Disney reports today after the close. My guess is that it will go down regardless of what tale the numbers tell. A little pop could be possible but the next serious move is down.
Have a look at the August blog, it predicted both the low and the present high within two dollars or so, rather amazing I think.
See the Dec 1 blog. The charts is repeated on the left, reality now is on the right, if only they all behaved this well! The A – B – diagonal C is what we have seen on many stocks, and if not that then similar structures. They are all ready to cave in but still not doing it. The Dow has gone beyond the point where it should have stopped, not yet sure how to account for that!
Talisman is the one in the red. The others are West Texas oil, Suncor and PetroBakken chosen on the basis that I have commented on all of them. Notice that they are all within 10-20% of the starting point in May except Talisman Energy, which is still 45% below that level. This is worrying as we may miss the boat (as with Morgan Stanley). On the other hand there is a train going by all the time so, you miss one, you take the next one. Up to you.
The tech stocks, represented by the Nasdaq, have enjoyed quite a bit of (irrational?) exuberance lately with the upcoming Facebook IPO, the Superbowl and Greece’s soon to come “no-default” default. But the simple fact that this index is still down by 40% since the highs some twelve years ago, remains. Also, despite the longer timeframes involved, the “picture” is essentially identical to most other indices and or individual stocks. The message is that this can turn any moment.
Some might argue that the market is full of negativity, pessimism and so on, but looking at the standard gauges like Put/Call ratios, sentiment indicators, volatility and so on , they clearly indicate the contrary. Not to bore the reader, we will show only two, the cash ratio at mutual funds in the US(see link),and a sentiment index for the Nasdaq; http://home.comcast.net/~RoyAshworth/Mutual_Fund_Cash_Levels/Mutual_Fund_Cash_Levels.htm
The sentiment is running at an all time high, at least for this 10+ year period. The cash levels at mutual funds are at an all time low at about 3.5% of assets held. The message here is that there is no one left to buy nor any money left to buy. Volatility – I am now boring you- that is now around 17 coming off 47 or so a few months ago, tells the same story;
Here I have overlaid the S&P onto a chart of the VIX, or volatility index. The current wisdom is that you should wait for the markets to calm down, which clearly is exactly what you should not do, at least not for the past 14 or so years. The zero line is just a base line set at the start of this chart, it does not represent a particular value! Note that when the S&P goes up, the VIX goes down and vice versa. This is logical as one should buy when the proverbial blood is flowing in the streets. Obviously not now!