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Happy Birthday Mr. Market…225 Years Old!!!

Daily Chart May 19th InvestWithAlex

5/19/2015 – A mixed day with the Dow Jones up 14 points (+0.08%) and the Nasdaq down 9 points (-0.19%)

Not many people know this, but the American stock market started trading on May 19th, 1790. Exactly 225 years ago. Back then there was no Dow Jones and from what I have read, people traded stocks over a barrel. Literally.  Although I have a chart going all the way back to the point of origin. An important thing to have if you wish to figure out the rate of vibration in any given market.

And while we live in a totally different world now, one primary driver remains fully intact. Human psychology. Regardless of what the FED does, we will always have cycles of boom and bust. If anything, the FED magnifies them.

Today is a perfect example of just that.  The US Economic and macro data is collapsing, corporate earnings are decelerating and the stock market is sitting at an all time high. Margin debt is breaking out, people are not hedging and bullish sentiment is as high as it was at 2000 and 2007 tops.

Sounds like a perfect recipe for a disaster to me. Most people I talk to can’t even fathom a 10% correction here, let alone a full blown bear market leg. Yet, that is precisely what we will get later on this year. The question is, are you ready for 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. May 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!!!

Happy Birthday Mr. Market…225 Years Old!!!  Google

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Why Linear Stock Market Projections Don’t Work

Linear Stock Market Chart

The picture above gives you a much better idea of how the stock market works in multi-dimensional space. Although we are still restricted by trying to illustrate it in a 3-D environment.

Human beings are fairly simplistic animals. We tend to take today’s environment and perpetuate it well into the future. Allow me give you two quick examples to drive the point home.

  • 6 Year Bull Market – most investors assume that it will continue for the foreseeable future.
  • The market has been stuck in a tight trading range over the last 10 months –Goldman: Market’s going nowhere for a year My question is, where was Goldman Sachs predicting this 10 months ago?

This sort of a linear thinking doesn’t work and that is precisely why most investors get into trouble. Nature doesn’t work in such a simple fashion. Everything in nature, including our cells, oscillate at a certain rate of vibration. In other words, the stock market will top out and reverse at a predetermined mathematical point of force. NOT when most people expect it to.

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Why Linear Stock Market Projections Don’t Work Google

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A Different Look At The Market – Guest Post

MarkA

Asian markets traded broadly higher this week while traded sharply lower – with a mixed bag in other markets, and here’s a  reminder from previous week’s;

As our Fund Managers are aware, our proprietary trend signal analytic triggered BULLISH for the Shanghai Composite Index (SSEC) all the way back on July 28, 2014 – and have remained that way ever since.  Our initial upside targets suggested a minimum move into the 3850-4350 range and now those levels have been achieved there is no reason why this index can’t go all the way back to the 6000 level – last seen in 2007!.

This index has now gained over 100% since our BULLISH trend signal triggered back in July last year.  The question is now is – what next?.

As usual however, we will always be guided by our objective and accurate trend models

4 Important Intermediate FX Trend Changes This Past Week!… Weekend Currency Forecast

Our current Elliott wave count labeling is that some longer-term trending moves are either complete or very close to complete – however what those Elliott wave counts do not tell us is precisely when they have finished and when new reversal trends are beginning.

Fortunately our proprietary trend analytic will do this job for us – and as we have always done, as soon as anything important changes we’ll immediately email our Hedge Fund clients.

From July 2014, and as our proprietary trend analytic models have triggered new intermediate trend signals,  6 major currencies have now accumulated a staggering total of pips based on those trend signals  and they are still going.

And so while a case be made in each case from an Elliott wave count labeling perspective that important turning points are upon us, it is also more important to remember that for each of these major currencies there remains no bearish technical evidence at this time that supports the turning point case for any of the major currencies. Simple.

The day will inevitably come when important multi-month lows (or highs) are technically confirmed by our trend signal analytic – but until that day arrives the status quo remains.

Post By: Mark Ackerman: A Financial Engineer,Brilliant Wharton Graduate Using Elliot Wave Principle Fractals and Fibbs as well as Quant Models for analysis of different 18 Asset Classes, 35 years of trading experience.Click Here To Learn More

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A Different Look At The Market – Guest Post Google

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Are You Smarter Than John D. Rockeffeller?

