Shocking: Unprecedented Amount Of Risk In Our Financial System
The amount of risk in our financial system and within our financial markets today is truly unprecedented. It is equivalent to sitting on a barrel of TNT with a fuse lit. With the stock market sitting at an all time high, VIX scrapping the bottom of its trading range, FED tightening and non-existing credit spreads…….this mess is about to blow sky high.
These two charts should drive the point home.
What these charts are suggesting is further confirmed by our mathematical and timing work. Again, our work shows a severe bear market between 2014-2017. 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 exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE
Jim Rogers Is Buying Russia And China. Should You?
Typically, Jim Rogers has an extremely long time frame associated with his investments. For instance, according to him China will do very well over the next 100 years. As right as he might be, I don’t have that kind of a time frame.
While Jim is starting to buy China once again, he is worried about the Chinese Credit Bubble. Just as we are. Where Is China’s Hidden Debt Bomb
Personally, I think it’s a little early for China. In my view, the Chinese market will be dragged down even further by its massive shadow banking system and by the upcoming severe 2014-2017 recession and a bear market in the US.
In terms of Russia and as I suggested before, wait and see is the best approach here. There is no doubt that the Russian market looks attractive and that there is literal “blood in the streets”, but to make money timing becomes increasingly important. After all, the Russian market has been in a general downtrend for over 3.5 years and with no sign of a turnaround.
Further, while we do not have enough data, the Russian stock market tends to do poorly during the US Recessions or Bear Markets. Since we anticipate a severe one to happen shortly, it’s another red flag to take into consideration. Either way, I would would wait for a technical reversal prior to taking up a position in this “undervalued” market.
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Jim Rogers Is Buying Russia And China. Should You? Google
Daily Ticker: Jim Rogers: Forget U.S. markets, I’m buying Chinese and Russian stocks
This week’s optimism about capital market reforms in China seemed to outweigh any investor concern stemming from the referendum on independence held in two regions of Ukraine.
Enthusiasm around China came after the State Council reiterated its desire to liberalize finance in areas such as IPOs and limits on foreign investment — even though some of these measures were originally announced months ago.
Jim Rogers, famed commodities investor and author of Street Smarts: Adventures on the Road and in the Markets, lives in Singapore and is a prominent bull on China’s long-term prospects. He tells us in the accompanying video that for the first time since 2008 he is buying shares in China “in a small way again,” which includes putting a little more in financial companies given authorities desire to open the economy more, “especially finance.”
He says he’s not buying much in China because of the country’s “big debt problem” — (“it worries me a lot”) — and he’s concerned with China’s shadow banking system.
When it comes to Russia, the country’s markets have been more than rattled by the crisis in Ukraine, with the main stock index falling 10% in March and the ruble losing 9% against the dollar in the first three months of the year.
Rogers says he bought more Russian stocks during the turmoil in Crimea and is interested in buying more.
Why?
You’re “supposed to buy when there is blood in the streets,” he tells us. “In Rusia, figuratively there is blood in the streets.”
Daily Stock Market Update. May 12th, 2014. InvestWithAlex.com
A substantial up day with the Dow Jones up 112 points (+0.68%) and the Nasdaq up 72 points (+1.77%)
How do you spell Short Squeeeezzzeeeee? In essence, that is exactly what we saw today. While most market pundits will argue that the bull market is back on, I do not share in their optimism. First, very few of the Dow stocks are participating in this rally. Second, there are so many different divergences in most markets that there is no clear sign of anything. Finally, even though the Nasdaq and the Russell 2000 had a massive two day rally, they remain in a clearly defined bearish trend. As do most of the leading high spec stocks.
More importantly, all markets opened up a large gap up in the morning. As you know from my earlier updates markets tend to close all gaps before resuming their directional moves. Not always, but 95% of the time is a good measure. With a large gap up today and a number of gaps going all the way down to 15,400, it’s just a matter of time before the Dow reverses and heads lower.
That is further confirmed by our mathematical and timing work. It clearly shows that the bear market of 2014-2017 is just around the corner. 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 exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE
(***Please Note: 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 12th, 2014. InvestWithAlex.com
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Market Climbing The Wall Of Worry….. Huge Rally Ahead?
