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Market Breadth

Market Breadth

by MoleApril 29, 2011

Yesterday I shared with you some thoughts on sentiment and much stuff- more today. I still have my same swing trades, but I don’t want to be a pig if you are getting my drift… or I don’t want to be left with a hot potato.

First some thoughts on commodities…. the “wall of worry.”

Exhibit A: POMO cumulative vs. CCI index


Exhibit B: POMO 20day vs. the CCI index

Cheers again.

Now some more on the S&P.

This is Cumulative Advances-Declines. The key here is how MANY stocks continue to rise.

Ok here is a shorter term view of that.

Now I ran the ADV-DEC and divided it by the VIX for more fun.

This shows similar picture- new highs.

Here is a little price action for ya:

Here is the SPX/GLD- futures is below magnigot line FWIW.

EUR- Inside day futures-


Could be distribution- but wish I had Wednesday’s data.

Anyways have a great weekend- I will not be around for a bit- will be traveling a little bit.


About The Author
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.

  • bisq

    Safe travels , in the spirit of Hollywood “i am loving your work”.
    The so called magnigot line on gold/sp is going to get blown to bits for whats it worth. matter of time – sooner rather than later imho. The charts i see people use are all too short term on this metric and cant see the wood for the trees. trust me on this one.

  • Hungry_Joe

    Volar, what is this sine breakout?

  • kbmck

    Great post Volar, thanks. I agree, market breath is key. IMO,we could be approaching the equivalent of June 07 in the A/D. Happy trails.

  • ultra

    Interesting monthly close for CHF

  • ultra

    Copper over gold

  • DarthTrader

    bisq I agree with you on the long term (the forest/hyperinflation blowoff) but the short term (the trees/impending bull market retracement) is in my opinion soon to be exactly opposite the long term. So it is important to not fall into a rocky crevasse while looking up at the mountain we will pass thru in a year or 3 . . . I say this because I have had to crawl out of such a crevasse in the past playing this Precious metal bull market for the last decade.

    Here is an excerpt from an article that may illustrate my point somewhat namely this line “It was a matter of years, not weeks, before the full and dire consequences of the policy of printing money became apparent. ” But the rest is informative :

    Upon recently re-reading Adam Fergusson’s detailed daily chronicle of the collapse of the German fiat currency in 1923, I was struck by what economists call the J-curve effect. It was a matter of years, not weeks, before the full and dire consequences of the policy of printing money became apparent. All of the characters whose lives Fergusson recounts, with the exception of the politicians, could foresee the dreadful consequences of money printing.

    But the crisis evolved in phases. As it started to bite, clever Germans worked out that debt would be inflated away and that hard assets would quickly rise in value. At page 109 we learn how in 1922 the clever Hans-Georg von der Osten, borrowed in February to buy a substantial estate, then paid off the entire loan in the autumn with a modest crop grown that year on the land. During that summer he also bought 100 tons of maize from a dealer for 8 million marks, only to sell the same crop back to the dealer a week later for twice the price. With the profits “I furnished the mansion house of my new estate with antique furniture, bought three guns, six suits and three of the most expensive pairs of shoes in Berlin, then spent eight days there on the town”, he boasted.

    There are of course many differences between the UK’s economic circumstances now, and those of Germany in the early 1920s. But there are also many parallels. One significant parallel is that Germany’s rulers knew that the country was unable to pay its war debts, and possibly embarked on their programme of currency debasement, to the ire of the Reparations Commission and creditor nations, as a deliberate policy to inflate the problem away.

    In the case of the USA with our many trillions of dollars of Debt I can easily see the Fed hitting the Restart Button, Crash the Dollar, Grab Real assets in the process (already got this done), come out on the other side with Real assets and create New Dollar or as many have said the Amero Currency (Canada, Mexico & USA currency).

  • DarthTrader

    If you're interested in Silver and/or other commodities it would be worth your time to view this video . . .

  • molecool

    In summary: Debt leads to war and tragedy – why again do we let the banksters run our planet?

