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Stock Market Update. April 28th, 2014. InvestWithAlex.com

daily chart April 28 2014A volatile day with the Dow Jones up 87 points (0.53%) and the Nasdaq down 1 point (0.03%) for the day. 

There is a famous saying on Wall Street “Sell In May And Go Away” as the stock market tends to historically underperform during the summer months. Not always, but often enough that the pattern is easily recognized by most market participants.  While most people attribute the subject matter to seasonality, there is a clearly defined DNA sequence within the stock market that sets this pattern off. To be exact, it hits on May 19th of each year (Note: May 19th does not represent tops or bottoms, it represents the time benchmark of when this energy arrives in the market).

With market internals getting uglier by the day, there is a real possibility that 2014 “Sell In May And Go Away” time frame will be the worst we have seen in quite some time. Clearly since the beginning of the current bull market on March 6th, 2009.

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

(***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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Stock Market Update. April 28th, 2014. InvestWithAlex.com Google

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Hedge Funds Are Shorting Small Caps…..Should You?

As per Bloomberg report below, hedge funds are starting to put out large bets that the best performing stocks (over the last few years) are set for a fall. To the tune of $2.8 Billion bet against the Russell 2000 in April alone.

Are these hedge funds on to something and should you follow? 

Yes and maybe. While the majority of the short positions were most likely put up as a hedge against declining markets, there is a growing group of short sellers that are going after the market on a net profit basis.

As per our mathematical and timing work (bear market of 2014-2017), such short sellers are positioning themselves in a proper way. Yet, this will not be an easy bear market to work with. Not even close. If I had to compare, the Dow will oscillate in a very similar fashion to the bear market that had occurred on the Dow between 2000 top and 2003 bottom. Or….a lot of highly volatile ups and downs that are guaranteed to drive both bulls and bears up the wall.

If you can operate in such an environment it might be a good idea to consider going short as soon as the bear market starts. 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.

Inflation or Deflation InvestWithAlex

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Hedge Funds Are Shorting Small Caps…..Should You?  Google

Bloomberg Writes: Hedge Funds Short Small Caps Most Since ’04 Russell Falls

Money managers are turning on stocks that have delivered the best returns during the bull market: small caps.

Large speculators such as hedge funds are betting $2.8 billion this month that the Russell 2000 Index will fall. That’s the most since 2012 and the highest versus average levels since 2004, according to data compiled by Bloomberg and Bank of America Corp. The about-face from a year of bullish wagers coincides with lackluster performance. The gauge of the smallest companies stands 7.1 percent below its 2014 high, trailing the recovery that has put the Standard & Poor’s 500 Index within 1.5 percent of a record.

Companies from KapStone Paper & Packaging Corp. to Cardtronics Inc. have climbed 20 times more than the S&P 500 since March 2009 amid faster sales and earnings growth. That’s also made them expensive. Valuations in theRussell 2000 rose above levels from the 1990s technology bubble. While small-cap shares are usually the first to benefit when economic growth picks up, the selloff reflects a loss of faith by professional investors in the five-year equity rally.

“Small-cap stocks are the most expensive I’ve ever seen them, and I’ve been doing this for 20 years,” Eric Cinnamond, manager of the $724 million Aston/River Road Independent Value Fund, said in an interview from Louisville, Kentucky. “There’s a lot of junk in the Russell 2000. If you’re a hedge fund, you’re seeing people starting to sell things like Netflix and Facebook and the biotechs, and a nice way to sell risk is to sell the Russell 2000.”

Biggest Speculators

The biggest speculators have increased short sales and bought hedges in most stocks as technology companies led a decline that erased $1 billion from American share values between April 2 and April 12. Traders including hedge funds cut holdings of Nasdaq 100 Index futures and turned bearish on the S&P 500 in the week ended April 15, according to data from the Commodity Futures Trading Commission.

In futures on the Russell 2000, whose constituents have an average market capitalization of about $1 billion, large speculators added to bearish bets that had reached $2.5 billion the previous week. Selling a futures contract is similar to a short sale, where a trader borrows and sells a security in the hope of profiting from a decline.

“It suggests a market that has become defensive,” Sid Mokhtari, a technical research strategist at CIBC World Markets Inc. in Toronto, said by phone on April 23. “We’ve seen defensive posturing in the market. We somehow have lost momentum in the small-cap space.”

