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Hands Down The Two Scariest Charts In Finance Today….Maybe Ever

That’s right ladies and gentlemen, this improved version of the CAPE ratio (improved because it has a greater negative correlation with future 12-year returns) shows equity valuations have now surpassed both the dotcom mania peak in 2000 and the 1929 mania peak. We are truly in uncharted territory. 

Plus, investors today are employing more leverage than ever before. In fact, margin debt has at least doubled from its prior 2000 peak. And this doesn’t even include the asset-backed loans at major financial firms which have become so popular in recent years.

To very quickly summarize: Everyone is long and strong, the stock market has never been more expensive by quite a few measures AND jet fuel margin debt (both up and down) has doubled from its Dot.com bubble peak.

That is to say, what can possibly go wrong?

If you would like to find out what the stock market will do next based on our timing and mathematical work, please Click Here.

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Weekly Stock Market Update & Forecast – January 13th, 2018

– State of the Market Address:

  • The Dow is quickly approaching 26,000
  • Shiller’s Adjusted S&P P/E ratio is now at 33.80 Now at arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
  • Weekly RSI at 90 – overbought. Daily RSI is at 86 – overbought.
  • Prior years corrections terminated at around 200 day moving average. Located at around 18,700 today (on weekly).
  • Weekly Stochastics at 98 – overbought. Daily at 97 – overbought.
  • NYSE McClellan Oscillator is at +17. Neutral.
  • Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest remained the same at 50K contracts net long. 
  • Last week’s CTO Reports suggest that commercials (smart money) have maintained their positioning.  For now, the Dow is 7X, the S&P is at 4X net short, Russell 2000 is now at 4X net short and the Nasdaq is net neutral.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the “smart money” is positioning for some sort of a sell-off.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year. Did it already complete? Click Here

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market. Did it already complete? Click Here

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it. 

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The FEDs Have Lost Control And Boy Are They Freaking Out

This is what losing control looks like after nearly 2 years of interest rate hikes.

Even though most investors will argue that is net positive, it is anything but. Just wait until the stock market reverts to its mean. And that is where it gets interesting. Now that Fed President William Dudley is stepping down in Mid 2018, he is actually beginning to make sense.

Fed’s Dudley worried central bank may have to ‘press harder on brakes’ in next few years

The Federal Reserve may have to “press harder on the brakes” at some point over the next few years, increasing the risk of a hard landing for the economy, New York Fed President William Dudley said Thursday.

The risk of economic overheating “seems like an odd issue to focus on when inflation is low, but it strikes me that this is a real risk over the next few years,” Dudley said in a speech to the Securities and Financial Markets Association.

This suggests that the Fed might have to be more aggressive with those rate hikes, the New York Fed president said.

In another words, everyone and their day trading grandma believe the FED will backstop any sort of a significant correction with easing and more QE. BTFD!!!

Weather it will work or not is an entirely different question, but all of the above is best described by the following chart. 

Having said that, this is indeed meaningless because we are already in a historic bubble of massive proportions. Yes, the everything bubble.

There is no way out of this and there are no gradual solutions. At this point it is a matter of perception or waiting for a time window when investors will finally lose faith in the FED. When that threshold is reached the stock market will correct in a spectacular fashion. If you would like to find out when that happens, please Click Here

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Daily Stock Market Update & Forecast – January 11, 2018 – Elliott Wave Edition

ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year. Did it already complete? Click Here

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market. Did it already complete? Click Here

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.