Breadth Thrust: Prelude to a Crash?

Pardon the sensational post title, but an email from a subscriber (‘L’, a financial advisor) had a grounding effect on me.  He sent me this photo along with…

“I thought you might be interested in the breadth thrust that is going to trigger today. For some reason the Internet seems to be full of misinterpretation of a thrust. My numbers show that this will trigger today. Sets up for a 1987 scenario it seems to me. Attached is the history of it.”


I tend not to be a numbers or quant guy as you know, but whatever it is he sees certainly does make sense with an eventual terminal scenario.  My question back to him…

“Thank you ‘L’.  Setting up an epic suck in?  Is that your read?”

L’s reply…

“That’s exactly my read. Check out the gold silver ratio in 87. Similar situation I believe. Maybe the economy picks up? Or inflation starts to pickup. Or maybe just a rotation out of bonds.

I have been cautious for years now because of market cap to GDP and other valuation ratios but this feels like the final move to me”

Me again…

“The final move.  That is exactly how I would describe it!  The question is going to be how far it goes?  If you don’t mind I think I would like to make this subject a focus in an upcoming report.”  [making it the subject of a public post instead]

I have been acting a bit like an an obnoxious bull boy here at the site, but this is a suck in of some kind.  Is it a quick upside throw over to get the herd all in or is it Armstrong’s post sling-shot move?  I don’t have a conclusion yet, and nor should I… or you.  It’s the market and it will decide.  Something tells me that when something changes abruptly and/or dramatically in bonds we’ll start getting some warnings.

So enjoy being a bull but stay away from that foreboding looking building over there with the blood curdling sounds emanating from it.

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