John D Rockefeller

I know I am not and I highly doubt that most investors out there today are either. Let me tell you a cool story.  

The Dow set a secondary bottom in early May of 1924 and then went on a rampage bull market that terminated on September 3rd, 1929 (exact top). Thereafter, the Dow distributed for 6 weeks before initiating its crash sequence on October 24, 1929. By November 13th, 1929 the Dow was down 49%. A devastating collapse.

Now, I know what you are thinking. “People were kind of dumb back then. The market was clearly in a speculative bubble and even a monkey with half a brain could have seen the 1929 crash coming from a mile away”.  WRONG. Human nature never changes. Case and point, I present to you probably the smartest and the wealthiest businessman who ever lived, Mr. John D. Rockeffeller (his net worth was over $200 Billion in today’s money).

October  30, 1929: The Dow Jones Industrial Average has one of its best days ever, rocketing up 29 points, or 12.3%, to 258 as John D. Rockefeller, Sr. announces: “There is nothing in the business situation to warrant the destruction of values that has taken place on the exchanges during the past week. My son and I have for some days been purchasing sound common stocks.” The Dow goes on to lose 84.1% more of its value before bottoming out on July 8, 1932.

I think his quote speaks for itself.  Just as in 1929, 99.99% of people today are not aware of where we are. Back to 2015.  I have already beaten the fundamental/economic/market horse and today’s stock market overvaluation/speculation levels to death. Both, in my daily blog and in my weekly updates. The only remaining question is, are you ready for a big market sell-off when it comes? If you would like to find out when that happens, please Click Here

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Why Most People Will Miss The Market Top….Again  Google

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Will “Sell In May” Fire Off This Year

Daily Chart May 18th InvestWithAlex

5/18/2015 – An up day with the Dow Jones up 25 points (+0.14%) and the Nasdaq up 30 points (+0.60%).

“Sell in May and go away” is one of those well know Wall Street “truths”. Unfortunately, it didn’t work last year. Instead, the market had a fairly good rally between May 21st and July 17th of 2014. Will it work this year? Let’s take a look.

35 months. That’s about how long it’s been since the market pulled back at least 10%, which is an eyebrow-raising stretch of time. Take a look at the market each year going back to 1980 and you’ll find that the S&P 500 has averaged an intra-year drop of a little over 14%. Yet, here we are approaching three full years of a largely uninterrupted climb.

With the stock market trading at or near all-time highs, the chief U.S. equity strategist Deutsche Bank said Friday he would not chase this rally.

Today, most investors are fast asleep. They shouldn’t be. The market is at its utmost dangerous when most people don’t anticipate a correction. Which is the case today.

As I have illustrated here so many times before, most investors are overwhelmingly bullish. Even though the stock market hasn’t gone anywhere since July of 2014 (NYSE). Further, we have faced a similar market setup/situation last summer. Range bound market, compressing wedge, everyone was fast asleep, etc… That was followed by July and September/October corrections.

Think of today’s trading range as if Mr. Market is accumulating energy for its next move higher or lower. Just as if a spring was compressed and then let go. So, will the market breakout to new all time highs or are we on verge of a big sell-off? I believe we will soon find out. One thing is certain, this period of low volatility is coming to an end.

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. May 18th, 2015  InvestWithAlex.com

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

Will “Sell In May” Fire Off This Year Google

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No Stock Market Bubble, At Least Not Yet

PE Ratio

BlackRock’s global chief investment strategist, Russ Koesterich, believes there is no bubble.

“The price-to-earnings ratio for the S&P 500 is about 17.5 times, which Koesterich pointed out is a “bit above the average.” But he said, “When you take into account … a low inflation environment and you’ve got a low [interest] rate environment, that’s probably in the right vicinity. It’s a bit stretched, but I don’t think it’s a bubble.”

Fair enough, but there a few things to consider here.  First, I am not sure where he is getting his 17.5 number.  TTM (trailing) P/E ratio = 20.4 while Shiller’s P/E ratio = 27.5. Shiller’s adjusted P/E is a much better measure. Further, as we have indicated here so many times before, earnings are expected to decline over the next twelve months. Making today’s P/E even more outrageous. Just look at the chart above. 

