Friday, November 11, 2011

"Stocks Now Stuck in Third ‘Ginormous Range" (DIA; SPY; QQQ)

This market wants to go higher, we're still betting on the 1998 template. The closest similarity is in the left side of the chart. The "Oh crap" moment of realization for the LTCM/Russian default had a trajectory similar to the that of the 2011 Euromess.

The difference between now and '98 is that the trigger for the mid-year waterfall slide thirteen years ago was discrete and thus fixable. The Fed gathered the banks and said "You're going to rescue Long Term Capital Management".

It was done and the flopping in the bottom of the boat phase was shorter and in a tighter range.
This time around the uncertainty could be read in that bottom range with those big fear/greed moves and in the big givebacks as we ascend the right side of the chart.

Here's MarketBeat:
Dynamic Hedge
Ginormous ranges. Click for ginormous image.
After the market’s face-ripping rally of the past month, which is finding another leg today, you might think Wall Street would be a non-stop party, with cocaine-fueled Maybachs speeding up and down Manhattan blowing money all over the place. Instead, everybody’s miserable.

If you want to know why everybody’s miserable, take a look at this chart we lifted from Dynamic Hedge (via Abnormal Returns), which shows how frustrating this market has been.

As DH highlights, we have done a whole lot of churning this year to get nowhere. The bulls can’t get excited for too long because the next thing you know the market is tumbling into the abyss. The bears can’t get too excited for too long because there’s always a trampoline at the bottom of that abyss....MORE
Here's the DJIA chart from 1998:


A much more symmetrical rebound but hey, you play the cards you're dealt.
And remember an old joke:

"Do you know the difference between prayer in church and prayer in a casino?"

"In a casino you really mean it"