Highest Valuation

The Russell 2000 last month reached a valuation of 10.8 times its members’ annual earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That was the highest since at least 1995 and compares with an average weekly ratio of 7.7 times Ebitda, the data show. The valuation was at 10.2 at the end of last week.

The Russell 1000 Index for larger stocks such as Apple Inc. and Exxon Mobil Corp. trades at 8.7 times Ebitda, close to the highest since 2001. The small-cap index carries an 18 percent premium relative to the large-cap measure, after reaching 23 percent in March and climbing to 26 percent in September, according to the data.

Russell 2000 futures gained 0.4 percent at 8:55 a.m. in London today, while S&P 500 contracts advanced 0.3 percent.

Embedded Premium

“If you look at the premium embedded in small caps through history, it tends to max out at 25 percent before reverting,” said Dan Morris, who helps oversee $569 billion as global investment strategist at TIAA-CREF Asset Management in New York. “We are still at fairly high levels, so it is not a good entry point for small caps versus large caps.”

Smaller companies have rallied as their earnings almost quadrupled between 2008 and 2013, according to data compiled by Bloomberg. Profits in the S&P 500 have gained 86 percent in the period, the data show.

“You get to a point where the valuation in small caps can get so high relative to large caps that the growth advantage is fully priced in,” Kevin Caron, a market strategist at Stifel Nicolaus & Co. in Florham Park, New Jersey, said by phone on April 23. His company oversees about $160 billion. “We may be pushing up against that limit.”

KapStone, the Northbrook, Illinois-based maker of paper and bags, has fallen 7.1 percent in 2014 after rising 40-fold between March 2009 and the end of 2013. The company boosted sales by an annual average of 28 percent during those years, data compiled by Bloomberg show.

Teller Machines

Cardtronics, which operates a network of automated teller machines, has fallen 24 percent this year after surging 41-fold from 2009 to 2013. Lakewood Capital Management LP said in a letter to investors on April 23 that it has started a short position in the Houston-based company.

Weakness in small-cap stocks is sometimes viewed as an augury for the broader market by analysts who consider the companies a harbinger for the economy.

During this month’s market retreat, the Russell 2000 fell almost twice as fast as the S&P 500 and remains 7.1 percent away from its March high. Other gauges considered bellwethers for the market, such as the Dow Jones Transportation Average and the Morgan Stanley Cyclical index, reached new records last week.

Professional investors are already bearing the brunt of selling in larger stocks. In the S&P 500, where companies have an average market value of $35.9 billion, shares with the highest levels of hedge-fund ownership fell twice as fast as the rest of the market during the week ended April 11, when declines reached the most in almost two years.

Missing Out

At the same time, hedge funds missed out on the most profitable short-sale opportunities. Shares borrowed and sold on expectations of a decline amounted to 0.2 percent of Facebook Inc.’s outstanding stock and 1 percent of Netflix Inc., down from 15 percent two years ago, according to data compiled by Bloomberg and Markit. Both stocks lost more than 20 percent from their highs in March.

Small caps were disproportionately punished in April due to disappointing economic data and will rebound as lending conditions and growth improve, said James Butterfill, head of global equity strategy at Coutts & Co. in London. Citigroup Inc.’s U.S. Economic Surprise Index, which drops when releases miss forecasts, fell on April 7 to the lowest since July 2012 as bad weather hurt data.

Longer Term

“Longer term, if you look at their fundamentals, aside from valuations, it suggests that small caps should continue to outperform,” Butterfill, who helps oversee $50 billion, said by phone on April 25. “There is a challenge in valuations, but people are willing to pay for that growth.”

Economists forecast the U.S. expansion will accelerate from what has been the slowest recovery since World War II. Gross domestic product will grow 2.7 percent this year and 3 percent in 2015, according to the median estimate in a Bloomberg survey.

Small caps have led the bull market as three rounds of monetary stimulus from the Federal Reserve drove investors into riskier assets. The Russell 2000 has returned 28 percent a year since March 2009, compared with a 24 percent increase in the S&P 500, data compiled by Bloomberg show.

