In what may win the award for most amusing and gripping analyst note of the day (yes, it’s a high bar), technical analyst Richard Ross of Auerbach Grayson rewrote the climactic scene from “A Few Good Men” where Jack Nicholson’s character admits ordering a Code Red that resulted in the death of a soldier. Ross reimagines himself in the role of Nicholson, warning investors not to buy risky assets as the S&P 500 got closer to the dreaded 1,120 level.
Technical analysts warned for weeks that the market would fall sharply if it slid below 1,120. Since passing that mark yesterday, the index has dropped below 1,100 and was recently at 1,095. Ross thinks it has farther to fall, and risky assets “are heading significantly lower.” In fact, he is now looking at a target price for the S&P 500 of 1,008.
Check out a selection from Ross’ note below and then be sure to rent the movie, so you can remember a simpler time when movies were scarier than real life.
“We live in a world of walls, and those walls need to be guarded by men with charts. I have a greater responsibility then you can possibly fathom. You have the luxury of not knowing what I know: that the breakdown in the S&P 500 below 1,120 while tragic, probably saved billions. And the charts of Crude, the Euro and Emerging Markets, while grotesque and incomprehensible to you, save jobs! We use words like �Support�, �Resistance�, �Fibonacci.� We use these words as the backbone of a life spent defending something. Fundamental analysts use them as a punchline! I have both the time and the inclination to explain myself to investors (see charts) who rise and sleep under the blanket of the very freedom that I provide. I would rather you just said �Thank You�, and traded our way. Did I order the Code Red on �Risky Assets? You�re darn right I did! Do you understand these rights as I have just read them to you? All you did was weaken a market today. You put prices in danger. Sweet dreams, son.”
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