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What You Ought To Know About Today’s Stock Buybacks

Daily Chart AMarch 19th

3/19/2015 –  A mixed day with the Dow Jones down 117 points (-0.65%) and the Nasdaq up 9 points (0.19%)

We have talked about stock buybacks and their eventual negative impact on this forum before. The Atlantic has a fairly good expose on the subject matter from a different angle Stock Buybacks Are Killing the American Economy

The article asks a simple question. Despite corporate profits being at the highest levels on record, at 12% of GDP, the underlying economic picture continues to deteriorate. Where did the money go?

The answer is as simple as it is surprising: Much of it went to stock buybacks—more than $6.9 trillion of them since 2004, according to data compiled by Mustafa Erdem Sakinç of The Academic-Industry Research Network. Over the past decade, the companies that make up the S&P 500 have spent an astounding 54 percent of profits on stock buybacks. Last year alone, U.S. corporations spent about $700 billion, or roughly 4 percent of GDP, to prop up their share prices by repurchasing their own stock.

Here is the scariest part. Not only was this money more or less wasted, this money was also borrowed away from future growth…..in the form of QE and zero interest rates. And the result? Overpriced and highly speculative stock market that is set to fall as soon as this “buyback” stimulus is withdrawn.

Finally, keep in mind that most corporations behave as individual investors would. They always buyback at the top while hoarding cash at the bottom. As was evident during the 2006-2010 period. That is not a good omen for the future.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. March 19th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

What You Ought To Know About Today’s Stock Buybacks  Google

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The S&P Suggests It Might Be Ready To Breakdown

S&P chart3

If you are familiar with technical analysis, you know exactly what you are looking at above. A massive rising wedge (it goes back further) on the S&P. The Dow has a very similar structure.

If you are not familiar, rising wedges typically resolve to the downside when the bottom line (support) is broken. If so, the chart above suggests that the market might be getting ready to breakdown. Further, the near completion of the compression on the wedge indicates that it might happen soon. Finally, given the extent of this wedge, the downside is like to be significant. If you want a more detailed analysis, actual dates and prices, please Click Here. 

Just FYI.

z32

The S&P Suggests It Might Be Ready To Breakdown   Google

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Crash Protection Cost Doubles, Big Decline Ahead?

Long-term crash protection put option cost has doubled.Traders pay up for crash protection-time to worry. Just a structural change or an ominous sign of things to come?

“Long-dated crash put protection costs on the have more than doubled over the past 9 months,” a Goldman Sachs options research team led by John Marshall wrote. “We believe it is an important development to watch as it implies investors are increasingly concerned about downside risk even as U.S. equities trade near all-time highs.”

Specifically, the options that have more than doubled in value are 55 percent out-of-the-money puts that expire in five years. That is to say, in order for these derivatives to pay off come expiration, the S&P would have to lose more than half its value over the next five years.

“We see reason for concern as put prices were up a similar amount in 2007 ahead of the financial crisis, diverging from credit and equity at that time as well.”

This is a complex matter to discuss and the increase above could be caused by a number of different things. Changing dynamics in the options markets, hedging, balance sheet issues, etc…. With that in mind, maybe some smart folks are building large short positions in an anticipation of a large decline or worse, a crash. That would make even more sense.

Z31

Crash Protection Cost Doubles, Big Decline Ahead?  Google

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Is It Time To Short Janet Yellen & The FED?

Daily Chart AMarch 18th

3/18/2015 – An up day with the Dow Jones up 227 points (+1.27%) and the Nasdaq up 45 points (+0.92%)

If you recall, in the last two weeks of February the market barely moved. And towards the end of February I suggested that this period of low volatility is coming to an end. Boy, did it ever. After the market topped out on March 2nd, the Dow has delivered close to 2,500 points in short-term market swings. That’s pretty impressive!!!

What happens next?

Today’s market rally was obviously FED induced. What did they say? Blah, blah, blah…….blah, blah. Literally. The FED wanted flexibility, to raise or not to raise, and that is precisely what their statement entails. Nothing more or less. In the final analysis, the talking heads can now spend another month dissecting every word in their never ending quest to find meaning.

