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What Most Investors Don’t Understand About Today’s Stock Market

Daily Chart October 7 InvestWithAlex

10/7/2015 – A positive day with the Dow Jones up 122 points (+0.73%)  and the Nasdaq up 43 points (+0.90%) 

I have said it, and so did Rogers, Soros, Faber, Icahn and even Buffett. Either way you twist it, the stock market is incredibly and historically overpriced. To justify today’s valuations, the US Economy must be growing at a rate of 5%+ and not close to zero.

Which brings me to my next point. Market history is calling, and it’s saying stock performance will be crappy for another ~10 years

Because stocks are still fantastically expensive relative to most of recorded history.

And in the past, when stocks have been this expensive — or close to this expensive — performance over the next decade has been lousy.

Long-term valuation analysis suggests that we are still working through aftermath of the highest level of stock-market valuation in history — the peak of the tech bubble in 2000 — and that this workout process will take at least another 5-10 years.

The article above is definitely worth a few minutes of your time. It almost looks identical to my longer-term analysis found here. The Real Reason Behind Stock Market’s Recent Trouble

And while their conclusion is correct, they did get their cyclic composition wrong. What most people don’t realize is that it is not unusual to find the stock market selling at a P/E of 5-10 at the bottom of bear markets. As a result, today’s adjusted S&P P/E of 25 should send chills down your spine. And that is before earnings collapse.

Point being, there is quite a bit of discrepancy between today’s economic reality and market projections. The only remaining question is, how fast will this correction occur and what form will it take. Slow and steady or an outright collapse. We might find out soon enough.

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 7th, 2015  InvestWithAlex.com

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What Most Investors Don’t Understand About Today’s Stock Market  Google

 

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Investment Wisdom Of The Day

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 Secret Behind How The Stock Market Really Works  Google

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Just How “Cooked” Are Today’s Earnings?

Carl Icahn believes by at least 20%. Watch the video below. Plus, he reaffirms his view that the stock market is overpriced and most likely in a bubble.

I have been saying the same thing for quite a while now. For instance, Is Today’s “Real” Stock Market P/E Ratio Above 30? -OR- BlackRock: Most Of Corporate Earnings Growth (If Any) Is Accounting Driven

I have said it before and I will say it again. Today’s distortions are so great that the FED’s Ponzi Finance makes Bernie Madoff look like a boy scout. But its more than that. Everyone is playing the same accounting game. Whether it is through low interest rates, share buybacks or outright accounting gimmicks.

While impossible to calculate, I would say that a more normalized environment would add 5 to 10 points to today’s P/E ratios. By the way, Shiller’s Adjusted P/E Ratio is still at 25. Turning an already expensive market into “are you freaking kidding me overpriced accident” waiting to happen.

Interesting times ahead, that’s for sure.

z32

Google

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Take Me To The Bull Game

Daily Chart October 6 InvestWithAlex

10/6/2015 – A mixed day with the Dow Jones up 14 points (+0.08%) and the Nasdaq down 33 points (-0.69%) 

As the market was hitting lows last Monday/Tuesday, I published the following article What You Ought To Know About Everyone Being Too Bearish.

What a difference one week makes. Today, most market pundits, financial media commentators and money managers are falling all over each other to call the market bottom. For instance….

I am not sure if it is a good idea to use “Brave” in financial analysis/advice, but what do I know. Most people called me “Chicken Little” and “Boy Who Cried Wolf” throughout 2007. That is, until the market rolled over and collapsed.

Whether or not we have hit bottom is yet to be seen. But one thing is certain. The fundamental drivers behind today’s market have not changed in one week. Particularly……

  • 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.

Finally, 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 6th, 2015  InvestWithAlex.com

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

Take Me To The Bull Game Google

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Is The Bottom In?

