Part VI: the S&P 500 conclusion
part 1 – we went around the world and, objectively, noted that the rest of the world had not made new highs and that some of them were in downtrends confirmed by lower tops and lower lows.
part 2 – I took my son to get his haircut yesterday and, after I posted the “too big to fail” there was Barney Frank on the talk shows talking about how strong the banks were and blah blah blah. I couldn’t help but laugh at the irony. Anyway, the XLF ETF (being used as a proxy for the banks) has either completed or about to complete a major sell signal. the “banks lead us up and lead us down” …..the continuation of this move in equities will be, almost directly, related to this level …WATCH IT LIKE A HAWK.
part 3 – technology is doing very well right now and, w/ as the largest weight w/in the S&P 500, it is continuing to have positive energy on the index. The move thru 3600 was a big deal on the NAZZIE. however, targets are just a little higher. the NAZZIE needs to weaken to start the flow of funds out of tech/banks/energy into the staples.
part 4 – energy (XLE), crude and oil services index were all shown to be coming close to sell patterns being complete.
part 5 – sector rotation model was shown and the importance of the staples sector relative strength was shown.
Summary: banks tag SELL target, NAZZIE tags SELL target a little higher, ENERGY rolls over and the staples ration takes off. TOP IS COMING, CAVEAT EMPTOR. CONSIDER THIS ANALYSIS WRONG W/ A WEEKLY CLOSE above the target zone on the XLF.
Final worlds — I was asked, by multiple people to do an analysis of the S&P 500. I did that by never showing a chart for the S&P 500. I tried to work my way thru the largest sectors of the S&P, use commodities (Palladium), intermarket analysis and ratio analysis. I have found when I work in isolation I become blinded. Keeping a big picture is what helps. Why did I get it so wrong for the past 1-1.5 years? a debrief of my analysis didn’t take into an account of the importance of the banking sector longer term pattern completing….that’s the biggest one, IMHO. Additionally, I underestimated the importance and strength of the technology sector.
all that being said, I remain a bear … the unbelievable and non-stop basket buy programs fueled by cheap money has caused an “appearance” of strength. I think it’s all a house of cards, most everyone knows it and when it comes time to go out the exit there’s not going to be enough room and this puppy is going to go down, hard.
don’t be asleep at the wheel and just did a quick look at bloomberg.com and this was the headline: http://www.bloomberg.com/news/2013-09-13/eu-nations-fight-barnier-plan-for-bank-failure-authority.html