Equity market warning sign

[malleefarmer]

Apparently, U.S railcard leases and buy backs are now the worst in 40 years. 400,000 rail cars idled due to the commodity recession. Bankers now own rail cars stateside.

When transportation (a very key economic indicator) runs into-the-gutter and banks become owners, that is a sure-fire sign of recession (IMO).

We’ll see if U.S. stock markets make new historic highs again this week . . . .

You or your company on twitter Errol or tehanylist

[TechAnalyst]

That may have been it but I don't expect so given the warning signs I'm seeing.

I don't think the risk is removed until stocks close above Monday mornings highs (Dec 2).

For the record, the reversal pattern was negated on Dec 12th with a close over 3160.

That didn't negate all of the risks that Errol has pointed out over time, they are still very much being ignored - for now.

It is worth noting that stocks weren't able to hold Friday's record high and closed lower on the day. That has been followed by more selling pressure this morning.

If last weeks low is taken out (very close now), it will leave a two day reversal pattern, another warning shot over the bow.

[errolanderson]

For the record, the reversal pattern was negated on Dec 12th with a close over 3160.

That didn't negate all of the risks that Errol has pointed out over time, they are still very much being ignored - for now.

It is worth noting that stocks weren't able to hold Friday's record high and closed lower on the day. That has been followed by more selling pressure this morning.

If last weeks low is taken out (very close now), it will leave a two day reversal pattern, another warning shot over the bow.

TechAnalyst . . . you were right on-the-money when you posted this alert.

It was Fed manipulation stoked by the ongoing repo crisis that reversed the impending selloff in equities.
Fundamentals no longer matter in stock markets, until they suddenly do, . . . which they will.

Now the Fed says there are worried about inflation. Almost laughable (IMO). That's about the least of their worries heading into 2020 . . . .

[TechAnalyst]

They did it again but this time with more troubling signs accompanying.

US stock markets opened strong to start this morning's floor session then worked lower most of the day, closing below yesterdays low (on the SP and NQ). In the case of the Nasdaq, it opened the session in record high territory and closed below yesterday's low. This key reversal may be more concerning than the previous one given the RSI shows lower levels of internal strength has accompanied the new highs. The S&P missed a new record high and thus a key reversal by 0.50 pts but did register an outside down day none the less. It opened the floor session above yesterdays high and closed the day below yesterdays low.

Adding to the concern is the developing coronavirus story (which may triggers profit taking at the least) and a significant rally in US treasuries this week. That is often considered a sign of a flight to safety as investors look to move money into safe havens, as is strength in gold and the Japanese Yen - both evident this week.

That is why I added J P Morgan's quote to the other thread "I made a fortune getting out too soon"

[TechAnalyst]

I struggle with using an event that is causing harm to make a point, and the benefit of using something that has played out over months in real time for demonstration purposes. That said.

Put options are price insurance for whatever asset you want to protect. Whether it’s the protection for your portfolio at record high stock values as we’ve been discussing here or the price protection suggested a few months ago (on a different thread) when the cattle markets had a good run or Errol’s suggestion of $490 canola puts, the process and protections are all basically the same.

I know the bad wrap options get – 90% expire worthless… But that's just describing the insurance industry. Collect premiums from the majority to compensate the few that suffer significant losses.

Point being, I wouldn’t throw them out of your risk management toolbox just because they could be a waste of money. I hope my life insurances policies are a waste of money every day!