Weekly Update & Summary: May 17th, 2014
A mixed week with the Dow Jones losing 92 points (-0.55%) and the Nasdaq gaining 18 points (+0.46%). The number of divergences and market undercurrents continue to increase.
The Dow left two gaps on the upside this week (May 14th/15th), suggesting a near term bounce. However, to complicate things even further the Dow continues to have two near term gaps on the downside, the one on April 14th and a large gap on April 16th. Indicating an eventual correction.
Further, there are a number of smaller gaps left leading all the way down to February 5th low. We continue to believe that the Dow will close such gaps when the next bear leg develops at below mentioned time frames (please see mathematical analysis & timing section below).
WEEKLY REVIEW:
Shocking: Unprecedented Amount Of Risk In Our Financial System
The amount of risk in our financial system and within our financial markets today is truly unprecedented. It is equivalent to sitting on a barrel of TNT with a fuse lit. With the stock market sitting at an all time high, VIX scrapping the bottom of its trading range, FED tightening and non-existing credit spreads…….this mess is about to blow sky high.
These two charts should drive the point home.
What these charts are suggesting is further confirmed by our mathematical and timing work. Again, our work shows a severe bear market between 2014-2017. 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 exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE
Will Gold Break Below $1,000 As Jim Rogers Suggests?
Typically I would agree with Jim, but not here. While gold can certainly break down to that level, it has very little time left to do it in.
As I have mention before, my mathematical and timing work shows a clearly defined bear market and a severe recession within the US Economy between 2014-2017. When we look at gold from that vantage point we can anticipate the following setup for the metal this time next year (May 2015)….
- The stock market is down 15-20%.
- The US Economy is in an official recession.
- The 10-Year Note is below 2%.
- The FED is looking to stimulate or re-inflate markets in any way possible. All tightening talk is nothing but a distant memory.
With gold showing signs of building a base/bottoming and with the fundamental setup being identical to the one in 2007 (when gold went from $600 to $1,800) the probability is very high that Gold is getting ready to rally here.
Point being, for gold to decline to $1,000, it must do so immediately or over the next 3-4 months (maximum). That is why I continue to believe that the probability of gold breaking above $1,420 and surging higher thereafter is much higher at this juncture
10-Year Treasury Note Screams Out “Recession Ahead”. Are You Listening?
On January 1st, 2014 I started heavy buying of a 10-Year Treasury Note. With most people at the time thinking I was on a crack cocaine binge, thus far, the bet has paid off handsomely.
More importantly, the 10-Year Note broke a significant support level today at around 2.55%. I continue to maintain that the 10-Year Note is one of the better investments over the next few years or until downside targets are achieved. Here is why….
Generally speaking, the BOND Market is more intelligent. Yields breaking down is indicative of what the bond market sees. What does it see? A significant recession and a possible bear market. That view is very much in line with our overall forecast and our mathematical/timing work predicting a severe bear market/recession within the US Economy between 2014-2017.
In addition, 30-Year bear markets in Bond Yields DO NOT end in a V shape fashion. Typically there is a double or tripple bottom. Finally, there is a number of large gaps in the 10-Year treasury, suggesting that the bond market will retest it’s 2012 and 2013 yield lows. Possibly taking the market as low as 1.5-1.6% in yield.
Impossible? On the contrary and that’s exactly what my extremely accurate mathematical work shows.
As the saying goes, money talks and bullshit walks. Well, the money in the Treasury Market is talking. The only question is…… Are You Listening?
MACROECONOMIC ANALYSIS:
Ukraine/Russia/USA/EU/NATO continue to be the most important issue. In fact, I continue to believe that things will escalate significantly over the next few weeks.
As discussed in last week’s update, May 11th referendum in East Ukraine was an overwhelming victory for Pro-Russian forces. As predicted, shortly after declaring independence they have asked to be a part of Russia. Thus far, without a response. Further and as expected, neither Ukraine nor the West recognize any of this as legitimate.
Next week Ukraine will hold its own elections. While the West is expected to recognize the results, Russia will not. Bringing us all back into a stalemate.
What happens over the next two weeks really depends on how far both Russia and the US will want to push the envelope. As before, any provocation from either side will explode this situation into an all out war. We are already getting indications that East Ukraine is mobilizing (with the help of Russia) to fight Ukraine’s federal forces/army. If the situation escalates any further, it might give Russia the pre-text needed to enter Ukraine in order to “defend” its new territory and its people.
As you can imagine this situation will spark a number of economic sanctions (from both sides), political storm, war rhetoric and a million other unforeseen consequences. It is highly probable that this would be incredibly unsettling for financial markets. I can tell you one thing, most markets do not have this priced in. The upcoming week is critical.
TECHNICAL ANALYSIS THE FOR DOW JONES:
Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market. Same applies to the market action over the last few months. Yet, that in itself can be misleading as per our timing analysis discussion below.
Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.
Short-Term: Short-term trend remains positive for the time being. The Dow would have to break below 16,000 for the short-term trend to shift from positive to negative.
Again, even though all 3 trends are bullish for the time being, that might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.
MATHEMATICAL & TIMING ANALYSIS:
It’s going to be a long one.
First, a re-cap. Particularly for our new subscribers. Over the last few months we have maintained that the DOW will…..
(*** Please Note: This time around about 90% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public. As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).
In conclusion, xxxx
Longer-Term Overview:
The next turning point is located at……
Date: XXXX
Price: XXXX
TRADING:
I am now fully committed to the XXXX side of the market with 11 individual positions taken at the prices outlined below. A lot of them have done incredibly well thus far and I hope you were able to benefit as well. I will be updating you of any changes or anticipated changes before they take place.
Remember, you should have an exact strategy and entry/exit points based on the forecast above.
The list below is for your reference point. It entails my investment strategy for my own investment purposes. While you are free to follow me, please do so at your own risk. Do not take this as a trading advice. Please note, all of the positions below have been triggered.
| Stock |
Entry Point ($) |
Action Taken |
Stop Loss @ |
| xxxx |
xxxx |
xxxx |
91 |
| xxxx |
xxxx |
xxxx |
1250 |
| xxxx |
110 |
xxxx |
121-123 |
| xxxx |
74 |
xxxx |
80 |
| xxxx |
xxxx |
xxxx |
260 |
| xxxx |
xxxx |
xxxx |
460 |
| xxxx |
35 |
xxxx |
39 |
| xxxx |
65 |
xxxx |
70 |
| xxxx |
120 |
xxxx |
120-130 |
| xxxx |
100 |
xxxx |
108-112 |
| xxxx |
112 |
xxxx |
120 |
Otherwise, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).
Weekly Stock Market Update & Forecast. May 17th, 2014. InvestWithAlex.com
If You Are A Trader: XXXX
If No Position: XXXX
If Long: XXXX
If Short: XXXX
CONCLUSION:
An incredibly important week is coming up. We are now looking for our forecasts above to be confirmed over the next few trading days/weeks. I have also described what to anticipate over the next few months and exactly what you should do now. With increased volatility, multiple interference patterns and an incredibly important long-term turning points coming up over the next few months we must be very careful and risk averse here. Those anticipating the moves and those who can time them properly will be rewarded appropriately.
Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start.
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