Investment Grin Of The Day Google
The Real Reason Behind Stock Market’s Decline & What’s Next – Summer Hiatus
8/21/2015 – Another massive down day with the Dow Jones down 530 points (-3.12%) and the Nasdaq down 171 points (-3.52%).
I AM TAKING A LITTLE BREAK FROM BLOGGING. BACK AFTER LABOR DAY OR SEPT – 8TH. OUR PREMIUM SERVICE REMAINS FULLY FUNCTIONAL.
This has not been a good week for the market. The Dow, Russell, NYSE and S&P are now firmly in the negative territory for the year. The Nasdaq is at a break even point, but barely so. And while we are likely to get some sort of a bounce, sometime soon, this SHOULD cause some concern. Perhaps the analysis below can clear things up.
Below is a comprehensive longer-term review of the stock market and what the next few years hold.
In the early January of 2000, the US Economy wa s booming. The Dow was fast approaching 11,800 and the Nasdaq was a stone throws away from its improbable benchmark of 5,000. Everyone was making a ton of money and as far as most people were concerned, the future looked very bright. So much so, that very few people predicted a bear market of 2000-2002, let alone a secular 2000-2017 bear market that was about to begin.
The only way to do so was to know and to understand the cyclical TIME structure oscillating within the stock market. For instance, an analyst working with such time cycles would know that the stock market’s 17-18 year cycle was topping out in conjunction with the 5 year cycle that started at 1994 bottom. The bull market that started at the bottom in August of 1982 was coming to a conclusion. In fact, it would top out exactly 17.5 years after it had started or on January 14th, 2000 at 11,800. The 5 year cycle that started in December of 1994 would top out at exactly the same time; 5 years and 35 trading days after it had started.
What does this have to do with predicting a severe bear market of 2014/15-2017?
Everything. Based on my work the stock market is a mathematically precise entity. And while there are hundreds of TIME cycles oscillating within the stock market at any one time, I will concentrate on only two to prove my point. The 17-18 cycle and the 5 year cycles. We will look at these cycles over the last 100+ years and I will prove to you, without a shadow of a doubt, they work.
THE 17-18 YEAR CYCLE IN THE STOCK MARKET:
Long-term cycles within the stock market tend to oscillate going all the way back to the first day of trading, in May of 1790. If you would be inclined, I would encourage you to verify that information for yourself. For our purposes we will start our analysis a little bit later or exactly 100 years ago. As the chart above indicates, the stock market tends to oscillate in clearly defined 17-18 year alternating Bull/Bear market cycles.
- 17.5 Year Bull Market (1914 bottom to 1932 bottom): The previous bear market terminated in July of 1914. At that time the US stock market shut down for World War 1. The stock market remained closed between August of 1914 and December of 1914 (a very rare occurrence). When the market finally reopened in December of 1914 it immediately began a rally that would not terminate until October of 1929. Followed by a now famous 1929 stock market crash and a massive 90% 3 year decline. The cycle terminated at the bottom in 1932, completing the 17.5 year bull market cycle at that time.
*Note: It is important to address the 1929-1932 bear market and its impact on the overall 1914-1932 Bull Market cycle. It is a complex matter to discuss without sufficient background or understanding, but the final (short-term) structural composition of this Bull Cycle inverted over the last 3 years (1929-1932). Mostly due to a massive rally between 1924-1929 and a number of down cycles converging on this time period at the same time. Regardless, the overall cycle lasted 17.5 years.
- 17 Year BEAR Market (1932 bottom to 1949 bottom): The cycle originated at the bottom in July of 1932 and lasted until June of 1949. During this period of time we had a post great depression bounce, 1937 crash and World War 2. Yet, despite the overall upward trajectory, this clearly defined 1949 bottom remained 60% below its 1929 top and well below both its 1937 and 1942 tops.
- 17 Year BULL Market (1949 bottom to 1966 top): The market surged higher between 1949 bottom and 1966 top. This was the so called “Golden Age” of post war reconstruction and the American industrial boom. During this time the Dow appreciated over 500% in a clearly defined bull market cycle.
- 16.5 Year BEAR Market (1966 top to 1982 bottom): The market stayed relatively flat during this period of time with a few notable declines of 30-50%. With the 1972-1974 mid cycle decline of 54% being the largest one. This clearly defined bear market completed in August of 1982. Approximately 25% below its 1966 top.