Second, many money managers believe that we must have either a blow off top or be in a massive bubble for a bear market to start. Nothing could be further from the truth. It is not a requirement. In other words, those who anticipate much higher markets based on the premise above, might pay dearly for it.

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No Stock Market Bubble, At Least Not Yet Google

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COT Reports & Weekly Market Calendar

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 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 May 12th, 2015

Currencies: 

  • USD:  4K Long Vs. 72K Short – Significant short position.
  • Canadian Dollar: 38K Long Vs. 52K Short – Neutral.
  • British Pound: 102K Long Vs. 35K Short- Significant long position.
  • Japanese Yen: 66K Long Vs. 34K Short – Neutral.
  • Euro: 162K Long Vs. 27K Short – Significant long position.
  • Australian Dollar: 93K Long Vs. 28K Short- Significant long position.

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

Markets/Commodities/Volatility: 

  • E-Mini S&P 500: 184K Long Vs. 635K Short – Heavy short position.
  • VIX: 114K Long Vs. 14K Short – Heavy long position suggests market turbulence ahead.
  • Gold: 37K Long Vs. 80K Short – Neutral

Conclusion: Based on the information above, commercial interests expect markets to decline while volatility surges higher.

Next Week’s Market Calendar: 

  • May 20 – FOMC Minutes
  • May 22 – Consumer Price Index

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COT Report & Weekly Market Calendar Google

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Why Most Bulls Might Be High On Drugs….Again

Daily Chart May 15th InvestWithAlex

5/15/2015 – A mixed day with the Dow Jones up 20 points (+0.11%) and the Nasdaq down 2.5 points (-0.05%)

A massive and rather rapid stock market decline is coming later on this year. And while we won’t have a crash, considering the amount of margin debt out there, quite a few people will get wiped out. If you would like to find out exactly when this move will develop, to the day, please Click Here. 

Despite the fact that the NYSE (largest index by capitalization) hasn’t gone anywhere since July 17th, 2014 (10 months if you can’t count), bullish spirits are running red hot. Don’t believe me? Let me show you just today’s news feed.

“We think the S&P takes out 2120 and trades up to 2200.”

“If this market was going to crater, it would have done so already. At least that’s what Jani Ziedins of the Cracked Market blog believes. Instead, he says, the smart money is holding strong, waiting for the skeptics to surrender and fuel the next leg up.”

The psychology seems to be: “I better lock in this deal while I can.” We might be seeing a similar pattern play out among corporate CEOs, who could soon choose to jump into the busy M&A game as they see borrowing rates turning higher.”

WOW!!! This much bullishness at once is making my head spin. Yet, should I dare to bring up the charts below, I get the following range of responses……

  1. Who cares…..we are in a long-term secular bull market – Hint: We are not.
  2. The US Economy is about to turn around and surge higher – Fair enough, but based on what? As I have argued before, there are no drivers to propel us forward.
  3. There are too many bears!!! – This is nonsense. Even the hardcore bears I know are scared to death to touch this market on the short side. Even most mainstream bears are suggesting that this bull market will continue.
  4. The valuations are NOT too high. – Take a look at the P/E chart below. I rest my case.
  5. The FED will backstop any and all market corrections, QE forever and other nonsense – Only a fool would make an investment decision based on the statements above. And let me tell you, there are quite a lot of fools out there.
  6. The market is consolidating as it gets ready for a breakout – I can just as easily argue that it is distributing.
  7. Etc…..

You get the idea. Call me a fool, but I have heard the exact same thing at 2000 and 2007 tops.

Historic Macro Vs Stock Market Data Divergence. 

Macro Data InvestWithAlex

Inflation Adjusted S&P. 

S&P inflation adjusted

Adjusted P/E Ratio Is Near Historic Highs (only 2000 tech top stands higher). 

PE Ratio

In other words, you don’t have to be a genius to figure out what happens next. 

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. May 15th, 2015  InvestWithAlex.com

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

Why Most Bulls Might Be High On Drugs….Again Google