Further Signs of Rally Exhaustion

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vhf

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Further Signs of Rally Exhaustion

posted on Jun 09, 2009 05:28PM

As noted in the two charts below, the PPT induced equity market rally is currently running on fumes. Now that insiders have sold their overpriced shares, the banks have issued their new shares, and the banksters have established their short positions accordingly, the usefulness of the rally has now ended.

After shorting, legally and illegally, PM stocks for about 2 years, it is more than likely that these same banksters and their hedge fund associates have established their long positions in this sector. Therefore, as the equity market rally ends, there is a good chance that PM stocks may diverge from the expected fall in other markets. Couple this with much reduced interest in the bond market and a fall in the USD, we can see that gold may be fueled by triple whammy octane. This Thursday's long T-bond auctions should reveal if the bond market is ripe to roll over.

Regards - VHF

BUYING VOLUME IS SLOWING. IS THE RALLY DYING OUT?

TPC

9 June 2009

As we mentioned in late May, the volume of this powerful rally has died out as the rally has extended. This is a glaring characteristic of bear market rallies. Some portion of this could be seasonal (given the beginning of summer), but given the staunch bullishness in the market and the huge gains you have to wonder where the buyers are going to come from in the coming weeks and months if this trend continues. More importantly, is there a catalyst that will keep the buying volume from slipping? Today was another weak days of money flows.

Click to enlarge: http://tinyurl.com/lbhmrx

Implied Vol Ratio At Inflection Point

Tyler Durden

June 9, 2009

The ratio of VIX (1 month fwd implied vol) to VXV (3 month) has dropped to a low of 0.92, a level crossed to the downside only 7 times over the past 2 years, and usually as a leading indicator of market downside activity. However, in this environment, where a majority of corporate risk is nationalized, and the only traders are a few tireless SPARK stations, it is anyone's guess whether this metric is relevant for anything anymore.