- 17.5 Year BULL Market (1982 bottom to 2000 top): A very well known period and a clearly defined bull market. The market surged higher from its August of 1982 bottom to reach its historic top in January of 2000. During this time the Dow appreciated over 1,400% in one of the strongest bull markets in history.
- 17 Year BEAR Market (2000 top to 2017 bottom): Even though the market is sitting near all time highs (as of this writing in January of 2014) and even though most people have assumed that the new bull market has started, in relative terms the market hasn’t appreciated very much since its top in 2000. The Nasdaq is still down. Plus, with the final down leg of this bear market being ahead of us (based on my mathematical and timing work), the BEAR market of 2000-2017 should complete itself in a negative territory or below its 2000 top.
It is important to note that the small variation (of +/- 1 year) in duration of these cycles is caused by smaller or larger cycles arriving at the same time. As such and based on the cycles above, we are no longer working in an arbitrary fashion when it comes to predicting the stock market. In other words, if the stock market repeats a clearly defined 17-18 year Bull/Bear cycle over a 220 year period of time (since 1790) and does so without interruption, it is safe to assume that the future is predictable and not random.
THE 5 YEAR CYCLE IN THE STOCK MARKET
One other easily identifiable cycle within the stock market is the 5 year cycle. These 5 year cycles represent one completed growth pattern or one completed Bull or Bear cycle. Typically, they tend to appear for 5 years, disappear and then reappear at a certain point in the future. While they are not sequential as the 17-18 year cycle above, once their place within the overall stock market is understood, they show up at exactly the right time. For instance,
- 1914 -1920: Bull Market
- 1924-1929: Bull Market (followed by a 1929 crash)
- 1932-1937: Bull Market (followed by a 1937 crash)
- 1937-1942: Bear Market
- 1966-1971: Bear Market
- 1982-1987: Bull Market (followed by a 1987 crash)
- 1994-2000: Bull Market (followed by a 2000 crash)
- 2002-2007: Bull Market (followed by a 2007 crash)
- 2009- July of 2014: Bull Market
One thing to understand about these 5 Year cycles is that they are exact. They have much lower level variance as compared to their longer counterparts. Essentially, we are NOT talking about 5 years +/- 6 months. We are talking about 5 years +/- a few days. For instance, the 2002-2007cycle started on October 10th, 2002 (at 2002 bottom) and terminated on October 11th, 2007. If you are counting, that is exactly 5 Years and 1 day or scary accurate. I encourage you to study the other cycles outlined above in order to prove to yourself how shockingly accurate they all are.
CONCLUSION:
In summary, predicting a bear market of 2015-2017 is rather simple. All 17-18 year bear cycles end with a 2-3 year bear market. For instance, 1912-1914, 1946-1949 and 1979-1982. And while most believe that the secular bear market ended at 2009 bottom, that is not the case. The secular bear market of 2000-2017 is still in effect and will terminate only when the year 2017 is reached. Although the final price bottom will be higher than the mid-cycle bottom reached in March of 2009.
Further, the 5-Year cycle that started on March 6th, 2009 bottom terminated on July 16th, 2014 (Look at NYSE for confirmation). Suggesting that the stock market is now ready to initiate its bear leg (despite recent higher highs). When I combine this cyclical analysis with the rest of my mathematical and timing work, the outcome is crystal clear. A severe bear market of 2015-2017 is just around the corner.
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. August 7th, 2015 InvestWithAlex.com
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Shocking: The Real Reason Behind Stock Market’s Decline & What’s Next Google
COT Reports & Weekly Market Calendar – August 7th, 2015
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 us 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 August 4th, 2015
Currencies:
- USD: 3K Long Vs. 82K Short – Significant short interest remains. No major changes.
- Canadian Dollar: 88K Long Vs. 4K Short – Net increase in commercials net long position.
- British Pound: 46K Long Vs. 37K Short – Remains neutral.
- Japanese Yen: 134K Long Vs. 16K Short – Net decrease in short interest. A large long position in Yen remains.
- Euro: 133K Long Vs. 17K Short – Significant long position remains. No changes.