Daily Chart October 5 InvestWithAlex

10/5/2015 – A positive day with the Dow Jones up 304 points (+1.85%) and the Nasdaq up 74 points (1.56%) 

Before we get to that, Bernanke: Wall St execs should have gone to jail for crisis I am really amazed at this declaration and the rest of the things Bernanke has said earlier today. This is equivalent to a Mafia Boss suggesting that his lieutenants should be jailed for committing murders on his behalf. Ironically, the FED/Street setup today is almost identical.

Now, back to the stock market. We had quite a rally since September 29th bottom. So much so that most of the indices are back to their break even point post the FED sell-off. More importantly, the market is somewhat confirming a double bottom and a reversal or 2011 pattern follow through. At least thus far and only on the S&P/Nasdaq. The Dow/NDX/Russell did not satisfy these technical requirements.

In other words, the development above could be argued either way. At least short-term. At the same time, longer-term picture remains a little bit more clear.

For instance, Credit Suisse: There’s a Growing Threat of a Major Top in the S&P 500

“We’ve obviously already had a significant fall in the stock market, triggered by the breaking down of the lows we saw earlier this year. The big question now is whether this is just a correction in a bull market,” he told us. In his mind, tumbling past 1,820 would signal that the market move could be something bigger. A “Dow Theory sell signal,” one of the oldest technical indicators around, was also triggered in August when the DJIA and Dow Jones Transportation Average fell below the low of a previous selloff, set in October 2014.”

And that is a Trillion dollar question here. If we are still in a long-term bull market, it would be a good idea to load up on stocks here. Yet, if we are in the early stages of a bear market, the recent rally is just a bounce. Which one is it? My blog post on Saturday, The Real Reason Behind Stock Market’s Recent Trouble, might clarify that longer term picture.

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 5th, 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 The Bottom In Google

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How To Lose 100% Of Your Capital

Daily Chart October 1 InvestWithAlex

10/1/2015 – A mixed day with the Dow Jones down 13 points (-0.08%) and the Nasdaq up 7 points (+0.15%) 

One thing is certain. If you read about any given trade in the mainstream financial medial outlet, chances are, it would be foolish to go ahead and execute on it. But here you go….How to make 7 times your money in Apple: Goldman

In other words, load up on Apple (AAPL) call options and wait for the stock to rally +50% over the next few months. It is as simple as that. It appears Goldman believes that the people on the other side of the trade are outright fools. Well, either that or guess who is writing those +700% calls to retail investors right about now.

As for me, I continue to maintain the view expressed here Shocking: The Real Story Behind Apple’s (AAPL) Decline

But wait, there is more good news. Good news: No one expects much from stocks

Expectations for stocks over the next six months have dropped along with the indexes. The fresh weekly survey by the American Association of Individual Investors showed those expecting lower prices jumped 11.2 percentage points to 39.9%, while those anticipating gains fell to 28.1%.

This is close to a multi-year high in bearishness, though 40% were bearish on July 30 right before the market tanked, so this is far from a reliable contrarian indicator on its own.

Seriously? Here is the only indicator you need. Shiller Adjusted S&P P/E Ratio.

shiller pe with rates investwithalex

As you can see, recent decline barely made a dent. And that is on top of today’s slowing economy, deteriorating earnings and freeze up in stimulus. Valuations have been higher on only two occasions. At 1929 and 2000 tops. You very well know what happened shortly thereafter.

In summary, just to reach its historic mean P/E of 16.6, the S&P would have to fall over 35% here. And that is the only sentiment indicator you should need. Everything else is just short-term noise no one can trade.

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 1st, 2015  InvestWithAlex.com

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

How To Lose 100% Of Your Capital Google

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Carl Icahn: In A Bubble. Investors Will Get Really Hurt.

You might be getting sick of Carl Icahn on this blog, but he is the only one of the big guys who has the fortitude to warn regular investors. I don’t think he can be anymore clear in this short video below.

“The public in my opinion is going to get really hurt. This market is in very dangerous territory. I think earnings are misstated and sort of a complete mirage.”

Yep, and you don’t have to be a genius to figure all of this out.

Z31

Carl Icahn: In A Bubble. Investors Will Get Really Hurt. Google