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The Power of the Wave Principle

NDX, Banks and EuroStoxx All Tumble

Stock-Markets / Stock Markets 2016 Feb 08, 2016 - 04:38 PM GMT

By: Anthony_Cherniawski

Stock-Markets

NDX gapped down 76.48 points, putting it well beneath its Head & Shoulders neckline and its prior low.

ZeroHedge comments, “Just over two weeks ago, JPM's Marko Kolanovic, whose unprecedented ability to predict short-term market moves is starting to seem a little bizarre, warned that the next "significant risk for the S&P500" was the bursting of the "macro momentum bubble." Specifically, he said that there is an emerging negative feedback loop that is "becoming a significant risk for the S&P 500" adding that "as some assets are near the top and others near the bottom of their historical ranges, we are obviously not experiencing an asset bubble of all risky assets, but rather a bubble in relative performance: we call it a Macro-Momentum bubble."


In retrospect, following tremendous valuation repricings of several tech stocks, last week's LinkedIn devastation being the most notable, he was once again right. And over the weekend, he did what he has every right to do: take another well-deserved victory lap.

This is what he said in his February Market Commentary: "Tech Bubble Burst?"

The FANG stocks have been defanged.

The BKX is in even worse shape. I have not located the European Banks Index symbol, but the US and Europe should be in tandem. Notice the retracement did not even have enough strength to touch back the Head & Shoulders neckline.

European banks are in a bloodbath and now subject to bail-ins. ZeroHedge comments, “While the ongoing slaughter in European bank credit, and mostly counterparty risk, is troubling, it is nothing new: we have been showing it for over a month, most recently on Friday in "European Bank Risk Soars To 3 Year Highs, US Risk Rising."

EuroStoxx Index is at 2804.66, beneath its neckline and prior low.

This week is turning out as the Cycles Model suggested.

Regards,

Tony

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