I have been arguing that the stock market is incredibly overvalued for quite some time now. This conclusion can be very easily ascertained from studying Shiller’s Adjusted S&P P/E chart below. To very quickly summarized, today’s valuation levels are the highest in history. Higher than 1929 and higher than 2000 if we adjust for tech earnings distortions.But wait a second, it gets a lot worse…… 

With that in mind quite a few bulls are beginning to acknowledge the fact of overvaluation while admiring they are playing the game of musical chairs. For instance…

Two-thirds of U.S. investors think stocks are overvalued

Nearly two-thirds of investors—65%—say the U.S. equity market is overvalued, the highest percentage on record.

All of the above brings out an important question……

If most investors believe the stock market is overvalued, as they consciously continue to play on the long side, how fast/powerful will the upcoming decline be? 

Well, Murphy’s Law and the stock market history suggests the door will be slammed with incredible speed. Yes, I am talking about a powerful crash that will wipe up years of gains in a matter of days. If not hours.

In other words, those who think they will be able to exit in an orderly fashion once the market confirms breakdown are kidding themselves. All exit doors will be shut close in an instance. The market suggests this is the only possible outcome at this point.

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

As the chart above suggests, VIX is tracing out a beautiful long-term compressing triangle/wedge. Technical analysis tells us that when it completes, VIX should surge and/or stage a massive move higher. Possibly in a very violent fashion.

If you would like to find out exactly when that happens and what that means for the stock market, please CLICK HERE. 

I have discussed this in the past, but my curiosity remains. Here is the latest “conundrum”, the FED can’t figure out why inflation is decelerating.

• Fed, split by inflation, should forge on with rate hikes: Mester
• Fed Starts to Wonder If Cornerstone Inflation Model Still Works

Federal Reserve officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong.

Minutes from the July 25-26 Federal Open Market Committee meeting showed a revealing debate over why the economy isn’t producing more inflation in a time of easy financial conditions, tight labor markets and solid economic growth.

The central bank has missed its 2 percent price goal for most of the past five years. Still, a majority of FOMC participants favor further rate increases. The July minutes showedan intensifying debate over whether that is the right policy response.

“These minutes to me were troubling,” said Ward McCarthy, chief financial economist at Jefferies LLC in New York. “They don’t have their confidence in their policy decisions; and they don’t have confidence that they can provide the right kind of guidance.”

Well, there is really nothing mysterious about any of this. Even a retarded buffoon can figure this one out. Let alone a Harvard Economist. 

When you flood the financial system with unlimited credit at zero interest rates everything is performing at its peak. For the time being and artificially, of course. However, when everyone is in debt up to their eyeballs, as is the case today, velocity of money slows down and inflation disappears. That is prior to turning into an outright deflationary collapse or debt liquidation.

The second point is, the inflation they are so blatantly unable to find is on clear display in the stock market. How else can you explain Shiller’s P/E Ratio at an all time high. Higher than 1929 and arguably 2000 if we adjust for tech earnings distortions. That’s where all of that “FREE MONEY” went. Straight to speculation.

My view remains, they are either cretins for not understanding this or they do. In which case they are knowingly running the biggest Ponzi scheme in the history of humanity.

Once thing is certain, scary times ahead. 

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

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.

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.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.

We executed a trade in the US Treasury (TLT) a few weeks ago at $128.50  Find out what that trade was (buy, sell, long or short) and why by Clicking Here

We executed a trade in the USD (DXY) two weeks ago at $94.5000  Find out what that trade was (buy, sell, long or short) and why by Clicking Here

By now most bears are a laughing stock of the investment community. After all, nothing can possibly stop this stock market advance. Even though valuations find themselves at historic all time highs.

I mean, seriously, even President Trump himself has acknowledged that this market is one directional by taking complete ownership of it. What can possibly go wrong – right?

Well, here are a few reasons you might want to consider.

3 reasons a stock-market correction is coming in late summer or early fall

1. The Transports are diverging from the Industrials. (Chart Above)

The Dow Jones Transportation Average DJT, +0.30%  is down almost 6% from its mid-July all-time high through Wednesday. That’s no catastrophe, but it’s a striking divergence from the records being clocked by the other major averages. It’s also a warning flag, since Dow Theory holds that the Transports must confirm the Dow Industrials’ move to all-time highs for the bull to continue.

Known as the Dow Theory non-confirmation. Take a look at the chart above. Not only are the Transports not confirming, they have put in a long-term double top formation. Unable to breakout above 2014 highs. This is a very weak formation and something definitely doesn’t smell right here.

2. Earnings aren’t giving stocks the pop they used to. 

So far, the second-quarter earnings season has been very good. As of last Friday, 73% of the companies in the S&P 500 that have reported earnings beat Wall Street’s earnings and revenue estimates, according to FactSet. Blended earnings growth is a solid 9.1%.

3. Washington faces big gridlock. 

Anyone who thought that Republican control of the White House and both houses of Congress would end Washington gridlock and make the federal government function smoothly must have been smoking something. After the health-care fiasco, how can anyone expect this fractured Congress to do anything big?

We have been discussing this for some time now. It can be argued that the stock market is pricing in a massive tax cut and deregulation. Hence the rally we saw off of November 2016 lows. Yet, and as we have seen thus far, all of that might be nothing but a big pipe dream as President Trump has been unable to get anything of significance passed.

Tax cuts? To be honest I would be surprised if they can get the debt ceiling raised. A major bloodbath associated with Washington’s gridlock might indeed be on the way.Invest accordingly.

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

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.

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.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.

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.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.

We executed a trade in British Pound (GBP/USD) on 7/31/2017 at $1.3200  Find out what that trade was (buy, sell, long or short) and why by Clicking Here