The Liquidity Index gives no clear guidance. 2 Cases seem possible.
The Gold Breadth chart indicates a potential interim LOW in Gold might be close. This can be seen by the extent of the fall of the Liq. Index and by the length of the timing window.
The Vix_Osc is still overbought and needs some more pressure relief.
Sir,
ReplyDeleteI have been an ardent follower of your analysis. But the liquidity index and the actual movement in stocks is not really matching up. I mean liquidity index has gone down more than 2008 in point terms and yet stock market has barely moved. In fact IWM is still near it's highs than even it's mid point of 52 weeks.
Adding to the fact that vix is still OB, i am more inclined towards equities correcting drastically while liquidity index remains flat or moves slightly to the upside. Exactly same as it did during the march 09 bottom. LI bottomed much before stocks.
Do you forsee such a scenario? Almost 99% of folks expect a santa rally amidst all bad news. Wouldn't it make sense to prove them wrong and bet otherwise. Not sure?
Your thoughts?
Jason
Jason,
ReplyDeleteI agree with your assessment that we could be in for a very painful Q1. Stocks should follow the Liquidity Index at some point. On the other side bear in mind that the market is very manipulated and that patterns can change temporarily...meaning things will catch up at some point in the future.
HistoryRhymes