- Australian Dollar: 135K Long Vs. 1K Short- Significant long position. Slight increase in long position. Massive long position remains.
Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, Euro, Yen and Australian Dollar rally. British pound is neutral.
Markets/Commodities/Volatility:
- E-Mini S&P 500: 279K Long Vs. 538K Short – Few changes. A substantial short position remains.
- VIX: 74K Long Vs. 18K Short – No changes. A substantial long position suggests market turbulence ahead.
- Gold: 86K Long Vs. 57K Short – Slight increase in net long exposure. Still neutral.
Conclusion: Based on the information above, commercial interests expect the stock market to decline as volatility surges higher. Gold is likely to remain within its trading range.
Next Week’s Market Calendar:
- Q-2 Earnings.
- Thursday – Retail Sales
COT Reports & Weekly Market Calendar – August 7th, 2015 Google
Investment Wisdom Of The Day
What Carl Icahn Thinks You Should Do In Today’s Market
Soros Fund has a large short position. Just a few weeks ago, Jim Rogers said the following Jim Rogers: Major Correction Ahead…Central Banks To Panic. Now, Carl Icahn is warning people that we are once again at 2000 and 2007 tops.
“What is better…..making 1-2% or losing 30% as people did in 2008? Right now is extremely dangerous.”
Forget about my line of thinking here for a second. Who else do you need to tell you that we are in a massive bubble and that a big correction is coming. Warren Buffett? Actually, WSJ ‘Buffett Indicator’ Flashes Warning for Stocks
Anyway, if you are sick and tired of your typical Wall Street analysis…… “We are in the early stages of a secular bull market and right now is a buying opportunity of a lifetime”, do yourself a favor and watch the video below.
What Carl Icahn Thinks You Should Do In Today’s Market Google
Margin Debt Monstrosity & Fed’s Achilles Heel
8/6/2015 – A negative day with the Dow Jones down 120 points (-0.69%) and the Nasdaq down 83 points (-1.62%).
As of today, the FED is facing the following set up.
- Massive stock market, bond market and other asset bubbles.
- Slowing economy and collapsing macro data. We are a stone throws away from an “official” recession. I can argue we are already in one.
- Zero interest rates and limited options to stimulate the economy further.
As a result, the FED has only two options.
- Raise interest rates NOW in order to reload their recession fighting toolkit before the next recession hits. Again, we are nearly there.
- Cancel rate hikes and eventually introduce QE4 to further “stimulate” the economy. Also known as, maintaining financial market stability. This scenario includes postponing interest rate hikes until we are in a recession.
You don’t have to be a genius to figure out which scenario the stock market is betting on. And while it would be prudent for the FED to reload now, in reality, no one really knows what they will do. I don’t think they know.
At the same time, it is a no win situation for the FED. There is no guarantee that the stock market won’t crater even if the FED introduces another round of QE while cancelling interest rate hikes. And I am not the only person who thinks that way.
While most are focused on the risks around a withdrawal of liquidity, we believe the biggest hit to confidence could be the opposite: if another round of US QE is necessary to prop up the economy. While the market could have a knee-jerk rally on an indication of forthcoming stimulus, we think this would likely be short-lived and could end in the red. QE fatigue is already evident: each subsequent round of QE has seen diminishing risk rallies.
Bingo. That’s how complex today’s macro economic setup is. We are at the end of this massive credit expansion cycle and there is nothing that can save this market now. Not even another round of QE. Well, unless the FED goes into a full monetization drive. But that’s entirely another matter.
Now, to margin debt. A few weeks ago I displayed this chart of skyrocketing margin debt and why it is yet another bearish indicator. That is to say, most investors are extremely bullish at the precise moment when they shouldn’t be.
Not everyone agrees with my assessment above. Traders are borrowing tons of money to bet on stocks … and it’s just not a big deal
“Margin debt does not, by any statistical measure, lead equity prices. They are, essentially by definition, coincident. As stock prices move higher, outstanding margin debt does as well. If and when stock prices move lower, margin debt will follow.”
