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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

10 Year Yield

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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.

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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…

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.

People stand in a line to receive ballots from members of a local election commission during the referendum on the status of Donetsk region in the eastern Ukrainian city of Mariupol

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The Stage Is Set. Why What Happens In Ukraine Next Will Have A Severe Impact On The US Financial Markets. Google

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Weekly Stock Market Update & Forecast. May 10th, 2014. InvestWithAlex.com

daily chart May 9 2014

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.

gold investwithalex

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.

  1. 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
  2. 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.
  3. 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

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Daily Stock Market Update. May 9th, 2014. InvestWithAlex.com

daily chart May 9 2014

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

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National Association of Realtors: 30-Year Mortgage Is For Losers.

Let’s give each other a pat on the back. Americans are so freaking rich that 43% of us don’t even bother to get a mortgage.  Instead, deciding to plunk down $200K, $500K or $1+ Mil on that house of your dreams in hard cold cash. In fact, according to most industry insiders you have got to be a special kind of stupid to bet against this trend.

We happily oblige. The reality is quite different. Instead of bringing joy, this number should cause panic. As we reported earlier, the number of all cash buyers is even higher in some parts of the country. For instance, in Las Vegas all cash investors (hedge funds, Chinese buyers, flippers, etc..) represent 75-90% of all real estate transactions.

In a nutshell, most of the demand from single unit families is gone. We are now left with investors, speculators and flippers playing the game of musical chairs. If that is not a clear sign of a market top, I don’t know what is.

When the music finally stops (already happening) expect this secondary real estate bubble to blow sky high. Just as predicted in this report Real Estate Collapse 2.0 Why, How & When

Ben Magic III

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National Association of Realtors: 30-Year Mortgage Is For Losers.  Google

MarketWatch: 43% of 2014 home buyers paid all cash

What the reliance on cash sales means for housing

Americans are still buying homes in all-cash deals, despite more investors leaving the market, according to a new report.

All-cash purchases accounted for almost 43% of all sales of residential property in the first quarter of 2014, up from almost 38% in the previous quarter and 19% in the first quarter of 2013, according to data released Thursday from real-estate data firm RealtyTrac. “It’s a surprising thing for us that cash sales have stayed high for so long even though the big hedge fund investors have pulled out of the market a bit,” says Daren Blomquist, vice president at RealtyTrac. “The high percentage of cash sales reveals the soft underbelly of the housing recovery.”

Experts say the high percentage of those paying cash won’t last much longer, though. “Cash buyers will become few and far between,” Blomquist says. So who does have the money to buy a home outright? Wealthy Americans and downsizing empty nesters make some of these all-cash deals, he says. Investors who are eager to make a profit by buying low and renting those properties — or flipping them — also drive up the number of all-cash deals, he adds.

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4 in 10 home buyers in 2014 paid in cash

Americans are still buying homes in all-cash deals, despite more investors leaving the market, according to a new report. MarketWatch’s Quentin Fottrell discusses what cash deals means for the housing recovery on MarketWatch.

Institutional investors — people or companies that have purchased at least 10 properties in a calendar year — appear to be gradually pulling out of the housing market. Investors accounted for 5.6% of all U.S. residential sales in the first quarter, down from 6.8% in the fourth quarter of 2013 and 7% in the first quarter of 2013. But while the share of institutional investor buyers declined in 18 of the top 20 markets for institutional investors, home prices continued to appreciate in most of those markets, although at a slower pace. “But price appreciation will definitely flatten out,” he adds.

The top five markets for cash sales were in Florida, which experienced one of the biggest property crashes after the 2008 recession: Cape Coral-Fort Myers (74%), Miami (67%), Sarasota (65%), Palm Bay (64%), and Lakeland (62%). Other major metro areas where over half of all property sales were done in cash included New York (57%), Columbia, S.C., (56%), Memphis, Tenn. (55%), Detroit, Mich. (53%), Atlanta (53%) and Las Vegas (52%). Many high-end homes are also purchased with cash and buyers in competitive areas where inventory is low are more likely to offer cash.

Not everyone agrees that the housing market is so reliant on cash. The National Association of Realtors says its data suggests the rate of cash sales is lower and on the decline. All-cash sales comprised 33% of transactions in March versus 35% in February and 30% in March 2013, according to data released last month. Individual investors purchased 17% of homes in March, down from 21% in February and 19% in March 2013, the NAR found. But existing home sales were flat in March, the report found. The pool of potential buyers is limited due to tight lending standards and rising interest rates, experts say.

