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 [...]
From The Big Picture:
I mentioned last week that bullish sentiment was getting a bit frothy. After a few weeks of record highs, expectations that stock prices will continue rising had surged.
Not quite an extrapolation of recent trends into infinity, but getting there.
This morning, I wanted to address the flip side of that — Bearish sentiment (expectations that stock prices will fall in the near future). This Pessimism remains above historical [...]
Bob Janjuah, Nomura’s famously bearish strategist, has some good news and bad news.
He just wrapped up an interview with The Globe And Mail.
The Good News
Janjuah forecasts a near-term rally in the stock market. He had two main reasons.
“Sentiment has gotten very, very bearish,” he said. “Sentiment is at an extreme.”
But more bullish than that is the bearish sentiment toward Greece.
“There seems to be an expectation that Greece is suddenly going to exit the [...]
In the absence of extreme bearish sentiment (i.e., bull signal) developing, it is unlikely that any upward price move in the major equity indices will last more than a couple of days and it is likely that selling will resume once those prices move towards the recent cyclical highs. Having more bears than bulls at the start of a rally provides short covering fuel and buyers on the sidelines willing [...]
We have discussed the money-on-the-sidelines fallacy a few times recently in the context of the circular money-flows (clear misunderstanding of the idea of a buyer and a seller) as well as mutual fund cash levels, retail sentiment, demographic shifts, and insider transactions. There is mounting evidence, as Morgan Stanley’s Michael Wilson notes, that ‘make no mistake…institutional investors are all-in‘ as the rolling beta of mutual funds relative to the [...]
The blistering asset rally of 2012 has run ahead of economic realities in Europe, America and China. It is exhibiting symptoms of a schizophrenic market, with technical indicators flashing signs of exhaustion.
Europe, China and the US are all facing significant troubles in 2012 Photo: AFP/EPA/Reuters
By Ambrose Evans-Pritchard
Graham Secker from Morgan Stanley said it is rare for global stocks, oil prices and government bonds to rise in lockstep, and such exuberance becomes a [...]