As the Dow surged passed its all time high the divergence between the Nasdaq and the Dow continues to widen. More so with the Russell 2000. With a lot of market participants suggesting that the market might be climbing the proverbial “Wall of Worry”, how likely is it that the most speculative issues will snap back to catch up to the Dow and the S&P?
Not very likely. What we are witnessing today is more indicative of a short squeeze as opposed to a sustained rally. Particularly on the more speculative indices. When you take the rest of the divergences into consideration, one reality sticks out. Typically, small caps and highly speculative tech companies lead the market. With both the Nasdaq and the Russell remaining in a short-term downtrend, it is highly probable the rally is about to fizzle out. Our mathematical and timing work confirms the same.
Breakout Writes: Market divergence: Dow hits new highs, but small caps still struggling
Everyone in the world is now focusing on the extreme equity market divergences. They cause a good bit of anxiety and appear striking to observers forever looking for patterns in the big scheme with which to make sense of the universe.
First, there’s the difference in performance between the large caps and the small caps. The large cap Dow Jones Industrial Average is making new all-time highs while the small cap Russell 2000 closed below its 200 day moving average last Friday.
Second, the number of NYSE stocks making new highs minus the number of NYSE stocks making new lows continues to look mediocre at best even as the Dow and S&P make all time highs.
Something has to give one way or the other. Either small cap under-performance and the relatively poor market internals drag down large caps or the small caps battle back and play catch up.
The million dollar questions go like this –
Is this a healthy washout where small cap stocks and 2013’s momentum darlings, which furiously sprinted higher for months on end, get knocked down a peg in a healthy corrective manner before the broader bull market resumes?
Or –
Is this an unhealthy hideout, where the market senses economic deterioration and money moves from growth to safer larger cap and dividend paying stocks as a last bastion of return before they too give way, get sold and move lower?
My own sense is based on a much simpler dynamic relating to seasonality. These divergences are occurring during the second and third quarters which are usually the weakest half year for stocks and so, if history is a guide, markets will remain choppy and ultimately frustrate most until middle to late September.
As such, I continue to think you sell the rips and look for bargains for the longer term during the most notable periods of fear and loathing.
Market Climbing The Wall Of Worry….. Huge Rally Ahead?
Investment Grin Of The Day
Recently Updated Stock Market Terms
- CEO — Chief Embezzlement Officer.
- CFO– Corporate Fraud Officer.
- BULL MARKET– A random market movement causing an investor to mistake himself for a financial genius.
- BEAR MARKET — A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.
- VALUE INVESTING — The art of buying low and selling lower.
- P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing.
- BROKER — What my broker has made me.
- STANDARD & POOR — Your life in a nutshell.
- STOCK ANALYST — Idiot who just downgraded your stock.
- STOCK SPLIT — When your ex-wife and her lawyer split your assets equally between themselves.
- MARKET CORRECTION — The day after you buy stocks.
- CASH FLOW — The movement your money makes as it disappears down the toilet.
- INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse.
Bonds & Stocks Continue To Rally. Who Is Right And Who Will Break Down First.
If you haven’t noticed, both the bond market and the stock market have been rallying as of late. An unusual situation. The real question is……which market has got it right and/or which of these markets will break first?
Will the bond yields begin to rise in tandem with the stock market as the US Economy accelerates growth -OR- will the stock market break down, pulling both the US Economy and the bond market down?
Typically, the bond market is considered to be the “more intelligent” market and I would have to agree with that classification in this particular case. With the US stock market being severely overvalued (in bubble territory) and with the FED tightening in full force, it is just a matter of time before the bond market comes out on top.
This is further confirmed by our mathematical and timing work. Again, our work shows a severe bear market between 2014-2017. 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 exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE
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Talking Numbers: How long can stocks and bonds rally together?
Call it the ultimate game of chicken.
The Dow Jones Industrial Average closed at record highs on Friday. The S&P 500 index is just a few points shy of its all-time highs. And yet, year-to-date, as the S&P 500 continues to defy gravity, investors have been furiously buying up bonds as well.