While I would have to agree with the statement above, they are looking at the wrong metric. It’s not the fact that margin debt moves in tandem with the stock market, it is the fact this metric is now 33% higher than at 2000 and 2007 tops. All while the stock market hasn’t gone anywhere over the last 12 months (NYSE). In other words, the market is storing a tremendous amount of fuel for a correction. And given how much margin debt is out there, any such correction can very quickly turn into a violent sell-off.
Further, I would have to agree with the following sentiment. The stock market is becoming a ‘lose-lose’ situation
Investors are in the grip of “Stockholm syndrome” because there is a trust that central bankers don’t want to hurt markets, which more or less forces investors to maintain a “risk-on” positioning, buying things like stocks and lower-rated bonds.
I couldn’t agree more. I continue to maintain that this is the worst trade out there today. The problem is, everyone is in it. By the time most investors realize the FED is not in control and cannot backstop the market, it will be too late. At least 50% of the down move will be over by that point. Oh well….
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. August 6th, 2015 InvestWithAlex.com
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Investment Wisdom Of The Day
Is It Possible To Predict The Stock Market?
Most investors automatically assume that the answer is NO. For instance, Past stock-market performance tells you nothing about future results — literally nothing
My response, if they “find no relationship between historical five-year returns and subsequent 12-month returns”, they are not working hard enough. It is a lot easier to just say the S&P is going to 2,200 by the end of they year, than it is to actually run calculations. Here is how the stock market really works…..
The markets being, at minimum, a 3-Dimensional phenomena, exactly like a large molecule rotating in space, in and out of the Z plane, with DNA coding sequences governing the entire process. Without understanding that the market is 3-D, twisting like a plant governed by the phyllotactic laws of dual number series and harmonic composition and decomposition, all measurements taken on a 2-D chart become misleading.
Point being, the stock market is not some randomly generated metric that chaos theory tries to explain. It is a mathematically exact entity that baffles the mind. And if you are willing to do the hard work, sooner or later, you will figure out exactly how it works. The explanation above gets you there half way.
Breaking News: Find Out Why We Are In A Massive Financial Bubble – TODAY!!!
8/5/2015 – A mixed day with the Dow Jones down 10 points (-0.06%) and the Nasdaq up 34 points (+0.67%)
A pair of interesting bubble articles for you today.
First, John Hussman: Stocks Show 4 Signs of Major Decline Ahead
He cited the metric among the indicators that foreshadowed declines after peaks in 1972, 2000 and 2007:
- Less than 27 percent of investment advisers polled by Investors Intelligence who say they are bearish.
- Valuations measured by the Shiller price-to-earnings ratio are greater than 18 times.
- Less than 60 percent of S&P 500 stocks above their 200-day moving averages.
- Record high on a weekly closing basis.
I would have to agree with the points above. They give more credence to my own bearish case. A case where I suggest that we are on a verge of a massive multi-year bear market sell-off. The decline that will represent the final leg down in 2000-2017 secular bear market. That’s right folks, we are still in a bear market. The 2009 bottom was a mid cycle bottom similar to 1907, 1937 and 1974.
Today’s stock-market bubble is bigger than the dot-com boom
Today risk is everywhere! Valuations will never be as high in such a period. So those who are saying this bull market still has some juice because valuations haven’t reached tech-bubble levels are kidding themselves! Those valuations were an anomaly!
My research shows that valuations during calm geopolitical periods tend to be twice as high. But the valuations on this bad boy are already higher than every bubble or major bull market peak over the past century. The only real exception is the year 2000. And we’re not far off 1929. And that’s with the poor geopolitical period we’re in!
That includes the major bull market peaks of 1937, 1965, and 2007.
So don’t believe the “this is not a bubble” arguments. This is denial plain and simple — which has happened in every single bubble in history, especially near the top.
An outstanding article worth a few minutes of your time. It is nothing that we haven’t discussed on this blog before. One look at Shiller’s S&P P/E ratio should be sufficient enough to realize the same. For god’s sake, only 1929 and 2000 tops were higher. And not by much. What else do you need to know to realize that we are in a freaking giant FED induced financial bubble. And if you still don’t see it, I can’t help you. No one can.
If it looks like a bubble. Walks like a bubble. And quacks like a bubble. It’s a damn bubble.
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. August 4th, 2015 InvestWithAlex.com
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Breaking News: Find Out Why We Are In A Massive Financial Bubble TODAY!!! Google
