Thursday, January 15, 2009

the Monster

I give you the banking sector index (BKX) : S&P 500 ratio.

The moment of truth is truly here...

I just can't get over the symmetry in these charts. It's breathtaking.

Never miss an opportunity to overanalyze, so here goes:

Looking at this chart it is blatantly obvious where all the volatility and fear was captured. If my interpretation is correct, the market will transition to a much quieter (comparitively) and stable trading range. You could say this week was the going away party for fear as we were coming in to test the July lows. Coming out of this test (as long as it holds...), the market should slowly creep higher. It will not be anything like this fall - so I would advise traders to adjust accordingly. This will be hard to get use to after working through chaos for the last six months or so.

Much like an adrenaline junkie reporter adjusting to life in the suburbs after living through a warzone, it will take some getting use to Pleasantville.

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