Bob Hoye Blog | NYSE: Important Signal | Talkmarkets

After completing a degree in Geophysics, Bob worked in mining exploration. Inspired by the mistake of making money on his first trade, he joined an investment dealer. Historical research led to metals forecasting for large mining companies. This segued into providing independent research to ... more

NYSE: Important Signal

Date: Monday, October 2, 2017 3:04 PM EST

BOB HOYE PUBLISHED BY INSTITUTIONAL ADVISORS SEPTEMBER 25, 2017 NYSE:

NYSE: Important Signal

We have been monitoring for what could be the last key technical signal on the NYSE, which has been a Sequential (9) Sell. This was accomplished on Thursday-Friday on the S&P and DJIA. Considering the extraordinary valuations (fundamentals) as well as momentum and sentiment excesses accomplished, all that has been needed has been a “Sequential” which is pattern. As noted in Thursday’s Pivot, the latter signal registered on October 8th, 2007. The high for the S&P was on October 11th of that fateful year. Our “Special” of September 15th used a headline from Zero Hedge “The Wall of Worry is Gone” and added our line crafted for the blow-off in March 2000. “Every bull market climbs a wall of worry and in a rush of enthusiasm leaps over, only to find ‘Murphy’ waiting.” “Murphy” is arriving with last week’s pattern signal and today’s moves. The T-Bill rate is again declining, perhaps anticipating the credit contraction. US credit spreads have widened a little since Thursday and European spreads (Italy) continue to widen. The US dollar has been firming since Wednesday. For new readers, Street creds are important. Our proprietary “Springboard Buy” registered on November 3rd and with the election results and buying surge we began to call it “Rational Exuberance”. The prospect of a pro-business administration is “Rational” and still part of the story. But is now fully in the market. The next “Springboard” was in mid-April and with the technical excesses into June, we dropped the “Rational” and just called it “Exuberance”. With the April “Buy” we noted the possibility of an important high in June, with the likelihood of the New York market making a “final thrust” into September. As this was working out in August we changed our stance from “Understandably Bullish” to “Cautiously Pessimistic”. There is something special about 2017. As we have been noting, great financial manias have climaxed in the ninth year after the equivalent blow-out in global commodities, which was in 2008. Since 1720, there have been five examples, with the last key dates being 1920 for commodities and 1929 for the financial bubble. Which in NY completed in September, with the previous such set climaxing in September 1873. Great bubbles have been followed be severe contraction. If the action had not become so measurably speculative this year, this historical “model” would not be working. For an important top, we have a checklist. Is it up when it should be? And have there been signs of speculation? Yes, to both. We are now “Bearish” on stock and lower-grade bond markets.

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