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Monday, March 11, 2013

A few interesting charts

I ran across a few charts that I found interesting.  The first one is on the financial stress tests.


It looks like the financial stocks ran up into the stress test last year then sold off.  The run up this year looks pretty similar.  Will there be a sell the news to the stress tests that were just released?  GS looking a little like a short term top.  Check out its daily chart.

This next chart is for global risk appetite.


This chart is pretty faint.  Its too bad because it is kind of interesting.  The red circled sell signals mostly happened within a month or two of the U.S. market top.  The exception is the one before the yellow circled area.  That sell signal happened in 2009, while the U.S. market kept going up until May of 2010.  The green circle marked a buy signal 4-6 weeks before the major bottom in 2009.   This chart is not great for market timing because it can lead quite a while.  However, it does mean there is some risk of a correction that has not been present since the buy signal late last summer.  This chart was pretty strong during the correction in Nov. last year.  It was on a sell during the correction into June.  The reaction of the market off those lows was radically different.  Did the risk appetite have something to do with that?  Unfortunately I don't have a regular source for it.  I got this chart form Zero Hedge (notoriously bearish bias).  They probably won't show it when it gives buy signals because that would be useful to more people, LOL.  At any rate it is signaling an increase in down side risk at the moment.

I have never seen this next chart before, but it is extremely interesting and a great idea.


Measuring stock valuations against their own history seems valid to me.  It must have taken a lot of work to put this chart together.  The prior two circled peaks sure led to big sell offs.  There was a top in March of 2002 right under SPX's 200 SMA that led to a really sharp sell off.  We were already out of the recession and the economic data was not all that bad.  I was very surprised by the magnitude of the move down.  Now I can see why it might have happened.  There were a lot of stocks richly valued based on their own history.  We can see that also happened at the 2007 major top.  So here we are again.  What is going to happen this time?


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