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Financial Media Warns: Financial Markets Are About To Make A Huge Move…..Guess The Direction

According to mainstream financial media (see the article below), we have been stuck is a very difficult and confusing sideways market. According to them, with most investors being impatient and with investor sentiment reaching a certain level, a big move is coming.

As true as that may be, their subsequent directional resolution, to everyone’s surprise, is to the upside. What else, as most financial media remains perpetually bullish. The real answer is a lot more complicated. What you are witnessing today is stock distribution prior to an eventual and steep bear market leg.

How do I know?

Such conclusion comes directly out of 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

three-wise-monkeys-hear-no-evil-see-no-evil-speak-no-evil

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Financial Media Warns: Financial Markets Are About To Make A Huge Move…..Guess The Direction Google

Breakout: Investor sentiment suggests a big move is coming

Market volatility has made doubters of us all. The the American Association of Individual Investorssurvey for the week ending May 7th showed 28.3% ‘bulls,’ 28.7% ‘bears’ and a whopping 43% of respondants ‘neutral.’ It’s the highest level of neutrality in more than 10 years.

It takes quite a bit to convince individual investors to not have an opinion about the market but that’s what the last two months have managed to do. “The market is just grinding,” saysoptionMONSTER’s Jon Najarian in the attached clip. “It’s been very easy to be in the wrong individual stocks.”

Case in point for Najarian is Twitter (TWTR) which he started buying on the way down, defying his own discipline and incurring a loss prior to a much-needed bounce (which came in shortly after this segment was taped). “The people that can’t decide, the ‘meh’ crowd, that’s probably been the right decision.”

As for the market as a whole history suggests a sharp move follows peaks in neutral sentiment. Going back to 2005 AAII neutral sentiment has pushed to 38 on 4 distinct prior occasions (August 2013, December 2011, November 2010 and December 2011). Looking at the S&P 500 (^GSPC) a month later showed greater than 4% moves each time over the subsequent 30 days.

Unfortunately for traders the back-test doesn’t give a clear sign. Three of the 1-month moves were up with one sharp drop. Still it’s a safe bet that American investors aren’t going to stay neutral for long. Look for Mr. Market to knock people into the bullish or bearish camps in short order.

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Russia Is Ready For A Nuclear War……Is Obama? Disturbing

As Russia celebrates it’s WWII victory day, this video of it’s massive war games a few days ago is a quick reminder to all of the jackasses and warmongers in Washington of the following. A war with Russia over an irrelevant nation 6,000 miles away from an American shore would be just a bit…just a bit….more difficult than blowing up a bunch of 1977 Toyota Pickups full of Taliban fighters with Chinese made AK-47’s or 1970 tanks in the deserts of Iraq.

That mobile ICBM nuclear missile (at 3 minute mark), the one that could be fired by two drunk Russian soldiers from the middle of Siberian taiga, splits into over 10 individual warheads upon re-entry and zigzags to it’s target. Russia claims it cannot be shot down. Real nasty stuff.

So, quickly, someone give Obama another Nobel peace prize as we start teaching our kids to “Duck and Cover” once again.

Point being, the US has no business meddling in Ukraine. What you are witnessing today is just the start. Eventually, the developments you see today will escalate as outlined in this report Nuclear World War 3 Is Coming Soon.When, How & Why . Too bad.

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Russia Is Ready For Nuclear War……Is Obama? Disturbing  Google

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Daily Stock Market Update. May 8th, 2014. InvestWithAlex.com

daily chart May 8 2014 - nasdaq

Another mixed day with the Dow Jones up 32 points (+0.20%) and the Nasdaq down 16 points (-0.40%). 

While the Dow has been, more or less, stuck in a trading range since the beginning of the year, the Nasdaq and the Russell 2000 have a clearly defined short-term bearish trend associated with them. Further, both indices are approaching their respective and important support levels. If broken, it would be a clear warning sign for the overall market.

With multiple undercurrents traversing the market, which index presents us with a better preview of what is to come for the overall market and the US Economy as a whole ……. the Dow or the Nasdaq?

It depends on the market environment we are in. In this particular case I believe the Nasdaq will be our leading indicator due to its overall level of overvaluation, speculation and recent market action.

This is further confirmed by our mathematical and timing work, showing 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 8th, 2014. InvestWithAlex.com  Google