Ominous pattern

[ValueSleuth]

There is an ominous stock market pattern coming to a resolution in the near future.

Take a look at a daily chart of the S&P 500 for last year and this. Concentrate on the pattern from the May 2, 2011 high and thereafter vs. the April 2, 2012 high and thereafter.

In July 2011 the market made a double top in an attempted rally back to the May 2 high. In July 2012, the market has made a similar double top in an attempted rally back to the April 2 high.

Note that the momentum readings for each of the years, as evidenced by the McClellan Oscillator and Summation Index are quite similar.

In July 2011, virtually coincident with options expiration, the market crashed.

We are approaching the July 2012 options expiration.

One way or another, something major is about to happen -- either a breakdown or a breakout in the general market.

VS

PS There are those who have maintained that IOC takes a 4%-5% dump in connection with options expiration (sometimes after a rise like we've recently experienced). This would amount to a mere $3-$4 quick decline. This is actually LESS than some of the recent pullbacks, so it would be no big deal. More consolidation at the current level (or slightly higher after reaching the all-time high at about $84) would be consistent with my predictions made quite some time ago. The longer that consolidation lasts, the better for the ultimate breakout over the all-time highs.

[Palm]

No doubt another precarious time in the markets. Something to remember that was going on last year at this time. Congress was debating the raising of the debt ceiling which had to happen by Aug 2. Things were not looking good and Moody's downgraded the US credit rating. Lots of uncertainty again right now about the "fiscal cliff" but probably nothing as momentous as the US downgrade last year. A lot of bad news baked into markets right now and probably won't change much until our elections IMHO.

[ValueSleuth]

The resolution has begun.

So far, IOC is holding up despite the market's move and specific weakness in the oil/gas sector.

Vs

[admin]

Well, in my little corner here I have put up that funny little graph daily of the Spanish 10-year yield (although arguably, the 2-year yield is even more important), and that ain't been painting a pretty picture (and I'm putting it very mildly).

However, I do expect major coordinated central bank action to soften the blow.

As far as I'm concerned, Germany and a few satellite countries should introduce a parallel currency and then let it rise. The present strategy has been counterproductive, even the IMF now admits that.

The euro has been an unmitigated disaster, first pumping bubbles in the periphery and now reversing that, creating a Fisherian self-reinforcing debt-deflationary 1930s style depression, but don't get me started..

[ValueSleuth]

Well, in my little corner here I have put up that funny little graph daily of the Spanish 10-year yield (although arguably, the 2-year yield is even more important), and that ain't been painting a pretty picture (and I'm putting it very mildly). However, I do expect major coordinated central bank action to soften the blow. As far as I'm concerned, Germany and a few satellite countries should introduce a parallel currency and then let it rise. The present strategy has been counterproductive, even the IMF now admits that. The euro has been an unmitigated disaster, first pumping bubbles in the periphery and now reversing that, creating a Fisherian self-reinforcing debt-deflationary 1930s style depression, but don't get me started..

The Germans don't want to jeopardize their exports, either internal to the Eurozone and/or outside.  They are currently in the sweet spot, with the Euro falling apart.

Why would they follow what you think they "should" do?

The Euro has lasted longer than I thought it would.  Hope springs eternal that some kind of fiscal integration will take place.  FAT CHANCE.  The political bozos will continue to have summits ad nauseum -- number 20 coming right up -- with worthless breathless communiques announcing the accomplishments -- OF NOTHING.

Unfortunately, the US will eventually have to participate in a massive Euro area bailout.

Will the Chinese bail us out when the time inevitably comes?

VS

[admin]

No, completely agree, no fiscal integration, politicians rarely commit suicide..
Not in my lifetime.
Well, the Germans might be in a sweet spot, but it is souring by the minute. Basically the euro crisis is a classic balance of payment crisis, and what they've been doing is finance the deficits of the periphery through some not too well known system called Target 2. It's an intra-eurozone settlement system between the central banks. The Bundesbank is a net creditor to the tune of 25%+ of German GDP, and rising..