The outperformance continued through April 2, even as earnings growth trailed large caps. Profitsfrom Russell 2000 companies shrank for a third quarter in the first three months of 2014, compared with average growth of 7.8 percent in S&P 500 stocks during that period. While thelarger companies exceeded analysts’ earnings estimates by a combined 5.8 percent in the first quarter, smaller firms beat by 0.3 percent, according to data compiled by Bloomberg.

Individual Stocks

Speculators have bigger bets against individual small caps too. Russell 2000 companies have on average 4.2 percent of their stock on loan, an indication of short-sellers’ activity, according to Markit data on Bloomberg. The average short-interest position on S&P 500 shares is 2.1 percent.

The short bets in Russell 2000 futures marked the biggest negative deviation from a mean since at least 2004, relative to historical positioning, according to data through April 15 compiled by Bank of America.

The recent performance of the smallest companies is indicative of broader concerns, according toUri Landesman, the president of New York-based Platinum Partners LLP.

“Small caps are in a riskier area of the market that hasn’t quite participated in this rebound, and they’re leading what will be a fairly significant correction in the market,” Landesman, who helps oversee $1.3 billion, said in an April 23 phone interview. “They aren’t going to recover right now. It’s a sign of some danger to come.”

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The Shocking Future Of Real Estate….. 3-D Printed Houses.

There is no doubt that the 3-D printing technology will revolutionize manufacturing and the world we live in over the next 25 years. While most people today will view the idea of printing your own house as utterly ridiculous, this company in China is already doing the deed.

The cheap materials used during the printing process and the lack of manual labour means that each house can be printed for under $5,000, the 3dprinterplans website says.

Truly amazing.  Yet, there is a bigger story here. Imagine designing, ordering and printing your own McMansion in a matter of days and at the fraction of today’s cost. Just another nail in today’s real estate market bubble? We will see, but it does look promising.

3d printed house investwithalex

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The Shocking Future Of Real Estate….. 3-D Printed Houses.  Google

BBC Writes: China: Firm 3D prints 10 full-sized houses in a day

A company in China has used giant 3D printers to make 10 full-sized, detached single-storey houses in a day, it appears.

A private firm, WinSun, used four 10m x 6.6m printers to spray a mixture of cement and construction waste to build the walls, layer by layer, officialXinhua news agency reported.

The cheap materials used during the printing process and the lack of manual labour means that each house can be printed for under $5,000, the 3dprinterplans website says.

“We can print buildings to any digital design our customers bring us. It’s fast and cheap,” says WinSun chief executive Ma Yihe. He also hopes his printers can be used to build skyscrapers in the future. At the moment, however, Chinese construction regulations do not allow multi-storey 3D-printed houses, Xinhua says.

The method of 3D printing has become more widely used in recent years. Manufacturers and designers have been able to make everyday items such as jewellery and furniture, as well as more specialised objects like industrial components.

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Will Russia View US Sanctions As A Declaration Of War?

As the Obama Administration readies to release it’s next round of Sanctions against Russia (see the list below), targeting Putin’s inner circle, Russia might just respond in kind by finally invading Ukraine. Why it is still unclear what it is exactly the Obama Administration is trying to accomplish in Ukraine, a nation 6,000 miles away from an American shore, it has been wildly successful in restarting the Cold War with Russia in a matter of 2 months. The progress the US and Russia have made together over the last 25 years to stabilize the world are out of the window. Great job Obama.

As I have mentioned before, the US has no business meddling in Ukraine or trying to push NATO up to Russia’s border. That destabilizes the entire region and that will eventually lead to some sort of a war. NATO’s presence in Ukraine would be equivalent to the Chinese or the Russians building a massive military base in Tijuana. Russia will not let that happen and it will go to war to prevent it, sanctions or not. Let’s now wait and see how Mr.Putin responds to Obama’s sanctions.  One thing is for sure, the US financial markets do not have Ukraine invasion priced in.    

