InvestWithAlex.com 

Subscribe Today
My Account

Category: Invest with Alex

Posted on

If The Market Crashes, How Will The ETF’s React?

1-c

August 24th gap down (or mini crash) of 1,000 points on the Dow was incredibly important from another angle. It has exposed a weakness in ETF’s that not many were aware of. Still not aware of. An in depth discussion can be found here…..

Wild Trading Exposed Flaws in ETFs

For our purposes and since we follow the Dow so closely, let’s take a look at DIA (chart above). But keep in mind, the analysis below was evident throughout the  stock market and across most financial instruments the morning of August 24th.

The Dow and DIA typically move together (+/- 20 cents). That morning the Dow bottomed 5 minutes into trading at 15,370, while the DIA bottomed at $150.57. That’s a 2% discrepancy or an arbitrage that can be recovered in a matter of minutes.We saw the same on QQQ/NDX and SPY/SPX, plus numerous other ETF’s.

Here is what I am thinking. Should the market crash over the next few months, something that is possible given today’s overvaluation/speculation environment, enterprising investors/traders might want to look at ETF’s to boost up their gains. On both the short side and subsequent reversals.

Who knows, the next discrepancy could be 2-5%, depending on the size and speed of the primary move. That is to say, put this arbitrage on your “To Watch List” and be ready to act if the market is crashing and/or moving fast.

Z31

If The Market Crashes, How Will The ETF’s React? Google

Posted on

Is A Bull Trap Now In Place?

Daily Chart October 12 InvestWithAlex

10/12/2015 – A positive day with the Dow Jones up 48 points (+0.28%) and the Nasdaq up 8 points (+0.17%) 

That depends on whom you ask. As far as I can tell there are two primary views out there. First, the stock market just had a correction, not that dissimilar to what had happened in 2011, and we are now primed to go higher. Much higher, as a secular bull market is just getting started.

The other side of the coin suggests that the market is now shifting into what could be a massive leg down. That entails the market is not yet done with a secular bear market that started in 2000.

Who is right? 

That is exactly what this very important article discusses The Stock Market Is Poised for a Huge Selloff — Don’t Be Fooled by the Recent Rally

Let’s take a closer look. My comments are in green, but I encourage you to read it in full.

1. History tells us that 5%-8% rallies in five to eight days, like the one we’ve just seen, are about three times more common during bear markets.

Exactly. These moves are designed to deliver the maximum amount of pain to the shorts, while bulls tend to declare a reversal and a “new” bull market. 

2. The sharpest rises on record are often bear bounces to lower highs, which define a bear market: lower highs and lower lows!

This has been the case thus far.

3. Bull markets take money from bears and give it to bulls, while bear markets take money from bulls and bears.

How true. It is incredibly hard to pass through these monster short-covering rallies and/or bounces. Most shorts can’t handle it and get out right at the bounce top. That is why most investors would be better off with a longer-term short approach. 

4. Bulls markets begin slowly, with melt-ups coming in the middle, as investors seek pleasure from prices that have already been rising. The final rally comes on weaker breadth, lighter volume and waning momentum, as cash and margin are already fully deployed, and the crowd assumes it’s different this time, continuing to buy without regard for potential pain.

That was, indeed, the case in the first half of 2015. 

5. Bear markets end in meltdowns, as investors attempt to avoid pain from prices that have already been falling. The final crash arrives after the meltdown is nearly over, as some news items arrive that the selling can be blamed upon.

Very true. Either that or a very long base building process. With that in mind, consider August 24th bottom. It was far from a typical wash out “bottom”. First, it was untradable. Second, most bulls didn’t even care or pay attention. 

6. When the market struggles to reach back above previously broken 50- and/or 200- day moving averages, that’s a warning of exhaustion.

Indeed. 

7. Bulls markets create arrogance. Novice investors believe they are smarter than industry professionals. Retail investors generally buy stocks they know and like if those stocks are already rising, betting that there will always be a “greater fool” willing to pay an even higher price later.

I always operate under the presumption that I am dumbest guy in the room. 

8. Bear markets create evidence that professionals are no smarter than novices.

Unless they timed the exact top and held short for the duration of a bear market. 

That is to say, while Citigroup is telling their clients to be “Brave” and buy stocks here, today’s valuation levels and historic market patterns are still flashing a red light. And instead of going long, investors might consider the possibility of a strong sell-off in the near 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. October 9th, 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 A Bull Trap Now In Place?  Google

Posted on

Outrageous Mistake: How We Missed September 29th Bottom Call By 3 Points.

Daily Chart October 9 InvestWithAlex

10/9/2015 – A positive day with the Dow Jones up 33 points (+0.20%) and and the Nasdaq up 19 points (+0.41%).

In early September of 2015 I updated my subscribers on some important TIME turning points. Particularly.

