Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Technical Evidence Dow's Bew high is Not a Stock Market Breakout

Stock-Markets / Stock Markets 2013 Nov 16, 2013 - 02:40 PM GMT

By: Brian_Bloom


Complacency does not equal buying hysteria

There’s too much “loose talk” that the public is going to pile into the market for the third, and final, blow-off phase.

The first chart below ( shows that, since August 2011, the index has been rising on falling volume. Over a two year period (+- 700 days) at an average daily volume (visually) of around 150 million, (700 X 150 million =) 105 billion shares changed hands. By contrast, OBV has risen from around 2.5 billion to 7.5 billion = 5 billion.

i.e. Roughly 5% of volume has, on balance, been buying pressure. Share prices have been rising because institutions have been trading in and out against a background of investor complacency flowing from QE. (This analysis was done visually and should be regarded as evidencing the principle that there has been an absence of buying hysteria)

Now let’s take a closer look at the second chart below (

Note two things:

1. The Dow rose to a new high but the OBV did not. It follows that the index price floated up rather than being pushed up by “buying pressure”. I.e. The new high was more a function of an absence of selling pressure.

2. Note how volume in the past two months has been averaging around 100 million shares a day.

This is one tricky market. If a “black swan” should emerge, sentiment could turn on a dime. It’s what we don’t know that’s important. What we know is the following, and it has already been factored into prices:

· The Syrian and Egyptian economies are basket cases that threaten to engulf the gulf.

· Some countries in Europe are trending towards economic basket cases

· Yellen wants to keep her foot on the accelerator, notwithstanding the “fact” that $1 of QE has historically given rise to less than $1 of GDP

· China is facing the consequences of massive mal-investment and is re-examining it priorities.

· The world has >$47 trillion sovereign debt

· Iran is edging towards having its nuclear energy ambitions accepted by the world

· Coal stocks (mined ore) is piling up mountainously in Newcastle Australia, where much of the coal destined for China is loaded onto freighters.

· Obamacare is providing embarrassing evidence that the US president is a smooth talking, ivory tower theoretician who is not really on top of his utterances.

· The Philippines has just suffered what appears to be a significant validation that climate change is not just some weird ivory tower concept

· The US finance industry has written off most of the historical bad debts arising from the real estate implosion, and domestic real estate in the US now represents a fairly lucrative investment relative to (say) US treasuries.

· The US is benefiting from its fracking industry (oil and gas)

What we don’t know is:

· What the Chinese authorities are going to do about the internal issues of:

o Mal-investment

o Exceptionally high personal debt levels

o Slowing economy

· Whether one of the European PIIGS will default while the ECB stands aside

· Yellen is saying one thing and thinking another

· The rest of the world will continue to meekly accept the US’s QE

· Whether the Typhoon that battered the Philippines is an early warning sign of mother earth flexing her muscles.

· How Israel is going to react to Iran’s nuclear push being accepted as a fait accompli by the rest of the world.

· Whether Russia will see an opportunity to re-establish itself as a “player” on the world’s power stage.

· What will happen to the world’s capital markets if interest rates start to rise.

So, those of us who have an ability to sleep well regardless of these unknowns will probably remain fully invested in an environment where the charts are hitting new highs.

By contrast, those of us who are focusing on the “knowns” and, seeing most of them as inhibitors of future economic growth, will be worrying about the unknowns and watching the charts like hawks for subtle signs that the “good times” may not be as robust as they seem - as evidenced by the OBV charts above.

Other technical indicators that are flashing warning signs are:

The volatility index below ( is at a 3 year low and the MACD cannot fall further because the $VIX would have to fall out of bed for that to happen. i.e. Volatility (fear) has nowhere to go but “up”

Finally, below is a chart of the Investors Intelligence Bulls/Bears Ratio. Note that it once again approaching an all time high. (source: )

Brian Bloom

Author, Beyond Neanderthal and The Last Finesse

Beyond Neanderthal and The Last Finesse are now available to purchase in e-book format, at under US$10 a copy, via almost 60 web based book retailers across the globe. In addition to Kindle, the entertaining, easy-to-read fact based adventure novels may also be downloaded on Kindle for PC, iPhone, iPod Touch, Blackberry, Nook, iPad and Adobe Digital Editions. Together, these two books offer a holistic right brain/left brain view of the current human condition, and of possibilities for a more positive future for humanity.

Links to Amazon reader reviews of Brian Bloom's fact-based novels: The Last Finesse, Beyond Neanderthal

Copyright © 2013 Brian Bloom - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Brian Bloom Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules