2/28/2019 – A negative day with the Dow Jones down 69 points (-0.27%) and the Nasdaq down 22 points (-0.29%)
As we have been saying, the stock market remains at an incredibly important juncture. Things are about to accelerate in an unexpected way. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here.
Despite multiple economic, technical and fundamental indicators pointing towards a severe bear market, most investors refuse to acknowledge any possibility of such a travesty. Consider the following…..
Dow needs to give back some gains before stocks see another big leg up
How steep and long a pullback is required to count as “significant?” Unfortunately, Hamilton never precisely answered that question. One rule of thumb that some Dow Theorists have used over the decades is that, in order to be counted as significant, a pullback must last between three weeks and three months and retrace between one-third and two-thirds of the previous rally.
If that’s so, needless to say, a Dow Theory buy signal is several weeks away at the earliest.
Schannep, editor of TheDowTheory.com, has modified this traditional rule of thumb, on the grounds that while it may have been appropriate for the slower-moving markets of yesteryear, it’s not suited to today’s faster-paced markets. He imposes no minimum time limit on a pullback, and says that a 3% decline is sufficient to be significant. The stock market has yet to hurdle even this much lower bar.
Has anyone considered what would happen if the next leg down turns into a major sell-off that will take out most recent lows? I guess not….
Why upbeat investors are counting on the ‘Powell put,’ the ‘Trump put’ and the ‘Xi put’
In real life, a put is an option that gives the holder the right but not the obligation to sell the underlying instrument at a set price by a certain time — a potentially valuable hedge if a bullish position goes south. Since at least Alan Greenspan’s tenure as head of the Federal Reserve beginning in the late 1980s, investors have talked of a “Fed put,” a reference to the idea that the central bank would take steps to soothe markets in the event of a violent downturn.
Deutsche Bank macro strategist Alan Ruskin, fresh off a round of client meetings in Hong Kong and Singapore, said in a Friday note that he noted a “strong consensus about a newfound Powell put” — reference to Fed Chairman Jerome Powell — due to the Fed’s sensitivity to financial conditions and expectations it will hold off on further rate increases at least through the first half.
The reality distortion field is strong here. Don’t forget, investors always find reasons to rationalize away their position, be it bullish or bearish.
What is different this time is how massively out of sink everything is. Over the last few years we have proven on this blog, without a shadow of a doubt I might add, that stocks are selling at some of the highest valuation levels in history. All while the underlying fundamental structure has been propped up by a giant Ponzi Scheme of massive debt and deficits, stock buybacks, liquidity infusions at all cost, zero interest rates, etc…..
In other words, the most ugly “Everything Bubble” is out there for everyone to see in all of its glory. Unfortunately, most investors refuse to see the Emperor in its true form. And considering the sentiment above, it would be our guess that they will pay dearly for it.
Luckily, you don’t have to guess. If you would like to find out what the stock market will do next, in both price and time, based on our mathematical and timing work, please Click Here
Please Note: Our latest call was a direct hit. While everyone was panicking our work projected an important bottom on December 27th (+/- 1 trading day) on the Dow at 21,725 (+/- 50 points). An actual bottom was put in place on December 26th at 21,713.
