Weekly Stock Market Update & Forecast – December 2nd, 2017
– State of the Market Address:
- The Dow is now above 24,000
- Shiller’s Adjusted S&P P/E ratio is now at 31.98 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 83 – overbought. Daily RSI is at 78 – overbought.
- Prior years corrections terminated at around 200 day moving average. Located at around 18,500 today (on weekly).
- Weekly Stochastics at 94 – overbought. Daily at 95 – overbought.
- NYSE McClellan Oscillator is at +18. Neutral.
- Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest declined to 60K contracts net long.
- Last week’s CTO Reports suggest that commercials (smart money) are shifting their positioning away from net short. Short interest has shifted slightly lower during the week. For now, the Dow is 6X, the S&P is at 2.5X net short, Russell 2000 is now at 6X 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 itDa
Investment Wisdom Of The Day
Daily Stock Market Update & Forecast – November 30th, 2017 – 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 itDa
The Curious Case Of All Time High Valuations Sitting On Top Of A Debt Mountain
Most of today’s financial commentary suggests that valuations are no longer relevant. That today’s market exists in some sort of a low interest rate, low inflation and high growth kind of an environment.
Still, it is refreshing to see a major Wall Street bank call it like it is….
Goldman says highest valuations since 1900 leave investors in for a world of hurt
We have been saying the same for months. Based on today’s Shiller’s P/E Ratio of 31.86, we are sitting at the highest valuation level in the history of the market. Yes, higher than 1929 and 2000 tops (if we adjust for lack of earnings). And the source of this prosperity is ……
So here you have it. The trajectory of US government debt is “unsustainable,” according to Yellen, Kaplan, and many others. In fact, just about everyone acknowledges this except for the only people that can actually do something about it: the lawmakers in Congress. They don’t even know the meaning of “unsustainable.” It’s not part of their vocabulary. It has been replaced by “fund raising” and “campaign contributions.” And they’re happier than ever to run up the debt, no holds barred.
Understandably, Mr. Trump has left out the source of his ‘miracle stock market run’ for the sake of simplicity. The above is equivalent to a junky maxing out his credit cards to go on a heroin binge. And we all know how that ends.
Investment Grin Of The Day
Explaining Today’s ‘Beyond Belief’ Bull Market
It is no secret that the stock market is historically overpriced. So much so that I have argued we are experiencing the highest valuation levels in history. Higher than 1929, 2007 and even 2000 (if we adjust for lack of tech earnings). Prior smaller peaks of 1937, 1966, 1972, 1987, etc…. don’t even come close.
This is best illustrated by the Shiller’s Adjusted P/E Ratio below. 
So, what gives?
First, the sentiment….. Retail investors haven’t been THIS bullish since (gulp) you know when
Since February 2016, the overall index has soared 98 points, “the largest increase in the 20-year history of the index that is not a rebound immediately after a major drop in optimism.” This is the kind of move contrarians eat up.
“In 1999 and early 2000, high enthusiasm for stocks was a powerful sign the stock-market bubble was on its last legs,” Richter said. “Of course, no one can say how much higher their enthusiasm will surge this time around. Hype works, until it doesn’t.”
Buy High Sell Low…….Right?
Second, the driving force….Central Banks Have Purchased $2 Trillion In Assets In 2017
In his latest “flow report”, BofA’s Michael Hartnett looks at the “Disconnect Myth” between rising stocks and bonds and summarizes succinctly that there is “no disconnect between stocks & bonds.”
Why? The best, and simplest, explanation for low yields & high stocks is simple: so far in 2017 there has been $1.96 trillion of central bank purchases of financial assets in 2017 alone, as central bank balance sheets have grown by $11.26 trillion since Lehman to $15.6 trillion. Hartnett concedes that the second best explanation is bonds pricing in low CPI (increasingly a new structurally low level of inflation due to tech disruption of labor force) while equities price in high EPS (with little on horizon to meaningfully reverse trend), although there is no reason why the second can’t flow from the first.
And there you have it ladies and gentlemen.
- The market is incredibly expensive. Record breaking expensive. Even if we take low yields into consideration.
- Idiot central bankers are terrified of what happens next. Instead of letting the bubbles deflate they have juiced them to unimaginable levels. And in nearly all assets classes.
- So much so that most retail investors now believe stocks will never go down. And even if they do it will be a BTFD situation.
We all have been here before and we all know what happens next. It is different this time as so many believe? Perhaps, but if you truly believe that I still have some Pets.com stock to sell you.
If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here.