So, which will break first: stocks or bonds?
Portfolio manager Chad Morganlander of Stifel Nicolaus’ Washington Crossing Advisors thinks bonds will crack first.
“I think interest rates are going to start going higher as the economy starts to improve and accelerate into the second quarter,” Morganlander said. “I think the [10-year Note] could go around 2.85 to 2.90 [percent].” Bond prices and rates move inversely to each other.
According to Morganlander, evidence of an accelerating economy will include nonfarm payrolls growing at a rate higher than 300,000 per month (it was 288,000 in April), higher household credit creation, and housing starts at an annual rate of 1.2 million (it was 946,000 in March).
But, while he sees the 10-year yield getting closer to 3 percent, he is optimistic on stocks as well. “We are quite bullish on the market,” Morganlander said. “We think that the equity markets are going to go higher by about 7 to 8 percent for the year.”
Mark Newton, chief technical analyst at Greywolf Execution Partners, doesn’t think rates will necessarily move up just yet.
“It’s still difficult to argue that the 10-year yield has to move straight up from here,” Newton said. “I know in the long run, that’s likely correct but in the short run, we’ve been very range-bound over the last few months.”
That range in the US Treasury 10-year yield is roughly between 2.56 and 2.82 percent, according to Newton. There is “very little sign, at least technically, that rates should move up right away. The chart overall is still quite bearish.”
Newton sees rates and stocks moving together, but this time to the downside.
“I think we’re going to see a move to 2.45 first,” said Newton about the 10-year yield. “That likely coincides with an equity correction probably between the months of July and September. That’s seasonal time when stocks usually pull back and we see that flight to safety in the Treasurys.
On the longer-term charts, Newton sees the 10-year yield moving down a well-defined trend channel since the mid-1980s. The upper end of that trend channel is currently around 3.75 percent.
“We almost need to get up above 3.75 to argue that a bigger move higher in rates is going to happen,” Newton said. “Rates over the long term are likely going to rise and it’s probably a poor risk/reward for investors. But, I think from a trading perspective, money should flow into Treasuries if the market starts to pull back more for safety reasons.”
“Over the next few months,” adds Newton, “I can still see rates pulling back here, getting back under 2.56 and down to 2.45.”
To see the full discussion on the US 10-Year Note, with Morganlander on the fundamentals and Newton on the technicals, watch the above video.
The Stage Is Set. Why What Happens In Ukraine Next Will Have A Severe Impact On The US Financial Markets.
Ukraine/Russia/USA/EU/NATO continue to be one of the most important issues. In fact, I continue to believe that things will escalate significantly over the next few weeks.
It appears that Mr. Putin’s game plan is clearing up. As anticipated, a large % of the Pro-Russian population turned out for the “independence” vote on May 11th. Here is the latest…
- Referendum results in Donetsk and Lugansk Regions show landslide support for self-rule
- 96.2% vote for Lugansk federalization at referendum
- Radicals, army, heavy weapons used in Ukraine to disrupt referendums – FM Lavrov
What happens next?
These regions will now ask, in one form or another, to join Russia in order to be protected from the Ukrainian forces. Mr. Putin will happily oblige. Essentially, it’s the same game plan as what had happened in Crimea. No shots fired, no invasion and Russia regains complete control of East Ukraine. A great strategy.
The fun starts when Ukraine’s interim government (under the direction of the US, the EU and NATO) refuses to let East Ukraine go (which they will). This should give Russia the pre-text needed to enter Ukraine in order to “defend” its new territory and its people.
As you can imagine this situation will spark a number of economic sanctions (from both sides), political storm, war rhetoric and a million other unforeseen consequences. It is highly probable that this would be incredibly unsettling for financial markets. I can tell you one thing, the markets do not have this priced in. The upcoming week is critical.
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Weekly Stock Market Update & Forecast. May 10th, 2014. InvestWithAlex.com
Weekly Update & Summary: May 10th, 2014
For the week the Dow Jones gained 70 points (+0.43%) and the Nasdaq lost 52 points (-1.26%). The number of divergences and market undercurrents continue to increase. While the Dow did very well structurally, it continues to have two near term gaps to the downside, the one on April 14th and a large gap on April 16th. Indicating an upcoming correction. Further, there are a number of smaller gaps left leading all the way down to February 5th low. We continue to believe that the Dow will close such gaps when the next bear leg develops at below mentioned time frames (please see mathematical analysis & timing section below).