  • DarthTrader

    We don't but through finding the right pressure points in persons (Presidents, Senator Congressman) and in time they push through their agenda. Taking power over and over throughout history From Christ throwing the moneychangers out of the Temple to Andrew Jackson doing much the Same to the Banksters during his administration and of course the movie industry's depiction of bankers during the 30's & 40's they are exposed. The Banksters expose their true nature through their own Greed to a point where it becomes to obvious not to target them and they lose their grip on Power. Unfortunately Roosevelt needing their help for his social programs allowed them to stay in tact during the Great Depression. (Soon to be seen as less Great in my opinion) I think Ron Paul has been sowing the seeds of destruction for the Bankster Class for the last 30 years and those seeds are beginning to bear fruit.

  • molecool

    “I think Ron Paul has been sowing the seeds of destruction for the Bankster Class for the last 30 years and those seeds are beginning to bear fruit.”

    I personally think the middle and under class have been systematically castrated. Citizens have been stripped off their rights and their tax Dollars are being wasted on endless wars and bankster bailouts. Meanwhile I'm driving circles around knee deep potholes in the city of Los Angeles and the power breaks down every few weeks.

    The truth is out there and there may be growing awareness but it is largely being ignored. Not a single Wall Street insider went to prison after 2008 (Madoff was a sideshow) and the recent SC decision which effectly removed limits on corporate spending in political campaigns was a clear sign for the banking class that it's open season to plunder the public purse and pretty much do whatever they fucking please. Karl Denninger has been reporting on financial and government corruption on a daily basis but do you ever see anyone getting cuffed? Of course not – we have put in place the best administration money can buy.

    Sorry to be cynical about this but it's game over. The rabbit hole is so deep at this point that it's going to be impossible to change the existing system and turn around the boat. Do you really think that after shipping out 50,000 manufacturing jobs a month since 2000 we are somehow getting them all back? Or that the Dollar somehow magically is going to rise back to its former glory? Or that someone somehow solves our energy problem and at the same time figures out how to feed eight Billion people without cheap access to fossil fuel?

    All that's left is a complete reset and given the complacency of the public I think we are still a few decades away from that. Personally I don't have enough skin in the game here to suffer through all this. Working on setting up shop somewhere else and to hopefully live out my life in relative safety, comfort, and happiness. The next few decades are going to be rough and I believe that I have lived through the better half of my life.

  • DarthTrader

    Dead on

  • bisq

    Its a great book , i bought a dozen copies when they re-issued last year – its a 1975 book ( “When Money Dies – The Nightmare of The Weimer Hyperinflation”) and i gave copies to friends and family i felt would actually 1) read it and 2) listen to it (prior to the reprint this book was selling for hundreds of dollars on ebay as it was so difficult to locate)
    However , this isnt 1920s Germany. Its not 1970s US/UK either. Its not even 1990s Japan or 1930s USA. It similarities to all those periods but it will go down in history as its own benchmark.
    I do not argue against anyone trying to trade the ranges of gold or stocks or the ratio of the two but i will say , you are going against a tidal wave if you try to get cute betting on stocks over gold – whatever the time scale. I harp on like a broken record to those that “get it” (alas thats not those in my social sphere , they largely listen and nod politely but dont care) but blogs such as this have independent , critical thinkers so are more fertile grounds to discuss and a core position of everyones portfolio should be long gold/PMs and short stocks. You can trade around it , just never ever lose it , because this trend isnt done yet – the big gains are yet to come – like all moves , this one will end in a parabola. Gold isnt remotely close to that. Even when valued against stocks. Do not get shaken out betting on paper over instrinsic value or you will regret it – the easiest way not to get shaken is dont use leverage.

    ps: if i had to pigeon hole myself i wouldnt be a hyperinflationist , i would be , gasp , a deflationaist. I see us in a liquidity trap and debt default and a debt deflation spiral will wash over all assets like a Tsunami. So why am i a bullish gold ? Because its cash. Because it will at least survive that event in some value. If im wrong , it will literally become impossible to buy gold with USDs like you couldnt buy Gold in Zim or Reichmarks , but i think thats less likely and frankly i dont want to envisage such an outcome. But im hedged if it happens. Because im not shorting US financial stocks on margin.