In cartoon: Ukraine in crisis

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Will Russia View US Sanctions As A Declaration Of War?  Google

 

 

?OFFICE OF FOREIGN ASSETS CONTROL

Specially Designated Nationals List Update

The following individuals have been added to OFAC’s SDN List:
 
BELAVENCEV, Oleg Evgenyevich (a.k.a. BELAVENTSEV, Oleg); DOB 15 Sep 1949; Russian Presidential Envoy to the Crimean District; Member of the Russian Security Council (individual) [UKRAINE2].
CHEMEZOV, Sergei (a.k.a. CHEMEZOV, Sergey Viktorovich); DOB 20 Aug 1952; POB Cheremkhovo, Irkutsk, Russia (individual) [UKRAINE2].
KOZAK, Dmitry; DOB 07 Nov 1958; POB Kirovograd, Ukraine; Deputy Prime Minister of the Russian Federation (individual) [UKRAINE2].
MUROV, Evgeniy Alekseyevich (a.k.a. MUROV, Evgeny; a.k.a. MUROV, Yevgeniy; a.k.a. MUROV, Yevgeny); DOB 18 Nov 1945; POB Zvenigorod, Moscow, Russia; Director of the Federal Protective Service of the Russian Federation; Army General (individual) [UKRAINE2].
PUSHKOV, Aleksei Konstantinovich (a.k.a. PUSHKOV, Alexei); DOB 10 Aug 1954; Chairman of State Duma Committee on International Affairs (individual) [UKRAINE2].
SECHIN, Igor; DOB 07 Sep 1960; POB St. Petersburg, Russia (individual) [UKRAINE2].
VOLODIN, Vyacheslav; DOB 04 Feb 1964; POB Alexeyevka, Khvalynsk district, Saratov, Russia; First Deputy Chief of Staff of the Presidential Executive Office (individual) [UKRAINE2].
The following entities have been added to OFAC’s SDN List:
AQUANIKA (a.k.a. AQUANIKA LLC; a.k.a. LLC RUSSKOYE VREMYA; a.k.a. OBSHCHESTVO S OGRANICHENNOI OTVETSTVENNOSTYU RUSSKOE VREMYA; a.k.a. RUSSKOE VREMYA OOO; a.k.a. RUSSKOYE VREMYA LLC), 47A, Sevastopolskiy Ave., of. 304, Moscow 117186, Russia; 1/2 Rodnikovaya ul., Savasleika s., Kulebakski raion, Nizhegorodskaya oblast 607007, Russia; Website http://www.aquanika.com; alt. Websitehttp://aquanikacompany.ru; Email Address [email protected]; Registration ID 1075247000036 [UKRAINE2].
AVIA GROUP LLC (a.k.a. AVIA GROUP LTD), Terminal Aeroport Sheremetyevo Khimki, 141400 Moskovskaya obl., Russia; Website http://www.avia-group.su/ [UKRAINE2].
AVIA GROUP NORD LLC, 17 A, Stratoyava St., Saint Petersburg, Russia; Website http://www.ag-nord.ru[UKRAINE2].
CJSC ZEST (a.k.a. ZEST LEASING), pr. Medikov 5, of. 301, St. Petersburg, Russia; 2 Liter a Pl. Rastrelli, St. Petersburg 191124, Russia; Website http://www.zest-leasing.ru; Registration ID 1027809190507; Government Gazette Number 44323193 [UKRAINE2].
INVESTCAPITALBANK (a.k.a. INVESTKAPITALBANK; a.k.a. OJSC INVESTCAPITALBANK; a.k.a. OPEN JOINT STOCK COMPANY INVESTCAPITALBANK), 100/1, Dostoevskogo Street, Ufa, Bashkortostan Republic 450077, Russia; SWIFT/BIC INAKRU41; Website http://www.investcapitalbank.ru; License 2377 [UKRAINE2].