WEEKLY REVIEW:
Why You Should Invest All Of Your Money In Cash. Hint….You Will Make A Killing.
Recently, I have been telling all of my friends and relatives to save and/or accumulate as much cash as they can. Better yet, to keep putting it in a 10-Year note. Assuming that they don’t actively invest/speculate in the stock market.
Stupidest investment advice ever?
Not when you are accumulating cash in order to raid the stock market at the bottom. AKA….to bathe in the blood of others. In fact, I gave the same advice in 2006-2007 or right before the collapse. Here is what happens when you accumulate cash right before or during the bear market.
First, you tend to avoid a bear market decline and losses of 30-50%. Second, you have the capital to come in at the bottom (ex: 2009) and buy the market/stocks at give away prices. Minimizing risk and maximizing gains in the subsequent bull market. Making cash one of the better investments today (because of a 2014-2017 bear market).Marc Faber tends to agree.
What You Ought To Know About The Upcoming Gold Rally. This Is Incredible.
According to a consultancy out of London you should sell your Gold and seriously consider buying some Twitter stock.
“Gold prices have probably peaked this year and could sink to their lowest since 2010 at $1,100 an ounce as the U.S. economic recovery gathers pace, consultancy Metals Focus said on Wednesday.”
Yeah, the US economic recovery gathers pace as it goes right over a cliff.
Here is what I believe to be the best way to look at Gold and it’s price. Forget about the fundamental factors such as supply/demand and geopolitical events. From our vantage point, Gold’s technical/structural setup is identical to the one in 2007 when Gold went from $600 to $1,800 an ounce.
With our mathematical and timing work predicting a severe bear market between 2014-2017, the FED will have no choice but to introduce further stimulus in order to try and re-inflate our markets and the economy. When that happens, I would expect Gold to be surging higher, not setting new lows. In fact, I continue to believe that Gold will be one of the better investments out there over the next 3-5 years.
All you have to do now is wait for Gold to break out above $1,420 and we should be off to the races. Be patient now. Our timing work shows that the next stage of the bull market in Gold is just around the corner as it will be surging higher by around this time next year. If you would like more precise timing please Click Here.
Is It Time To Short Homebuilders? This Answer Might Surprise You
According to Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, it is time.
“Investors should bet against the SPDR S&P Homebuilders ETF because he does not see the expected rebound in single-family housing occurring”
We like the idea as this ETF is likely to yield about a 50% return on the short side over the next few years. Why? For the following reasons.
- As we have outlined so many times before, the housing recovery is over and the entire real estate market is about to embark on the most vicious bear leg of it’s decline. Stage 3. You can read everything you need to know about this here. Real Estate Collapse 2.0 Why, How & When
- Our advanced mathematical and timing work predicts a severe bear market between 2014-2017. Under such circumstances the real estate market will not be able to maintain its upward trajectory. On the contrary, it might be one of the sectors leading the market lower.
- SPDR S&P Homebuilders ETF (XHB) is showing early signs of a technical price breakdown.
When you combine the points the above, SPDR S&P Homebuilders ETF (XHB) becomes a very good short investment opportunity.
MACROECONOMIC ANALYSIS:
Ukraine/Russia/USA/EU/NATO continue to be the most important issue. In fact, I continue to believe that things will escalate significantly over the next few weeks.
It appears that Mr. Putin’s game plan is clearing up. It is highly probable that he will wait for a referendum scheduled for this Sunday, May 11th. It is widely expected that Pro-Russian population in East Ukraine will declare independence or become autonomous and then in one form or another will ask to join Russia. Essentially it’s the same game plan as what had happened in Crimea. No shots fired, no invasion and Russia regains complete control of East Ukraine. A great strategy.
The fun starts when Ukraine’s interim government (under the direction of the US, the EU and NATO) refuses to let East Ukraine go (which they will). This should give Russia the pre-text needed to enter Ukraine in order to “defend” its new territory and its people.
