Friday, December 04, 2009

Bearish Cross in NYSE Volume Suggests Rally Will Crumble

A chart plotting simple moving averages in the New York stock exchange (NYSE) volume reveals a fundamental weakness in the current stock market rally.

If "volume is the weapon of the Bull," then this Bull Market Rally is either flat-out doomed or extremely fragile. Frequent contributor Harun I. graciously shared a deeply insightful chart--a chart of deceptive simplicity. It plots only two lines, as Harun explains:

The attached chart of 52-week (blue line) NYSE Total Volume and 200-week SMA (magenta line) is a reality at odds with mainstream propaganda.

Before I post the chart, please read the HUGE GIANT BIG FAT DISCLAIMER below to refresh your awareness that this is not investment advice but merely the freely offered musings of an amateur.

Here's a snapshot of the chart:

Click the snapshot to open the full chart in a new browser window.

If you examine the entire chart, you will notice how perfectly the lines track the great Bull market and the underlying economy; the moving averages only intersected during the 1990-91 recession/Bull market pause.

Now, however, the moving averages of volume are dropping and diverging as the 52-week moving average is plummeting below the 200-week for the first and only time in 26 years.

Simply put: volume is not supporting this rally, and if "volume is the weapon of the Bull" then the Bulls have no weapons at all--unless you count propaganda about "green shoots" and blatant government manipulation of the credit and stock markets as "weapons" which can compensate for declining volume.

But that's just another way of saying propaganda and manipulation can overwhelm reality. They have done so for 9 months, but reality has a nasty habit of wresting free of manipulation, lies and artifice at the most inopportune moments--like right now, for instance.

NOTE: Thank you to everyone who wrote me and/or contributed to the site in the past 14 days; I have several hundred emails to respond to and unglamorous tasks like collecting dead leaves and website maintenance which compete for my limited time. Your patience is much-appreciated.

News flash: My interview with Richard Metzger at Dangerous Minds is now available for viewing. (And yes, I know I look old...give a 55-year old a break!)

Permanent link: Bearish Cross in NYSE Volume Suggests Rally Will Crumble

Get Survival+: Structuring Prosperity for Yourself and the Nation on or in ebook and Kindle formats. A 20% discount is available from the publisher.

Expanded free eBook now available (85,300 words, 136 pages):
in HTML: Survival+ in PDF: Survival+

NOTE: the Kindle reader for PCs is now available for free which means you canread the Kindle version of Survival+ on your PC.

Of Two Minds is now available via Kindle: Of Two Minds blog-Kindle

Thank you, Paul C. ($20), for your exceedingly generous contribution to this site. I am greatly honored by your support and readership.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.

Our Privacy Policy:

Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Adsense and Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative)
If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.

Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted
on my site.

  © Blogger templates Newspaper III by 2008

Back to TOP