In terms of the stock market, the bulls are large and in charge. Or so it appears. The stock market played out exactly as one of our scenarios suggested (subscriber section). And while the bulls feel vindicated, I wouldn’t get too excited just yet. The volatility we have experienced over the last few weeks is here to stay and the bulls might very quickly find themselves on the other side of the FED’s stupidity.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. March 17th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Is It Time To Short Janet Yellen & The FED? Google

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The Shocking Secret Behind The Stock Market

stock market DNAHere is the best explanation I came across when I first started research into my mathematical and timing work. After more than a decade of development work behind me, I can attest that the statement below is 100% accurate.

“Markets being, at minimum, a three-dimensional phenomena, exactly like a large molecule rotating in space, in and out of Z plane, with DNA coding sequences governing the entire process. Without understanding the market is 3-D, twisting like a plant governed by the phyllotactic laws of dual number series and harmonic composition and decomposition, all measurements taken on a 2-D chart become misleading” – Dr. B.

Z30

The Shocking Secret Behind The Stock Market  Google

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Investment Wisdom Of The Day

tudor jones“Were you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt. After a while size means nothing. It gets back to whether you’re making 100% rate of return on $10,000 or $100 million dollars. It doesn’t make any difference.” – Paul Tudor Jones

z33

Investment Wisdom Of The Day  Google

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Will The Fed Forgo Raising Interest Rates?

subprime car loans

Quite a few bears think that they should or that they will. I believe that they should, but I don’t think that they will forgo the eventual rate hike.

“In my view, the Fed will not increase interest rates this year,” he told CNBC’s “Squawk Box,” pointing to dollar strength and recent disappointing economic data. “The economy simply [is] not taking off, so I don’t see there will be an interest rate increase.” – Mark Faber

“The U.S. economy is sicker than ever,” said Schiff. “And the Fed is going to launch QE4 for the same reason they launched QE3, 2 and 1. They’re going to try to stimulate the economy. Now that they stopped QE, the air is coming out of this bubble.”

And according to Schiff, if the Fed does raise interest rates later this year, the outcome will be catastrophic. “I think without QE4, we will be back in recession,” he said. “It’s going to be horrible. There’s going to be a worse financial crisis than 2008.”

I agree with the views above. The underlying US Economy is sick and on the verge of recession. With that in mind, the bears above are forgetting two things. First, the FED needs to re-load on their recession fighting tools before the next one hits (we are almost there). And second, the FED is a reactionary force. Meaning, it has always been behind the ball in terms of reacting to various economic developments. I don’t think that will change now.

z33

Will The Fed Forgo Raising Interest Rates? Google

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These Charts Will Scare The Bejeezus Out Of You

Daily Chart AMarch 17th

3/17/2015 – A mixed day with the Dow Jones down 129 points (-0.72%) and the Nasdaq up 8 points (+0.16%)

Let’s take a look at some charts in order to come to a very simple conclusion.

Two weeks ago I talked about the chart below. Suggesting that the majority of the stocks haven’t gone anywhere since about June 16th, 2014. You can see even more evidence of that here  A hidden bear market in Dow threatens all stocks

NYSE

Not only that. Various macroeconomic indicators have collapsed while earnings multiples continue to expand. Plus, corporates are starting to guide lower. That is to say, something has got to give.

Macrodata

Finally, the GDP Growth consensus is starting to collapse. So much so that if it wasn’t for the QE and zero interest rates, the US Economy would already be in a full out recession (or worse).

GPD Consensus

Given all of the above, it doesn’t take a genius to figure out what happens next. Surprisingly enough, 99% of investors out there don’t see it.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. March 17th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

These Charts Will Scare The Bejeezus Out Of You Google

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Why Dollar Strength Suggests Upcoming Turbulence

dollar surge

A little over 3 years ago, some swanky EU supermodels were refusing payment in the US Dollars. Today, you would be hard pressed to find a single person who is not bullish on the greenback. This worries me and here is why.

We are in an incredibly complex macro economic situation. The debt levels are massive, almost every country is trying to devalue/monetize their currency, there are numerous asset bubbles and the FED is trying to re-load their toolbox before the next recession starts (just around the corner now).

In other words, people are panicking into the dollar at exactly the wrong time. As the chart above illustrates, almost every financial disaster has been preceded by such a run up. Followed by a multi-year decline. Finally, the commercials are heavily shorting the dollar at this stage. We talk about all of that and what to expect next in our latest weekly podcast. Click Here to listen.

z32

Why Dollar Strength Suggests Upcoming Turbulence   Google