  • September 17th 2015 (+/- 1 trading day) and
  • September 29th 2015(+/- 1 trading day)

As we approached September 17th, the FED interest rate decision date, an important top target was identified on the Dow at 16,850 (+/- 25 points). The target was hit right after the FED decision, but the market spiked through it. Topping out a few minutes later at 16,933. Then reversing and selling off to the tune of 1,000 Dow points.

We then faced a very similar situation on September 29th. As the market was collapsing and everyone was starting to freak out, I have identified an important mathematical resistance point on the Dow at 15,965 (+/- 20 points). This point was identified a few days prior. The market proceeded to deliver an exact hit, in this case bottoming on September 29th at 15,942. Or, it was 3 points outside of the range above.

What happens next? Well, if you would be interested in this kind of analysis, please Click Here.

Now, as we head into the weekend, quite a few additional things are worth your attention.

Fed official still favors 2015 hike but notes dimmer outlook

Just give it up Janet Yellen. No one believes you anymore. Well, if they have at least half a brain. And as I have said here at least a million times before, the FED will not raise interest rates in any meaningful way. Most likely not at all. The market and resurfacing deflation will prevent them.

Plus, I have a quick suggestion for Janet Yellen. Instead of trying to BS the market, start working on your “Crisis Of 2015-2017” whitepaper. And think long and hard about how you will explain to the fools in Washington as to why the stock market has crashed and the US Economy went into a tailspin. All while the interest rates were at zero and you were printing money through QE.  As a friendly advice, you can always blame Mr. Putin.

This rally deserves respect, though Nasdaq weakness glares

As I have said here a few days ago, what a difference a week makes. Around September 29th, everyone was extremely bearish. Predicting all sort of things, including a market crash. Today, the opposite is true. The bears got squeezed while most in the financial industry are calling for a market bottom. Yet, the fundamentals haven’t changed.

What fundamental?

  • The FED is stuck in the worst possible position. Unable to raise interest rates and/or stimulate the economy further.
  • With QE, zero interest rates and stock buybacks monetary velocity slowing, there is nothing to propel us forward.
  • The US Economy is rolling over into a recessionary environment.
  • Earnings are expected to decline. If not collapse. Just as they did in 2008/2009.
  • All of the above should send chills down investors spines once they realize the stock market is selling at a Shiller Adjusted S&P P/E multiple that is the 3rd highest in history. Right behind 1929 and 2000 tops and on par with 2007 top.

Considering the above, you won’t find Marc Faber, Jim Rogers, Carl Icahn and many others switching to the bullish side just because the market staged a 2%+ rally. Don’t forget, these structural moves take time. In many cases years.

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. October 9th, 2015  InvestWithAlex.com

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

Outrageous Mistake: How We Missed September 29th Bottom Call By 3 Points Google

Posted on

COT Reports & Weekly Market Calendar – October 9th, 2015

COT Reports: If you are not familiar, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions. In other words, it gives us a preview of what commercial interests are buying or selling. As the theory goes, we want to be on the same side of the trade as the big guys.

While not a good timing tool, currencies, commodities and the stock market (to a lesser extent) tend to move in the direction of the bets made by the commercial players. Not always, but often enough.

Latest data, as of October 5th, 2015

Currencies: 

  • USD:  2K Long Vs. 56K Short – Slight increase in net short position. Substantial short interest remains.
  • Canadian Dollar: 49K Long Vs. 1K Short – Significant long interest remains.
  • British Pound: 57K Long Vs. 5K Short – Slight increase in net long interest. British pound remains bullish.
  • Japanese Yen: 71K Long Vs. 8K Short – No net changes. Japanese Yen is still bullish.
  • Euro: 92K Long Vs. 24K Short – Slight increase in net short exposure. Significant long position remains. No changes.
  • Australian Dollar: 100K Long Vs. 10K Short-  Slight increase in net short position. Significant long position remains.

Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, British Pound, Euro, Japanese Yen and Australian Dollar rally. 

Markets/Commodities/Volatility: 

  • E-Mini S&P 500: 586K Long Vs. 357K Short – Net neutral position remains. No major changes
  • VIX: 44K Long Vs. 101K Short – Slight increase in net short position.
  • Gold: 57 Long Vs. 81K Short – Slight increase in net short position. Still neutral.

Conclusion: Based on the information above, commercial interests are now net neutral the S&P and Gold. Please note, commercials have substantially increased their net short position in VIX. That could be due to them expecting a market rally and/or us remaining in a trading range. Considering the fact that S&P is neutral, no definitive conclusion can be ascertained at this time in regards to VIX. Gold is likely to remain within its trading range. 

Next Week’s Market Calendar: 

  • Q-3 Earnings
  • Wednesday: Retail Sales
  • Thursday:Consumer Price Index

Z30

COT Reports & Weekly Market Calendar – October 9th, 2015 Google

Posted on

What You Ought To Know About Yields Heading Down

10 year note chart investwithalex2

If you have been following this blog for any length of time you know that I have been maintaining the following view. The 10-Year Note should put in at least a double bottom at around 1.5% before reversing and staging a multi decade rally in yields. For instance, 10-Year Treasury Note Screams Out “Recession Ahead”. Are You Listening?

