Special Macro Chart Analysis by Master Trader Fari Hamzei
Courtesy of Damien Hoffman at Wall St. Cheat Sheet
Master Quant Trader Fari Hamzei was scheduled to contribute a chart to this week’s installment of Chart Junkie, however he offered us a special proprietary treat we had to bring to you all alone:
This is our coveted SP1-MoMo Chart. We have THREE components in an extremely overbought condition screaming a SELL to us all at once.
On the DAILY S&P-500 Cash Index (SPX) Chart (above), we see:
1) CI Diff, in the lowest subgraph, is now RED (crossed below 0);
2) CI reading is 27.5 !! This is an extremely high reading. This is due to a very high ramp-up rate the market has traded at since Meredith Whitney woke us on that faithful Monday (July 13th) to remind us all that “in GS she trusts” — at least for this quarter; and,
3) Divergence between long-term [modified] Advance-Decline Line on the subgraph SP1 (above) and its short-term sister MoMo. THESE DIVERGENCES always work out. Note the previous three divergences: two bullish and one bearish, in mid-June, early March, and late November.
Bottom line: A pause is in order. In our humble opinion, at minimum to 954 (38% retracement) or down to the 937 area (50% retracement).
