On CNBC’s Mad Money, Jim Cramer runs a weekly segment called, “Am I Diversified,” where diabetic retirees call in and seek Jimbo’s input as to how well they can spread out their losses via diversification techniques. In that spirit, I am going to play that game too. Only this time, I am going take an admittedly hardcore bearish stance. The daily charts of the stocks seen below all show a “death cross,” where the 50 day moving average crosses down below the 200 day moving average. This cross reliably illustrates that a former uptrend (as seen in the inclining/flattish 200 day moving average) has grown long in the tooth, and the fresh downtrend is taking hold (as seen via the down sloping 50 day moving average). Basically, the presumption is that a bear market is now upon us.
Moreover, all five firms are considered best in breed in their respective sectors, and have very large market capitalizations, none less than $29,500,000,000. They are: $FCX (my “tell”), $GILD, $GOOG, $GS and $KO. In my charts, look for the blue line (50 day) crossing below the yellow line (200 day). I fully admit that I am cherry picking these five stocks to illustrate the death cross.
Assuming the death crosses hold, I would like to hear your comments over the weekend.
I would like to know, specifically:
Can the market successfully rebound with these five mega cap names in bear market mode?
It has been a long and intense couple of weeks. So, feel free to vent anything else that is on your mind in the comments section, when you guys check in to iBC periodically over the weekend.
Perfect shots set-ups. Your technical analysis confirms those found on put:call charts with these patterns
1) FCX- reverse H&S on ratio meaning put volume expanding upward from two year lows
2) GILD- put buying breakout of two year channel
3) GOOG- put volume coming off of two year lows
4) GS- put/call ratio turning up off lows but at this point best to rely on charts
5) KO-K.O.’d is right- soon will be as put/call solid reverse H&S patterns all the above supported by your charts
Good info., thanks for sharing.
I think if GOOG breaks down, AAPL might follow, and if AAPL breaks down, SNDK might follow, and then you have the domino effect in the Technology sector. Basic Materials and Energy sectors got massacred on Friday, and therefore I need to see Monday when it comes to making a call on FCX. GILD, KO, and GS are in a league of their own, seeing that GS moves awkwardly when the market moves awkwardly and GILD/KO tail whatever the main sectors (Financial, Energy, and Basic Materials) are doing.
So, in conclusion, I think it comes down to GOOG and FCX. Monday is crucial!
agreed Moose
It certainly does look dire especially the way copper is acting
A couple of odd things I’m watching
1) Just average volume on many names – death days like Friday usually have very high volume
Not so much lots of sellers just no buyers
2) Many stocks are above their recent lows yet the index is closed lower – this was my big tell to go long Mar 2009 when comparing it to Nov 2008
3) Leaders are much higher than May, most still look decent like there’s nothing wrong
4) Dollar is parabolic now, jumped 1.5% alone on Friday
Probably nothing and we’ll continue our regularly scheduled bear market
Those are excellent points. The velocity of the selling volume has diminished each successive leg down since April.
Great Points. the most obvious usually does not work.
Just want to drop by and say I love your blog. You have been a great addition to iBC.
Thanks RC–great to work with you here.
“where diabetic retirees call in and seek Jimbo’s input as to how well they can spread out their losses via diversification techniques”
OMG!! Fuggin Hilarious Chess!! Love it..
sidenote: I just started reading Aftershock, and I’m starting to think really apocalyptic thoughts of imminent disaster on the horizon for Markets and Mankind.. Ugh!
I’m glad I’m about 70% cash right now, but damnnn… still depressing.
Great post as always Sir
Indeed–thanks for reading Dave.
You’re absolutely right about “It has been a long and intense couple of weeks…” I figured the “flash crash” might play out like 1987 where the market needed 6 or 8 weeks to settle down before it was safe for intermediate and long term players to get back in. I think that still might work, but we seem to have a lot more volatility than we did then. If we close above the 1040 level on Monday, I might still believe that would work, and this would be a mild, albeit wacky, correction in a new bull(?) market.
If we can’t close above the 1040, I would think, uh, I don’t know what to think. There are so many cross-currents that any but the most seasoned and risk savvy traders/investors will see their capital severely impaired. Depending on conditions Sunday night and Monday morning I’m going to… Well um, I’ll discuss that over in the PPT.
Nice job on the tab BTW. I like the approach, time frame, etc. It really complements the other tabs, and the stuff that happens inside the PPT.
Thanks Yogs! You’re a loyal reader and I really appreciate that.
That guy on the pict looks seriously like someone who likes to beat his meat. And with martha as well!
Who said tv isnt for kids anymore.
no country for old men
Chess
I expect a brief melt up before the plunge for 2 reasons:
– so the mkt can shake out weak hands and inflict maximum pain
– the GS bots require a nice trading range and volitility is mothers milk to the traders
To paraphrase: we are doing God’s work; we want 100% guaranteed profits or you are screwed
Just read a quote attributed to Zerohedge:
No takers this week on the Romanian offering. CDS spreads have widened 25% or more for Austria, Bulgaria, Hungary, Czech Rep, Latvia. Lastly and maybe most disturbing is there were no takers this week for the Brazilian 11 yr Note. Damn, a BRIC country in trouble?
Phil from Brazil- does this portend big trouble ahead for Brazil?? When major country offerings fail look out, as all the dominoes can fall. Decoupling my ass.
Show of hands, how many of us own or know someone that owns Romanian, Bulgarian, Hungarian, Czech or Latvian bonds. In other words, who gives a pile of steaming shit if they default?
But no doubt if some 2-bit village in Estonia can’t get a bid on some munis then the S&P will sell off 100 points on the news. So we better pay attention.