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Crash Ahead? Scary Pattern Forming on S&P 500 Chart, Banking Sector Heading For A Serious Decline, The Gold Plunge Could Be The First ETF-Led Death Spiral


Scary Pattern Could Be Forming on S&P 500 Chart

A scary head-and-shoulders pattern could be building in the S&P 500, and this negative chart formation would be created if the market stalls just above current levels.

“It’s developing and it’s developing fast,” said Scott Redler of T3Live.com on Wednesday morning.

Redler follows the short-term technicals of the market, and he says the head and shoulders should be proven either way in the next few trading days. “Anticipating this type of pattern has been painful this year,” he said. The head and shoulders is seen by technicians as a signal of more selling to come.

“The bears are hanging their hat on the idea that this bounce back will lead to a lower high, potentially a right shoulder that continues in the 1575 area,” said Redler, describing the pattern after Tuesday’s close. “The first pullback of the year was March 20 with the Italian election. The left shoulder was built during the month of March, with the peak being around 1573. Then you had a head when it hit its high at 1597.”

CLICK ON CHART TO ENLARGE

The above chart reflects a ratio I created a few years ago for Premium Members. The blended ratio has been awesome for picking major highs and lows in the banking industry.

I then apply a unique relative momentum index to the blended ratio to create the indicator in the upper right third of the chart. Since 2008 the relative momentum index has reached the overvalued level three different times…resulting in declines in the banking index of 22%, 37% and 75%., which had large impacts on the S&P 500!

 

 

The Gold Plunge May Have Been The First ETF-Led Death Spiral

Is GLD The First “ETF Lead Death Spiral”?

We all know what gold did.

 

Price of gold

Business Insider/Matthew Boesler, data from Bloomberg

 

In 2 days it gave up gains that took over 2 years to accumulate. It is down 13% in two days.

What triggered the move? There are all sorts of explanations:

  • Cyprus central bank selling
  • Deflation
  • QE
  • Bitcoin

It is hard to pinpoint the “catalyst” but the ensuing steps have seemed all too predictable.

 

gld etf shares outstanding

Business Insider/Matthew Boesler, data from Bloomberg

Ann Barnhardt in 2011: When You See Metals Cash & Futures Price Decoupling, The End is Nigh!

Shortly after the collapse take-down of MFGlobal in October of 2011, Ann Barnhardt walked away from Barnhardt Capital Mangement, and published a prescient prediction on the coming collapse of the paper futures markets, as the loss of confidence by arbitrageurs in the paper markets would result in a decoupling of the cash markets from the futures markets.  Barnhardt warned readers to:

Watch for the gold and silver futures to sell off as people walk away from paper,while the online cash dealers, seeing that market demand for their physical inventory is robust, begin to ignore the futures prices and hold their prices steady or even raise them. When you see this basis decoupling and absence of arbitrage, lo, the end is nigh. A parabolic spike is coming.

Exactly what we’ve seen in the physical silver market over the past week.  Is the end nigh?

 

IMF warns world economy risks chronic new phase of financial crisis

Nearly five years after the financial crisis started, the International Monetary Fund (IMF) has issued a warning about the increasing fragmentation of the global economy, the very visible split between the dynamism of emerging countries, the US’ resistance and the persistent weakening of the eurozone.

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