  • Smiddywesson

    I completely agree, but the Fall of Rome swept out the bad with the good. Cheer up little feller

    Sure, a few billion people will die when a system with zero inventory and just in time delivery fails, but you can't make a cake without breaking a few eggs. I will miss the Bernank though, he was really amusing.

    On the bright side (cue the music from the Poseidon Adventure “Morning After”) a lot of good is coming down the road. The coming unrest will break the choke hold of the corporations on our political systems because that scam depended upon people not caring. Trust me, starving people will care. Say goodbye to the banks. The end of Global Trade will bring back the jobs and end the three card monte game the corporations play with their taxes. Starvation and want will also send the baby boomers to their graves, small loss there to lose the most ignorant, narciscistic, and rapacious generation every to slither over the face of the Earth. Their dying cries to keep your hands off of their social security (the money they already spent) is music to my ears.

    There was a Roman city which fell to the “barbarians” (who were mostly people who the Romans screwed, including their own soldiers who returned from foreign wars and found their homes and lands stolen, so they deserted). These people fled into the swamps and founded a village in an area so undesirable they figured they would be safe, and built that village on a lake. That village later grew into one of the most beautiful and most powerful cities in the world. It was Venice. None of the survivors who founded Venice could have dreamed of what was in store for their descendants because they were blinded by what was lost. But their descendants didn't know Rome, and had no limit to their dreams.

    It was a good run but I won't be sorry to see the old system go. I won't miss Bush, I won't miss Obama, and I won't miss American Idol. The world until recently was characterized by starvation and pestilence, so we are just reverting to the mean. Eventually, we will punch out of the clouds into a better world, but we won't live to see it. Knowing it's there is enough for me.

    PS: Malthus thought the world would starve centuries ago. He was wrong. He viewed the future as a linear progression of the past. So did the people who sold derivatives prior to 2007. Those people are always wrong in the end. We solved fission 7 decades ago and we are on the cusp of solving fusion. When we do, we'll still need oil, but the energy crisis will be over. We will have unlimited clean energy, people will stop arguing about climate change, and fresh water will be available in abundance. Everything will change. Eventually, we will fudge it up all over again, but that is what we do best.

    It's all good.

  • Smiddywesson

    “The next few decades are going to be rough and I believe that I have lived through the better half of my life.”

    I refuse to accept that. There are always people who come out on top after chaotic events. They will need to do something with their money, and it the role of people like us who study the markets to take it from them. Traders can always find a way to make a living because trading doesn't require great strength, youth, or incredible intelligence. Trading requires a proper mind set, a huge amount of knowledge, and wisdom. You can do that at any age. It doesn't even require that we trade stocks or bonds. If we were magically transported to Barter Town and people were walking around in leather and mohawks, who do you think is better equipped to survive, Timmothy Geithner or you? Our skills are transferable.

    The only people who are going to be completely ok are the wealthy criminals that brought this about, or traders, or both. (wink)

  • convictscott

    Volar – great post as usual 🙂 It seems to me like the best tactic is to take long only daily pattern trades (particularly hammer candles) until that divergence

  • Smiddywesson

    We are a herd species. Debt and war is our nature. Fortunately, all the really honorable actions and all the meaningful change occurs when we are up against the ropes. Without stress, we all become Homer Simpson.

    Everything is cool, everything is mole cool.

  • Caston Thomas

    “Without stress, we all become Homer Simpson.” THAT is one of the most profound statements I have read in a long time. Please tell me that you came up with it yourself! My wife and I were talking about this concept for about two hours over breakfast this morning. You encapsulated my entire rant into one simple, concise statement. Brilliant! 🙂

  • amokta

    Hello, anyone home?
    CS – thanks for comments previous thread!

    Holiday here in UK, but US open I take it on monday.