JSB SOBINBANK (a.k.a. SOBINBANK), 15 Korp. 56 D. 4 Etazh ul. Rochdelskaya, Moscow 123022, Russia; 15/56 Rochdelskaya Street, Moscow 123022, Russia; SWIFT/BIC SBBARUMM; Websitehttp://www.sobinbank.ru; Registration ID 1027739051009; Government Gazette Number 09610355 [UKRAINE2].
SAKHATRANS LLC (a.k.a. OBSHCHESTVO S OGRANICHENNOI OTVETSTVENNOSTYU SAKHA (YAKUTSKAYA) TRANSPORTNAYA KOMPANIYA; a.k.a. SAKHATRANS OOO), 14 ul. Molodezhnaya Rabochi Pos. Vanino, 682860 Vaninski, Raion Khabarovski Krai, Russia [UKRAINE2].
SMP BANK (a.k.a. BANK SEVERNY MORSKOY PUT; a.k.a. SMP BANK OPEN JOINT-STOCK COMPANY), 71/11 Sadovnicheskaya Street, Moscow 115035, Russia; SWIFT/BIC SMBKRUMM; Website www.smpbank.ru; Email Address [email protected] [UKRAINE2].
STROYGAZMONTAZH (a.k.a. LIMITED LIABILITY COMPANY STROYGAZMONTAZH; a.k.a. STROYGAZMONTAZH CORPORATION; a.k.a. “SGM”), 53 prospekt Vernadskogo, Moscow 119415, Russia; Websitewww.ooosgm.com; alt. Website www.ooosgm.ru; Email Address [email protected] [UKRAINE2].
STROYTRANSGAZ GROUP (a.k.a. STROYTRANSGAZ; a.k.a. “STG GROUP”), 3 Begovaya Street, Building #1, Moscow 125284, Russia; Website www.stroytransgaz.ru [UKRAINE2].
STROYTRANSGAZ HOLDING (a.k.a. STG HOLDING LIMITED; a.k.a. STG HOLDINGS LIMITED; a.k.a. STROYTRANSGAZ HOLDING LIMITED; a.k.a. “STGH”), 33 Stasinou Street, Office 2 2003, Nicosia Strovolos, Cyprus [UKRAINE2].
STROYTRANSGAZ LLC (a.k.a. OOO STROYTRANSGAZ), House 65, Novocheremushkinskaya, Moscow 117418, Russia [UKRAINE2].
STROYTRANSGAZ OJSC (a.k.a. OAO STROYTRANSGAZ), House 58, Novocheremushkinskaya St., Moscow 117418, Russia [UKRAINE2].
STROYTRANSGAZ-M LLC, 26th Meeting of the Communist Party Street, House 2V, Novy Urengoy, Tyumenskaya Oblast, Yamalo-Nenetsky Autonomous Region 629305, Russia [UKRAINE2].
THE LIMITED LIABILITY COMPANY INVESTMENT COMPANY ABROS (a.k.a. LLC IC ABROS), 2 Liter a Pl. Rastrelli, St. Petersburg 191124, Russia; Government Gazette Number 72426791; Telephone: 7812 3358979 [UKRAINE2].
TRANSOIL (a.k.a. LIMITED LIABILITY COMPANY TRANSOIL; f.k.a. OBSHCHESTVO S ORGANICHERNNOI OTVETSTVENNOSTYU TRANSOIL; a.k.a. TRANSOIL LLC; a.k.a. TRANSOYL SNG LTD.), 18A Petrogradskaya nab., St. Petersburg 197046, Russia; Website http://www.transoil-spb.ru; alt. Website http://transoil.com;Email Address [email protected]; Registration ID 1037835069986 [UKRAINE2].
VOLGA GROUP (a.k.a. VOLGA GROUP INVESTMENTS; f.k.a. VOLGA RESOURCES; f.k.a. VOLGA RESOURCES GROUP), 3, rue de la Reine L-2418, Luxembourg; Russia [UKRAINE2].

