Deja-Vu

• Posted by Robert Sinn
• on October 27th, 2011

RISK ON BABY!! A blistering rally across the board today as the dollar ($DX_F, $UUP) has been hit hard and virtually anything that can be construed as being a risk asset is up 3%+. On a serious note, today’s monster rip across the board in equity markets got me thinking: When was the last time that the S&P 500 blew right through its 50-day simple moving average on the first test from below, followed by taking a blow torch to its 200-day SMA on the first test less than three weeks later? Check it out:

 

$SPX Summer-Early Fall 2010: The fundamental macro backdrop wasn’t too dissimilar to the current situation. Europe had just put on a band-aid and kicked the can for a few months while the $FED was making early rumblings about QE2 which put a steady bid into risk assets such as equities ($IWM, $SPY) and precious metals ($GLD, $SLV). Fast forward exactly one year later and we have this chart:

 

$SPX Summer- Early Fall 2011: A similar situation technically to last summer for the S&P 500, moreover, the fundamental macro backdrop is almost a carbon copy. Europe has just put on another band-aid and kicked the can for a few more months while the Fed has begun to make rumblings of a large-scale MBS purchase program (QE3). It’s deja-vu all over again.

 

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