  • DarthTrader

    Hello Amotka

    Yes Silver looking like it will test the 44.61 Low if it breaks it then the Sell off is on in my opinion.

    That would be over a correction of 20% larger than any other correction on the way up.
    That would have me looking for a test of the 200 day ma currently at 28 maybe at 30 by the time it gets there.
    Silver tested the 200 day in the corrections in 2004, 2006, and 2008


  • amokta

    Yes, just noticed that – huge drop!
    Lest see, certainly a larger correction than on way up

  • amokta

    Gold dropped a bit,but not as much as silver – not sure what that says!
    Silver certainly moves!

  • DarthTrader

    The Route is on from here . ..

    Once they get silver on the ropes they kill it . . . normally l o l

    right now down 10% if it were to close tomorrow right here AGQ would be down 20% . . down $70

  • skynard

    Damn! Was stopped out of my /SI short last week. There is a ride, HUH! Now lets see the rest of the market follow.

  • skynard

    Long /DX
    Short /CL & /ES

  • OllyVaradi

    Most exciting open for a while. Silver's really taking it up the Gary, copper looking none too healthy either. $ seems to have caught a bid, just need that to carry on and despite a shameless ramp on the DJ, that seems to be drifting also.

    Looks like you'll do well on those trades Skynard! GL

  • amokta

    You were right about silver!
    Did anyone take the inside day, short on on break of low trade (i dont do futures)

  • OllyVaradi

    Hmm. Can't bag any credit for a silver call. My only one ever was nodding Will's going long silver on Kate's 3rd left finger.

    I do need to let go of the DJ a bit and try other instruments. Missing out on a few things here.

    Perhaps you can try futures if I punt PM's Amokta.

  • amokta

    I do not have the experience to trade futures – no way for me!

    I think CS said if one can be expert at one or two markets, then thats better than being master of none – if DJ works for you then thats good!

  • DarthTrader

    Not me, in fact, I closed the short part of my AGQ Put spreads just in case this market had another big Sunday night like last week

    So all had was just puts on the AGQ

  • convictscott

    Amotka, PLEASE tell me you took the inside day silver short

  • convictscott

    Amotka, I reccomend the micro gold and silver futures for you. 24 hr trading, small sizes. Good learning vehicle

  • bisq

    Obama statement shortly. Something fishy happening. My spider sense are tingling. Related to PM smackdown ?

  • bisq

    LOL , so Bin Laden is dead? That is the big news thats causing unprecedented media reaction and WH protocol ? LOL.i still smell something fishy….massive headfake.

  • ds2

    I don't know – this could be great for sentiment. Interesting for sure.

  • skynard

    HeHe! /ES & /DX are both busting a move. Let's see you wins;-)

  • malverd

    well the bin laden factor should be good for how many + points tomorrow?

  • raised_by_wolves

    With /GC down 0.8% and /ES up 0.9%, the equities to gold ratio should be ABOVE the Maginot Line again.

  • Clint

    Judging by the futures it'll be well into the triple digits.

  • raised_by_wolves

    I can't take the inside day until U.S. market open, and it's already too late. Tonight demonstrates why I need a futures account.

  • bisq

    Make hay! You wont get gifts like this often. A bit of staged drama for the yo-yos to get excited about , afterall , it changes nothing.

  • DarthTrader

    Silver chart looks a lot like the Flash crash from Last May 6th 2010

    That one rallied back up most of the way then rolled over and broke the lows

  • raised_by_wolves

    I take that part about it being too late back since there are always new trade setups.

  • Smiddywesson

    Yes, all me. Most probably just a monkey typing Shakespeare.

    We are predators, but we live in a world where we are caged. That's why nobody reads, our kids are fat, and everything has slipped.

    But, change is in the air, and bad times sometimes have good results. I tell my kids to study math, science, computers, and statistics and stop trying to stock pick. These are the skills for most industries today, so why focus on the industry or job you think you want at 18 years of age? I don't even know what I want to do with the rest of my life, why should they?