Bloomberg Writes: U.S. Plans to Hit Putin’s Inner Circle With New Sanctions

The U.S. and European Union will impose new sanctions as early as today on Russian companies and individuals close to President Vladimir Putin over the escalating crisis in Ukraine, officials said.

“We will be looking to designate people who are in his inner circle, who have a significant impact on the Russian economy,” Deputy White House National Security Adviser Tony Blinken said on CBS’s “Face the Nation” program yesterday. “We’ll be looking to designate companies that they and other inner-circle people control. We’ll be looking at taking steps as well with regard to high-technology exports to their defense industry. All of this together is going to have an impact.”

The seizure of international inspectors by pro-Russian separatists last week escalated the crisis after Russia began military exercises on Ukraine’s border where the North Atlantic Treaty Organization says Putin has massed about 40,000 troops. Ukraine’s southern air-defense forces are in “operational readiness,” the Defense Ministry said yesterday on its website.

Among those who may be hit by sanctions is Igor Sechin, the chief executive officer of OAO Rosneft (ROSN), according to people familiar with developments. Sechin is a Putin confidant.

EU Discussions

Representatives of the 28 EU states will meet today to widen a list of people subject to asset freezes and travel bans, an official from the bloc said over the weekend. The sanctions will target 15 Russians in positions of power, another diplomat said. Both asked not to be identified because of the sensitivity of the matter.

“What we will hear about in the coming days is an expansion of existing sanctions, measures against individuals or entities in Russia,” U.K. Foreign Secretary William Hague told Sky News television yesterday. “Already we have seen more than $60 billion of capital flight out of Russia so far this year, and serious falls in the Russian stock market. So no one should underestimate the impact on Russia and Russia’s own interests of continued escalation of this crisis.”

Russia has stoked tensions in Ukraine with “threatening” military maneuvers and by “taking no concrete steps” to implement an April 17 accord meant to calm the crisis, the Group of Seven nations — the U.S., the U.K., France, Germany, Italy, Canada and Japan — said in an April 25 statement.

Military Drills

Early this morning, a group of 30 gunmen seized a state security building in the city of Konstantinovka, the press secretary of the Donetsk regional police said by phone.

Ukraine’s foreign minister, Andriy Deshchytsia, said he would travel to Vienna to discuss with international officials Ukraine’s contention that Russia was not complying with the Geneva agreement and that Putin’s administration was not allowing monitors to observe its military drills.

“We are going to discuss today in Vienna the implementation of the Vienna document that allow international observers to monitor military drills that now have started near Ukraine’s borders,” Deshchytsia told Bloomberg television today. “Russia does not want to comply with it.”

In the wake of those capital outflows and a credit-rating downgrade by Standard & Poor’s, Russia’s central bank unexpectedly raised its key interest rate to 7.5 percent on April 25.

Markets Sag

Russia’s Micex Index fell 1.38 percent to 1,262.46 by 11:39 a.m. bringing its loss this year to 16 percent. The ruble has lost almost 9 percent this year against the dollar, the second-worst performance among 24 emerging currencies tracked by Bloomberg after Argentina’s peso.

Sanctions previously imposed by the U.S., the EU, Canada and other allies targeted a number of Putin’s associates and top officials, as well as St. Petersburg-based OAO Bank Rossiya.

Executives at OAO Gazprombank, Russia’s third-largest lender, are preparing for possible sanctions, two people with knowledge of the deliberations said last week, while development lender Vnesheconombank is taking precautions, according to a person familiar with talks at the lender.

U.S. Senator Bob Corker of Tennessee, the top Republican on the Foreign Relations Committee, called on President Barack Obama to impose sanctions on four of Russia’s largest banks and OAO Gazprom (OGZD), the country’s gas-export monopoly.

Largest Banks

“Hitting four of the largest banks there would send shock waves through the economy,” Corker said on CBS yesterday. “I just think we need to hit him much more toughly,” he said of Putin.

Some U.S. officials warn that broader sanctions, those that affect ordinary Russians and not just the oligarchs in Putin’s inner circle, may backfire to the Russian leader’s benefit. Ordinary Russians would probably rally behind Putin and allow him to blame the U.S. and its allies for the country’s economic woes.

Three officials, all of whom requested anonymity to discuss internal policy deliberations, said financial and other sanctions are unlikely to deter Putin. His goals are to destabilize Ukraine; ensure Russian domination of portions of it, as well as the Transnistria region of Moldova; and make the government in Kiev subservient to his.

China’s government said it did not support sanctions.

“We believe that sanction will not help solve the problem but, on the contrary, escalate the situation,” Chinese Foreign Ministry spokesman Qin Gang said. “Sanctions will not serve the interests of any party.”

Coordinated Measures

The planned EU moves are not set to include broader trade, financial and economic measures against Russia, known as “stage three” sanctions. Hague said work on those is continuing.

“It’s going to be more effective if everybody signs on and everybody’s committed,” Obama told a news conference yesterday in Putrajaya, Malaysia. “We’re going to be in a stronger position to deter Mr. Putin when he sees that the world is unified and the United States and Europe is unified, rather than this is just a U.S.-Russia conflict.”