As you can imagine this situation will spark a number of economic sanctions (from both sides), political storm, war rhetoric and a million other unforeseen consequences. It is highly probable that this would be incredibly unsettling for financial markets. I can tell you one thing, the markets do not have this priced in. The upcoming week is critical.
TECHNICAL ANALYSIS THE FOR DOW JONES:
Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market. Same applies to the market action over the last few months. Yet, that in itself can be misleading as per our timing analysis discussion below.
Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.
Short-Term: Short-term trend remains positive for the time being. The Dow would have to break below 16,000 for the short-term trend to shift from positive to negative.
Again, even though all 3 trends are bullish for the time being, that might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.
MATHEMATICAL & TIMING ANALYSIS:
It’s going to be a long one.
First, a re-cap. Particularly for our new subscribers. Over the last few months we have maintained that the DOW will
(*** Please Note: This time around about 90% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public. As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).
In conclusion, xxxx
Longer-Term Overview:
The next turning point is located at……
Date: XXXX
Price: XXXX
TRADING:
I am now fully committed to the XXXX side of the market with 11 individual positions taken at the prices outlined below. A lot of them have done incredibly well thus far and I hope you were able to benefit as well. I will be updating you of any changes or anticipated changes before they take place.
Remember, you should have an exact strategy and entry/exit points based on the forecast above.
The list below is for your reference point. It entails my investment strategy for my own investment purposes. While you are free to follow me, please do so at your own risk. Do not take this as a trading advice. Please note, all of the positions below have been triggered.
| Stock | Entry Point ($) | Action Taken | Stop Loss @ |
| xxxx | xxxx | xxxx | 91 |
| xxxx | xxxx | xxxx | 1250 |
| xxxx | 110 | xxxx | 121-123 |
| xxxx | 74 | xxxx | 80 |
| xxxx | xxxx | xxxx | 260 |
| xxxx | xxxx | xxxx | 460 |
| xxxx | 35 | xxxx | 39 |
| xxxx | 65 | xxxx | 70 |
| xxxx | 120 | xxxx | 120-130 |
| xxxx | 100 | xxxx | 108-112 |
| xxxx | 112 | xxxx | 120 |
Otherwise, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).
If You Are A Trader: XXXX
If No Position: XXXX
If Long: XXXX
If Short: XXXX
CONCLUSION:
An incredibly important week is coming up. We are now looking for our forecasts above to be confirmed over the next few trading days/weeks. I have also described what to anticipate over the next few months and exactly what you should do now. With increased volatility, multiple interference patterns and an incredibly important long-term turning points coming up over the next few months we must be very careful and risk averse here. Those anticipating the moves and those who can time them properly will be rewarded appropriately.
Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start.
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Weekly Stock Market Update & Forecast. May 10th, 2014. InvestWithAlex.com Google
Daily Stock Market Update. May 9th, 2014. InvestWithAlex.com
A slight up day with the Dow Jones up 32 points (0.20%) and the Nasdaq up 20 points (+0.50%).
Today, let’s talk about one of the most dangerous times within the stock market internal composition. Contrary to a popular believe, most powerful moves do not happen as blow off tops/bottoms, they tend to materialize after a prolonged period of inactivity. From a mathematical/physics perspective, it is similar to compressing a powerful spring and then letting it go. As you can imagine, such action releases a massive amount of pent up energy in one quick snap. The 1987 market crash is a perfect illustration of that.
If you haven’t noticed, the stock market has flat lined over the short-term since April 22nd and over the long-term since December 31st, 2013. At this juncture most investors/traders are bored out of their minds and fast asleep.
This is the most dangerous time as WARNING signs should be flashing all over the place. The stage is being set. Remember, it’s the market’s job to create such an environment and put everyone to sleep…….before slamming you out of your nap in a violent fashion.
This sort of thinking tends to be in agreement with our mathematical and timing work. Once again, it shows that a severe bear market of 2014-2017 is just around the corner.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 exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE
(***Please Note: 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).
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Daily Stock Market Update. May 9th, 2014. InvestWithAlex.com Google