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Are Social Media Stocks/ETF About To Get Destroyed?

Let’s take a quick look at two charts. Facebook (FB) and Twitter (TWTR).This is rather simple. Fundamentaly speaking, both companies are massively overpriced.  Technically, Twitter is on the verge of breaking below a massive muti-year rising wedge.

Should it do so, I wouldn’t be surprised to see Twitter below $15 a share over the next 12-18 months. Facebook is about to break below a major/important support level. The problem is, Facebook has massive gaps all the way down to $20 a share. Gaps that must be closed sooner or later. That is not a good sign.

Hmm, I wonder what happens next. 

Twitter TWTR - InvestWithAlex

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Are Social Media Stocks/ETF About To Get Destroyed?  Google

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Why The FED Will Raise Rates Before The Next Round Of QE

economic_forecasting

Societe Generale’s notorious bear, Albert Edwards, thinks the US Economy is about to implode and the FED will flood the market with another round of QE. More Fed Stimulus Coming in Inflationary Push

The first quarter U.S. GDP data was a major disappointment to the market as business investment declined due to the intensifying U.S. profits recession. Only the biggest inventory build in history stopped the economy subsiding into a recessionary quagmire. Sales are declining on a year-over-year basis, but we are assured this is due to the cold weather. But if it is not, and sales do not surge in coming months, then the economy is heading into recession. GDP would have fallen 2.5 percent since December without inventory growth”, Edwards said.

I couldn’t agree more. So much so that I continue to maintain that we are in a stealth recessionary mode. Meaning, take away zero interest rates, QE and asset speculation, and you will find the US Economy in a full blown recession.

I would also agree that the FED will flood the market with another round of QE and cut interest rates (after they raise it). With that in mind, it is all about timing at this stage. Before they can do any of the above three things must happen. 1. They must raise interest rates. 2. The stock market must decline and 3. The US Economy must slip into an official recession. For now, they reload.

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Why The FED Will Raise Rates Before The Next Round Of QE Google

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Capital Outflows And How Fast They Will Collapse The Market.

Daily Chart May 5th InvestWithAlex

5/5/2015 – A down day with the Dow Jones down 142 points (-0.79%) and the Nasdaq down 78 points (-1.55%)

Despite bullish spirits running high, the stock market has been stuck in a flat trading range for over 10 months now (NYSE). And while most stock prices are miraculously maintaining their upper range, fund outflows are starting to match 2008 panic levels.

In April, U.S. equity mutual funds and ETFs saw outflows of $35.8 billion, according to TrimTabs. That’s the biggest move away from American stocks since October 2008. And the bearish tone is confirmed by the flows in the leveraged ETF space, where leveraged short ETFs saw an increase in assets of 4.6 percent, while leveraged long ETFs saw assets dip by 2.5 percent.

But Wait, There’s More! There is always a bull lurking around, ready to put a positive spin on the news above.

“I actually think it could be a positive for U.S. stocks, because the more people are fleeing equities, the less likely we are to have a crash instantaneously,” Boris Schlossberg of BK Asset Management.  “It’s only when we have bubble-kind-of-conditions that leads to very sharp corrections in equities.”

If my mathematical and timing work is correct, the final leg of a secular 2000-2017 bear market is just around the corner. The only remaining question is, how fast will any such bear leg develop…….will it be a crash or a prolonged decline?

Both. If my work is accurate we should see a fairly rapid sell-off when the TIME is right. Considering today’s market setup and the overall bullish overtone, it will catch most investors by surprise. That will be followed by a quick bounce and a subsequent prolonged decline into the final bottom. In other words, those without this timing and mathematical breakdown stand zero chance of NOT losing money over the next few years.

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 2014/15-2017 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. May 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!!!

Capital Outflows And How Fast They Will Collapse The Market. Google

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Bet Against The FED: The Only Way To Generate Returns Moving Forward

Stan Druckenmiller made over $1 Billion by betting against the bank of England with George Soros in the early 1990’s. In other words, when he talks, you better pay attention. And what does he have to say today? The exact same thing I have been yapping on this blog for quite a while now.

I know it’s so tempting to go ahead and make investments and it looks good for today,” the retired founder of Duquense Capital Management said, “but when this thing ends, because we’ve had speculation, we’ve had money building up four to six years in terms of a risk pattern, I think it could end very badly.

There is nothing more deflationary than creating a phony asset bubble, having a bunch of investors plow into it and then having it pop.

I feel more like it was in ’04 when every bone in my body said this is a bad risk/reward, but I can’t figure out how it’s going to end. I just know it’s going to end badly, and a year and a half later we figure out it was housing and subprime. I feel the same way now.