In addition to sanctions, some U.S. Republican lawmakers, led by Arizona Senator John McCain, are pushing the Obama administration to send anti-tank, anti-missile and other weapons to Ukraine’s military. Blinken, the White House adviser, dismissed that suggestion, saying the administration focus is on economic assistance.

Weapons “wouldn’t make a difference in terms of their ability to stand up to the Russians,” Blinken said on CNN. The U.S. will focus on “professionalizing” Ukraine’s military, while stopping short of providing lethal aid, he said.

Meanwhile, pro-Russian separatists freed one international observer from a group of 11 taken captive three days ago in the eastern Ukrainian city of Slovyansk. Negotiators for the Organization for Security and Cooperation in Europe left the city following the release of the observer, a Swedish officer who is diabetic, the Russian news agency RIA Novosti reported.

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Weekly Stock Market Update & Forecast. April 26th, 2014. InvestWithAlex.com

daily chart April 25 2014

Weekly Update & Summary: April 26th, 2014

With a substantial decline on Friday, the Dow Jones lost 47 points (-0.29%) and the Nasdaq lost 20 points (-0.49%) for the week. Structurally, all markets have opened up a large gap this Friday. Suggesting a near term upswing to close it. While the short-term upswing is probable, the Dow 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.  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:

100% Of Economists Agree Yields Will Rise.
What That Means Should Send Chills Down Your Spine

As you know, I have very little (if any) respect for economists. It’s a worthless profession where they tend to do more harm than good (Greenspan, Bernanke, Yellen).Plus, things they do have very little application in the real world. Let me put it this way……if the economists knew what they were talking about they would be making millions on Wall Street instead of arguing if the GDP growth of Zimbabwe will be 2.6% or 2.9% in the year 2019.

However, when 100% of surveyed economists expect yields to rise you better perk up and pay attention. From a contrarian point of view.  In Bloomberg’s recently conducted survey, 67 out of 67 Economists expect interest rates to rise over the next 6 months. In other words, they expect continued economic growth and an eventual tightening by the FED.

10 Year Note Chart

That flies in the face of our forecast. In the past I have shown that we expect yields to fall and the yield curve to flatten as the US Economy falls into a severe recession between 2014-2017 What Does The Yield Curve Yield?  In fact, over the next 12 months the FED will be looking for ways to stimulate the economy and to print, instead of tightening. As far as I am concerned, 100% of the economists agreeing on the opposite is a direct validation of that view.

Don’t forget, our mathematical and timing work shows a severe bear market between 2014-2017. When it begins to develop, it is only rational that yields decline.

Tech Bubble 2.0 Is Here: Why High Flyers Will Collapse
To The Tune Of 70-90%. Scary!

David Einhorn of Greenlight Capital certainly thinks so…… 

“Now there is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand, and what might pop it. The current bubble is an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm,” The firm said it was shorting a group of undisclosed “high-flying momentum stocks.”

We have maintained the same view for quite some time now. With unprecedented level of speculation, overvaluation, FED printing, IPO insanity and asset price inflation, today’s fundamental situation is not that dissimilar to 2007 top.  And while Mr. Einhorn is not particularly sure about the timing, we are.

The upcoming collapse in high flying tech specs will unfold in short order as our mathematical and timing work indicates. 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.

New Home Sales Plunge. Why The Upcoming Real Estate Crash Will Be Much Worse Than The 2006-2010 Decline

As per the Commerce Department report released earlier today new home sales have collapsed 14.5% to an eight month low.  While industry insiders blame everything from unusually cold weather to baby Jesus for this catastrophic drop, the reality is quite simple. The real estate market is slowly rolling over into a massive bear leg (stage 3) after it’s “dead cat” bounce between (2010-2014). I have outlined all of this in my comprehensive report dating back to October of 2013. Real Estate Collapse 2.0 Why, How & When Thus far, it’s playing out exactly as I predicted.

Here is what most people don’t get. Secular bear markets do not move in straight lines nor do they move fast. Just as bear/bull cycles in the stock markets last 17/18 years, same applies to the real estate cycles.