The good news is, I am not the only one who thinks this way.

Wall Street guru who has been nailing the interest-rate story just made a jarring prediction for 2016

Much of the shift lower in our yield forecasts derives from the view that the ECB [European Central Bank] will continue to buy bonds in its QE [Quantitative Easing] program. The forecast for a ‘bowing-in’ of curves reflects our opinion that a long period of unconventional policy will create an unconventional outcome. Central banks did not forecast the persistently weak growth or recent decline in inflation. So data dependency does not easily justify lifting rates from the zero-bound — it might suggest the opposite.

Listen, this is rather simple. The FED will not raise interest rates anytime soon. Plus, we are on a verge of an “official” recession. In addition to the stock market being in a massive bubble. All of that suggests lower rates.

Yet, the best piece of evidence we have is as follows. 35+ year bear markets in yields do not end in a V shape fashion. We typically see double and triple bottoms. And while I often talk about this bottom, I rarely talk about what happens next.

Based on my mathematical and timing work, I expect yields to surge for at least a few decades. We will be facing an interest rate environment that started in 1949 and terminated in 1979. Most likely in a compressed form as I expect the FED to pull out all of the stops in the monetization attempts. No other outcome is possible as we now have too much debt. Debt that we will never repay in full.

Z31

What You Ought To Know About Yields Heading Down Google

Posted on

The Gospel Of Janet Yellen

Daily Chart October 8 InvestWithAlex

10/8/2015 – A positive day with the Dow Jones up 138 points (+0.82%) and the Nasdaq up 19 points (+0.41%) 

Most market participants continue to obsess over what the FED will or will not do. And it should come as no surprise that today’s FOMC minutes failed to provide any sort of clarity. Like I have said, they are stuck and don’t know what to do.

A 25 bps rate hike here would be laughable. Which brings us to my two primary Fed related themes. Something that investors should be paying attention to and not the nonsense everyone is concentrating on.

First, I continue to maintain that the FED has missed the window of opportunity to raise interest rates. It is too late now. Why?  They needed to reload their recession fighting tool kit before the next recession or a bear market strikes. The problem is………we are already there as per my mathematical and timing work. That will become evident to everyone else over the next 12 months.

That is to say, the stock market/economy will collapse while interest rates remain at ZERO. What will they do…..another round of QE? Most certainly, but that won’t save the day. The bond market might react to such a development in a negative way this time around, driving yields higher, not lower.

Second, every FED Chairman since Paul Volcker, and to a certain extent before, has been baptized by fire of a large scale market sell-off. Let me give you an example.

  • Paul  (The Iron Will) Volcker: Took office in August of 1979. Last down leg of a 1966-1982 bear market started in April of 1981. Baptized by fire 1.5 years into his tenure.
  • Alan (The Master Printer) Greenspan: Took office in August of 1987. Baptized by fire just two months later, when the crash of 1987 took place.
  • Ben (The Savior) Bernanke: Took office in February of 2006. The 2007-2009 bear leg started in October of 2007. Baptized by fire 1.75 years into his tenure.
  • Janet (Everything is Peachy) Yellen: Took office in February of 2014. Now 1.75 years into her tenure.

Coincidence? Perhaps. But if the trend above holds true, Ms. Yellen is about to get creamed, along with every other bull out there. Just saying!!!

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. October 8th, 2015  InvestWithAlex.com

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

The Gospel Of Janet Yellen  Google

 

Posted on

Is Today’s Real Estate Bubble Bigger Than 2006?

housing bubble investwithalex

Not according to most people. Particularly, home building and home depot CEOs. According to them, get this, the housing market will continue to improve due to a shift towards smarter homes and LED lights. Insanity.

Housing today: A ‘bubble larger than 2006’

The good news is, some people in the article above do have their heads screwed on right.

Hanson, often criticized for being a housing bear, points to the institutional and foreign buyers who have flooded the market since 2012, buying up distressed and lower-priced homes, as well as some new construction, all with cash. He calls it an exact replay of the last housing boom, “when unorthodox demand with unorthodox capital would pay any price it took to hit the bid. In short, end-users today are being handed a red-hot potato market already in a bubble larger than 2006.

And while some Americans might feel house rich for the time being, there is this gem to consider Most Americans have less than $1,000 in savings

As for yours truly, I continue to maintain the view that the US Housing Market is putting in a multi decade double top. And anyone who is buying a house today, will regret that decision a couple of years down the road. In fact, my analysis remains exactly the same…..

The only hope homeowners have at this stage is the FED going into a full out “Monetization” mode. And while that will create a whole set of terrible economic problems, at least mortgages will be monetized and/or inflated away. At the same time, I wouldn’t bet on it. z32

Is Today’s Real Estate Bubble Bigger Than 2006?  Google