When you have zero money for so long, the marginal benefits you get through consumption greatly diminish, but there’s one thing that doesn’t diminish, which is unintended consequences.

When this thing ends, because we’ve had speculation, we’ve had money building up for four to six years, in terms of a risk pattern, I think it could end very badly.

Then again, feel free to listen to your Charles Schwab financial adviser and go long on margin. 

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Bet Against The FED: The Only Way To Generate Returns Moving Forward Google

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Just A Quick Technical Stock Market Summary

A fairly good technical summary of where the market is today. Of course, the conclusion is bullish, but you shouldn’t expect anything else from the mainstream financial media. By the way, the apparent breakout the guy mentions can be interpreted in a bearish way. As a head fake. In either case, this video is worth 1 minutes of your time.

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Just A Quick Technical Stock Market Summary Google

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Bubble Or Not: The Clash Of Hedge Fund Egos

Daily Chart May 4st

5/4/2015 – A positive day with the Dow Jones up 46 points (0.26%) and the Nasdaq up 11 points (+0.23%). 

The overall US Equities market continues to trade within a tight trading range. Arguably, since July 17th of 2014.  And while most investors remain ovewhelmingly bullish, quite a few mega investors are sounding an alarm bell. Who is right? Let take a closer look

Bullish Case: Third Point’s Dan Loeb

We remain constructive on the US for three reasons: 1) economic data should improve in the next few quarters; 2) the Fed does not seem to be in any rush to move early and a June rate hike seems unlikely; and 3) while investors are focused solely on the first rate raise, we think the overall path higher will be gradual, in contrast to previous rate shifts. These factors should create an environment where growth improves and monetary policy stays flexible, which is generally good for equities (higher multiples notwithstanding). We may follow last year’s playbook and ignore the old adage to “sell in May and go away.

This is probably one of the better bullish cases that I have seen in quite a long time. Simply put, it makes sense.

Bearish Case: Carl Icahn (Icahn: Junk bonds now ‘even more dangerous’ than stock market)

Money keeps pouring into high-yield bond funds, even though that market is “ridiculously high,” Icahn said. “When they start coming down, there is going to be a great run to the exits,” he added. High-yield is the best performer in U.S. fixed-income returns in the year so far. The billionaire activist investor said he’s “very concerned” about the stock market, and he’s hedged in preparation for a correction. Below are a few other nuggets from his appearance on the show.

That is fairly self-explanatory. So, who is right? 

I would have to side with Mr. Icahn, but not for the reasons you might think. When we look at the fundamental variables described above (the FED, interest rates, liquidity, earnings, P/E, growth, etc….), they do not really matter. Don’t get me wrong, they do matter, but not when it comes to timing major turns in the stock market.

As my book Timed Value shows, the market traces out an exact mathematical structure as it moves in 4-Dimensional (or higher) space. What does that mean? It simply means that the market will turn around and initiate its sell-off when the TIME & PRICE are right. Not when fundamental data turns.  That is to say, my data is not showing anything positive.

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 2014/15-2017 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. May 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!!!

Bubble Or Not: The Clash Of The Hedge Fund Egos Google

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Has Warren Buffett Lost His “Value” Mind?

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Well, there you have it. Warren Buffett believes the stock market is inexpensive at today’s valuation levels. Straight from the horse’s mouth.

“If these interest rates were to continue for 10 years, stocks would be extremely cheap now,” the chairman and CEO of Berkshire Hathaway. If rates normalize, stocks would be on the high side on a valuation basis, he said. “They’ve fooled me so far. So I’ve been wrong,” he said. “I would have thought by now you would have seen much higher rates than we have now, which is essentially nothing.”

Fair enough. Well, if we are to take this one step further and say that interest rates are zero or negative (which they almost are – inflation adjusted), we can then argue that the stock market valuation could be and should be INFINITE.

I would argue that Buffett’s mentors Graham & Dodd would not for a second believe in what Mr. Buffett is trying to preach. Today’s unusually low interest rates should not be used for valuation purposes. Investors should realize that we are at the bottom of a 35 year bear market in yields and that they will head higher as soon as the secondary bottom on a 10-Year Note is set over the next 2 years, at around 1.4-1.5%.

How fast will they surge thereafter? Once the bottom is in, any bull market in yields can be sharp. So much so that I wouldn’t be surprised to see yields at around 6% by 2020. And if that is the case, today’s valuation levels are not only high, they are in a bubble level territory.

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Has Warren Buffett Lost His “Value” Mind  Google