Look At These Trace Charts Comparing Now and 1966

Quote from osorico:

Here's another source maybe to your liking.

DJI 1966 Daily Correlation...
http://www.mrci.com/special/out/ddji66.pdf

DJI 1966 Weekly Correlation...
http://www.mrci.com/special/out/wdji66.pdf


S&P 1966 Daily Correlation...
http://www.mrci.com/special/out/dspi66.pdf

S&P 1966 Weekly Correlation...
http://www.mrci.com/special/out/wspi66.pdf


nice find ByLoSellHi.

Osorico :)
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Those are even better.

I honestly find the almost perfect overlap between these charts eerie.

I don't know if such almost perfect overlays between such divergent time periods is common or not.
 
Quote from osorico:

Here's another source maybe to your liking.

DJI 1966 Daily Correlation...
http://www.mrci.com/special/out/ddji66.pdf

DJI 1966 Weekly Correlation...
http://www.mrci.com/special/out/wdji66.pdf


S&P 1966 Daily Correlation...
http://www.mrci.com/special/out/dspi66.pdf

S&P 1966 Weekly Correlation...
http://www.mrci.com/special/out/wspi66.pdf


nice find ByLoSellHi.

Osorico :)
More...
Sounds like mucho dubious pseudo-science to me...

1). High positive correlation does not imply causality.
2). Correlations can be spurious.
3). Correlations are not stationary and in significant market events (when you are expecting the magic of diversification to protect you) correlations amongst multiple asset classes tend to approach + or - 1.
4). Fooled by correlation: http://www.gummy-stuff.org/perfect-correlation.htm
 
Quote from Equalizer:

Sounds like mucho dubious pseudo-science to me...

1). High positive correlation does not imply causality.
2). Correlations can be spurious.
3). Correlations are not stationary and in significant market events (when you are expecting the magic of diversification to protect you) correlations amongst multiple asset classes tend to approach + or - 1.
4). Fooled by correlation: http://www.gummy-stuff.org/perfect-correlation.htm
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Correlation analysis is one of the few reliable tools in my shed.

Yet everything you say is very perceptive.....and very true.

I will say that technical work such as these charts posted by BLSH is more interesting than fundamental correlations.

Case in point: What if you were a bond trader and you correctly forecast $700 gold and $80 crude. In what universe would you then price the Long Bond at under 5%?

And those are intermarket relationships with correlations rooted in pretty common sense theory. Yet, wrongo.

Or in what world would one presume multi year dollar lows in Euro land occurring simultaneously as multi year dollar highs in Asia?

Or the recent pop in Unleaded while crude chops?

Or 4.50 corn and only 7.25 beans?

Who in 1989 would have forseen the the Dow briefly crossing the Nikkei a little over a decade later?

I agree Equalizer, spreads are the biggest potential blow up trade around. I love them.
 
The world is awash in crude, but not refinery capacity. And awash in soybeans in storage but not acerage. Imbalances create opportunity.
 
Quote from stock_trad3r:

There are tons of articles but a lot of the analysis is simply flawed and should be taken with a huge grain of salt. The charts look similar but that was from 1966. It is just a coincidence.
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No it's not a coincidence.

1960s experienced a bull/bubble market due to a conglomerate M&A boom.
This type it's the LBO boom, as well as some M&A consolidation activity.

Similiar dynamics, very similiar. I wouldn't say that the chart action will repeat itself exactly, however.
 
Quote from Hydroblunt:

No it's not a coincidence.

1960s experienced a bull/bubble market due to a conglomerate M&A boom.
This type it's the LBO boom, as well as some M&A consolidation activity.

Similiar dynamics, very similiar. I wouldn't say that the chart action will repeat itself exactly, however.
More...



I didnt think you were bearish hydro,

I would be quite worried about the private equity sector and the amount of debt and leverage they are carrying.
 
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