Morning Audibles 8.27.10 - Bam! Spliff! Pow! Holy cow BB-man!

Reading AMENRA's corner last night... CV was struck with curiosity by this cryptic comment...


Creditcane™: Bam! Spliff! Pow! Holy cow BB-man!


The first part is easy... We all know what Creditcane™ is (although nobody seems quite sure what it does)... And of course...

&

We know those as being what we do to our pillows and cognos & Harry Wanger voodoo dolls when our trades go the wrong way...


There is, of course, too, the I-Man option for SPLIFF...

But none of that was what was curious to CV... What got me curious was the...

BB-Man

That part was odd to me... Now, assuming AmenRa wasn't talking about a STUTTERING Robin, or this guy right here...

Related to this guy... Who you Chicago Cubs fans know very well...

And who mentored another famous Chicago prodigy...

So what was AMEN RA referring to with the use of "BB Man"? Frankly, I have no idea, but the thought took me on a little journey looking for things that I might be overlooking...

My first stop was BloomBerg... Where I ran across the Nenner video (if any of you have not seen it yet)...

http://www.bloomberg.com/news/2010-08-25/charles-nenner-sees-dow-falling-to-5000-in-two-years-video.html

Also... Batman's sidekick "Robin" Griffiths...

http://www.bloomberg.com/news/2010-08-26/cazenove-s-griffiths-sees-u-s-stocks-testing-2009-lows-video.html

B-But the question still b-bothered me... Why were these men so b-bearish?


So I just decided to pull up some long term charts and see if there was anything to see... This is the end of the month, and the S&P cash is VERY close to what would be a "confirmation" of a MONTHLY 3lb  reversal (which reversed in May - b-but hasn't confirmed yet - as it requires a MONTHLY close below to confirm)... That level on the S&P is roughly 1130...


I wanted to see how it looked on a MONTHLY chart with 2,20 BOLLINGER BANDS... And here's how it looked...

I don't want to get into a lot of annotations here... Why? Because it's an odd way of looking at technicals... Some people get VERY PICKY about the TYPE of technicals they gravitate towards to underscore their own belief system... I did, casually, note the following:

- The horizontal blue line is the 1030 level which would be the MONTHLY 3lb reversal confirmation line... What's interesting about this level, is that it corresponds somewhat to the 1998 LTCM crisis, the "capitulation" in the summer of '02 recession, the confirmation base for the '04-'07 rally, and the "capitulation" point of the '08 credit crisis... 

- The red elliptical circles are points when the MONTHLY candles "took out" the midpoint of the BB's... What I see are TWICE (in '00, and in '08), it turned out to be the beginning of a VERY LONG & STEEP decline in equity prices... The exception was in 1998, after LTCM, (which was probably due to the fact that it was more of an "isolated" credit event - at the time)... In ALL cases, the MONTHLY CANDLE (and for that matter, the length of the candles in advance of) the crossover of the midpoint of the BB's were VERY LONG (as is the case right now)...

These are just observations...

I also decided to take a look at this on a weekly basis...

Again, no particular annotations, only to say that on the last major high in the S&P (Oct '07), when the WEEKLY CANDLE closed under the lower shadow of price band level (when the market was at its high), then prices began to collapse soon thereafter...

What is also interesting to note is that in this moment, the MIDPOINT of the MONTHLY BB is 1007, while the LOW SHADOW of the 2,20 BB's is 1009... Of course, both levels are in very close alignment with the 1010 low of 2010...

So I don't know if any of this means anything or not... But it may make a case for considering that despite the S&P having some very short term OVERSOLD technicals, in the past (decade) the most major vicious moves down have actually come at points such as this...