EconomicGreenfield

On June 29 I wrote a blog post titled “Financial Stocks – Notable Price Action.”

I continue to believe that the “price action” of various financial stocks is disconcerting.  I view the poor performance of these financial and brokerage stocks to be one indicator among (very) many that serves as a “red flag” as to the financial markets and economy as a whole.

Here is an updated chart to that June 29 post.  It shows the XLF (the financial ETF) on a daily basis since 2007.  As well, the S&P500 is plotted above it, with GS and JPM shown below it.  The blue line on each indicates the 200dma:

(click on chart image to enlarge)(chart courtesy of StockCharts.com; chart created by and annotated by author)

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1239.70 as this post is written

In the June 29 post (“Financial Stocks – Notable Price Action”) I wrote the following:

I think that the relatively poor “price action” of various financial stocks is notable.  It is one of many current indications that overall stock market health is not as strong as a casual glance at the major indices would indicate.

I continue to believe that the lagging / “sagging” price of various financial stocks is highly notable.  Here is another chart that I created a while ago that provides another view of the poor “price action” of the financial stocks vs. that of the entire stock market, as depicted by the S&P500:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart created by and annotated by author)

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The above chart is depicted on a daily basis, LOG scale, since 2007.   On each of the three plots, a blue line depicts the 50dma for perspective.

As one can see, there has been an interesting progression of the relative price of the XLF (Financial SPDR) vs. the S&P500, as seen in the top of the chart.  In the middle of the chart, the same can be seen in the $XBD (Broker/Dealer Index).  Generally, since mid-2009, the price of both the XLF and $XBD have been on a slow downward trajectory relative to the price of the S&P500.  The S&P500 is plotted on the bottom of the chart.

In my experience, any time the financials lag the general stock market for a considerable period, it is generally a “red flag” that should be closely monitored.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1229.10 as this post is written

This post is an update to recent posts, that began on October 6 (“A Chart Of Recent S&P500 Price Volatility“) on stock market volatility.

While I track many different measures of volatility, I find the following chart to be both simple and clear in depicting the recent outsized volatility in the stock market.

This chart depicts the S&P500 in 60 minute intervals from July 20 through yesterday’s close.  As such, it encompasses the progression of the stock market since its July 25 daily high of 1344.32:

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

The blue line is a 50-period moving average.

I continue to believe that this volatility is notable and has important implications.

As I wrote in the above-referenced October 6 post:

What I find notable is the frequency and extent of the price volatility.  As one can see, there have been several episodes of advances and declines of roughly 80-100+ points in rapid fashion – some even happening over the course of a few days.

While there are various ways to interpret such volatility, my overall belief is that such is (yet another) cautionary sign.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1218.28 as this post is written

This post is an update to the post of October 6 (“A Chart Of Recent S&P500 Price Volatility“)

While I track many different measures of volatility, I find the following chart to be both simple and clear in depicting the recent outsized volatility in the stock market.

This chart depicts the S&P500 in 10 minute intervals from July 20 through yesterday’s close.  As such, it encompasses the progression of the stock market since its July 25 daily high of 1344.32:

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

The blue line is a 50-period moving average.

I continue to believe that this volatility is notable and has important implications.

As I wrote in the above-referenced October 6 post:

What I find notable is the frequency and extent of the price volatility.  As one can see, there have been several episodes of advances and declines of roughly 80-100+ points in rapid fashion – some even happening over the course of a few days.

While there are various ways to interpret such volatility, my overall belief is that such is (yet another) cautionary sign.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1195.69 as this post is written

In my post of September 29 (“Near-Term Direction Of The Stock Market – Update“) I had reiterated my view that the S&P500 would fall below the August 9 low of 1101.54.

It did fall below that 1101.54 level, reaching a bottom of 1074.77 on October 4.

The question now becomes whether that 1074.77 was a “lasting bottom,” or whether there is more near-term downside.  I believe that the 1074.77 low will not be a “lasting bottom” – i.e. it will be breached to the downside in the near-term.

This may seem illogical to some, as we have seen a strong rebound from that 1075-level over the last few days.  Friday’s close of 1155.46, as well as strong futures indications this morning, have led many to become bullish.

This strong rebound seems to me to be a strong “bounce” more than anything else.  I continue to believe what I wrote in the aforementioned September 29 post – “…the stock market “price action” feels very “unsettled” to me, and, as such,  I think the “danger” here is rather high.”

There are many aspects of the financial and economic situation – many that I have recently written of – that lead me to believe this continues to be a dangerous situation.

Here is an updated chart of the S&P500, on a 1-year daily basis through 10-7-11 with price labels, for reference:

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

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Since the S&P500 highs of early May and early July I have written a variety of posts warning of what I considered cautionary signs for the stock market.  Most of those posts can be found in the “stock market” category.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1155.46 as this post is written