- This Technical Signaled The Last Two Market Crashes And It Just Happened!
by Tyler Durden, www.zerohedge.com
Submitted by Thad Beversdorf via FirstRebuttal.com,
… So what I’ve done is taken a two decade period of S&P pricing which encompasses several cycles. Mid 1990′s was a market mid cycle having recovered from the short recession of the early 1990′s but before things really began heating up in the late 1990′s. If we just have a gentle look at the chart we see we’ve had a couple large cycles with fairly extreme booms and subsequent busts. Currently we are in the midst of the third boom which has taken us to new all time highs. Now even a 5 year old can look at the chart and say at some point this thing has a large down turn, same as it always does. That’s easy to see and not many will argue it. But as so many bulls remind us we could have said the same thing about this chart a year ago and we’d have missed out on significant returns. Very true. So the key is then figuring out where the down turn begins. I know I know that’s the kind of stuff you have to go to biz school for eh. Ok so let’s first have a look at the easy chart.
And again this brought us into the latest Fed bubble. Now during this latest cycle the RSI moved up but bounced off the upper band a few times without actually breaking through 70. At the same time the S&P moved higher but with quite heavy volatility. Eventually we saw the RSI move up and break through the upper limit. It was about the same time that the S&P traded higher to the upper BB where it tracked for some time. However, at the end of November 2014 the S&P started to dislocate and moving down below the upper BB. And then ominously January of this year we saw the RSI also move below the upper RSI band.
Remember this technical signaled the popping of the past two bubble cycles. Now February saw the RSI move back above the upper band but March moved back down below. I would watch this very carefully now. I would venture to say if April remains below the upper RSI band we could very well have moved into the latest and perhaps greatest period of wealth destruction. It is time to protect those assets.