyckoff up-thrust (reversal) right along with a terminating wedge.
Note, after the record setting Force Index, further upside pressure has evaporated.
It’s as if the bulls abandoned the market, exhausted.
As Ed Dowd said in a recent interview, link here, these types of record-breaking moves are typically ending moves; not the beginning of a next leg up (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Crash, Retrace, Reversal
With all eyes fixated and hypnotized by the A.I. bubble, behind the scenes, other markets have retraced and reversed.
They look ready to continue the next (major) leg … down.
One of those is UnitedHealth and the Healthcare Sector XLV (not advice, not a recommendation).
The last update on UNH, was back during the earnings implosion.
Two months later, UNH went on to post a (slight) new low, changing the retrace projections.
As is typical for this site, we’re going to look at UNH from a strategic, longer-term perspective, the monthly chart.
UnitedHealth UNH, Monthly
During the last melt-down in ’07 – ’08, UNH lost -75.60%.
For October just ended, we can see (zoom area), UNH retraced to 38.2%, rejected it, closing lower for the month.
Before everyone decides it’s a ‘slam-dunk’ lower, for UNH, in the markets, anything can happen. Amazon’s (AMZN) overnight launch (on earnings) comes to mind.
Next up, we’ll look at the Health Care sector itself and tracking fund XLV.
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The Danger Point®, trade mark: No. 6,505,279
… And ‘Dollar Debasement’
‘When the trade gets a name, it’s over’. Ed Dowd
His assessment on the ‘dollar debasement’ trade, comments on gold, can be found here.
Gold dropped -50%, during the last melt-down, ’07 – ’08; it could do the same again (not advice, not a recommendation).
With that, we’re looking at gold (GLD) from a strategic standpoint.
Meaning, it’s a long-term bull market, but where a sustained ‘correction’ may be at hand.
Gold GLD, Weekly
The trendline goes all the way back to the beginning of the GLD, fund.
Note the largest ever Force Index. Past similar actions either resulted in a sideways move, or reversal.
The Fibonacci projection tool, highlighted in magenta.
The projection levels are shown as blue lines. It’s clear, GLD is ‘respecting’ the levels.
A gold, GLD drop of 50% (from the 403.30, high), would put it at 201.65 (not advice, not a recommendation).
Margin Debt Increases
First, it was $1 Trillion.
Now, it’s $1.13 Trillion; discussed here.
While everyone’s looking for A.I. to burst (including this site), maybe the precious metals are going first.
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The Danger Point®, trade mark: No. 6,505,279
Chaos Everywhere
While everyone’s chasing after the S&P top, maybe Wells Fargo has already given us the signal.
Back in the day (3/9/09), the S&P bottomed at, or near, 666.7
Revisionist History
It’s important to note, as time passes, finding any reporting of that low (666) is becoming increasing more difficult. Links here and here have two conflicting closes.
The ‘old-timers’ know and that’s what matters.
The Reversal
Wells Fargo posted its all-time high (86.66) ten-days ago, on September 23rd.
Today was a sight upside reversal, suggesting a (marginal) push higher.
Charts to follow.
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The Danger Point®, trade mark: No. 6,505,279
Repeating Pattern
During the last multi-year, market melt-down from ’07 – ’09, Cadence Design Systems (CDNS) crashed over -90%, in a relatively ‘well-behaved’ collapse.
‘Well-behaved’; straight down, sideways, then straight down again.
Looking at the current price action on a closing basis, we see the ominous (potential) pattern of Spring-to-Up-Thrust.
Cadence Design Systems, CDNS, Daily Close
Other Wyckoff ‘spring’ set-ups are noted.
However, this time around, we may be in up-thrust (reversal) condition.
The next earnings release is late October; there’s time to assess action (if/when short) before any Kabuki theater (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
One of Many?
The last melt-down in 2008 – 2009, was precipitated by subprime mortgage.
This time, will it be auto loans?
Is this just one of many implosions to come?
Digging-in on auto finance, we have chief cook and bottle washer, Ally Financial. Old timers know this outfit as formerly GMAC.
Let’s not forget, Carvana (CVNA) and Ally are (potentially) joined at the hip, link here.
Moving on to the chart.
Ally Financial, ALLY, Weekly
This price action is eerily similar to biotech.
Note how long ALLY bounced around below support (in spring position) before finally moving to the upside.
Nearly a month ‘hugging the lows’, could be an underlying indication of weakness (not advice, not a recommendation).
The next earnings release is scheduled for October 17th.
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The Danger Point®, trade mark: No. 6,505,279
Buy The Rumor …
Will the coming week, be:
Sell, the news?
The S&P opened slightly lower, and is holding steady, unchanged.
Gold is unchanged, as well.
We’re ninety minutes into the session, relative calm.
There is one market nuance to consider. Most, if not nearly all who read what is next, may take no notice or disregard.
That’s your choice.
However, the S&P futures ESU25, posted a high at the last regular session, of 6333.25.
Seems like it might just be an oddity (easily surpassed); that is, until one considers the same index, posted a bottom of 666.67, at the 2009, low.
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The Danger Point®, trade mark: No. 6,505,279
A Number Recurring Trough Time
You’ll have to judge for yourself if the chart with closing numbers and axis line, are of importance.
As a reminder, let’s not forget where the S&P bottomed, in 2009.
‘The S&P hit a low of 666, intraday’
With that, this update will be brief.
Biotech Sector Index, SPBIO, Daily Close
We’re using the actual index (SPBIO) and not the XBI, ETF, typically traded as a proxy.
After hours (as of 6:53 p.m., EST) has the ETF, XBI, trading unchanged to slightly lower.
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The Danger Point®, trade mark: No. 6,505,279
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