  • Real Estate Bull Market: Arguably, the US real estate boom began at 1991 recession bottom. It lasted until 2006/07 top or 17 years. Stock market equivalent: 1982-2000 bull market.
  • Stage 1 – Initial Bear Market Leg In Real Estate. 2007-2010 (3 years). Nationwide, prices declined 20-40%. Stock market equivalent: 2000-2003 Bear Market. The Dow declined  about 40%.
  • Stage 2 – Real Estate Bounce.  Also known as the “Dead Cat” bounce 2010-2014 (4 years). Stock market equivalent 2003-2007 bull market.
  • State 3 – Real Estate Collapse:  2014-2017. Stage 3 collapses are notoriously sharp, fast and very nasty. The stock market equivalent would be the bear market of 2007-2009 when the Dow lost 56% of it’s value in 18 months.

Conclusion: While the analysis above is fairly simplistic, it is also extremely accurate when we take our mathematical, timing and cycle work into consideration. The analysis above clearly indicates that the real estate market/sector is about to eat dirt in a massive and a severe Stage 3 decline. This is further confirmed by the undying love for Real Estate in today’s American culture.

Remember, before any bear market terminates itself any sense of “love for an asset class” must be crushed out of the prevailing culture. I am afraid we are at least a decade away from that point when it comes to the American Real Estate.

MACROECONOMIC ANALYSIS:  

Ukraine/Russia/USA/EU/NATO  continue to  be the most important issue. In fact, I continue to believe things will escalate significantly over the next few weeks.

As predicted in last week’s report, Geneva Accord  did not hold up. As of today, it is nothing but a distant memory for all involved.  I continue to believe the US/NATO, Ukraine’s Interim Government, Pro-Russian Movement In the East Ukraine and Russia are one spark away from reigniting this conflict and going at each other on multiple levels.  While I don’t believe NATO and Russia will get involved into a direct military conflict (for the time being), any misstep here by either side might lead to Russia invading East Ukraine. In fact, I continue to believe it is just a matter of time. Such a move by Russia will spark a number of economic sanctions (from both sides), political storm, war rhetoric and a million other unforeseen consequences.  As you can imagine, this would be incredibly unsettling for financial markets.  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 two weeks. 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:  

(*** 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 long-term turning point is located at

Date: XXXX
Price: XXXX

XXXX

Trading:

I am now fully committed to the xxxx 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.

END OF UPDATE——–

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. April 26th, 2014. InvestWithAlex.com  Google

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Stock Market Update. April 25th, 2014 InvestWithAlex.com

daily chart April 25 2014

A significant down day with the Dow Jones down 140 points (-0.85%) and the Nasdaq down 73 points (-1.75%). 

Even though both the S&P and the Dow are a stone throws away from their all time highs, market internals are getting ugly. We have already discussed that in the past. What concerns me the most today is to what an extent the Obama Administration is going to play chicken with Russia.

If you have been reading this blog, you know that I have maintained a fairly accurate stand (for over a month now) that Russia will invade Ukraine one way or the other. It has no other option as it must stop NATO’s expansion up to it’s borders.  For Russia it’s a matter of national security.  With Russian jets entering Ukrainian airspace as I write this and with Russian special forces already operating in East Ukraine, it’s a forgone conclusion.

The real question here is how far the US is willing to go and what impact Obama’s actions will have on the US Economy. That’s right, the US Economy….not Russian economy. While most media pundits are completely oblivious to the subject matter with their American chest beating patriotism, economic warfare against Russia will only accelerate the upcoming and severe US Recession/Bear Market of 2014-2017. Make no mistake about that.

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

(***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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Will Silicon Valley Real Estate Face Annihilation As Tech Bubble 2.0 Collapses?

An eye opening look at Silicon Valley’s real estate…….

“In Palo Alto, the average apartment rent has jumped more than 45 percent in the past five years, to $2,604.69 in February, according to Axiometrics.For some, even two paychecks are not enough. Each month as many as 300 Woodland Park residents receive notices from Equity Residential giving them three days to pay or vacate their homes, according to an employee’s testimony in a lawsuit. “ 

As of today, the Tech Bubble 2.0 is in full force in Silicon Valley. With “stupid” amounts of money floating around the valley I sometimes wonder how regular people can even afford to live there. Well, according to the BusinessWeek article below, they can’t. Yet, that might change fairly soon.

As I have insinuated here a number of times before, the bear market of 2014-2017 is just around the corner (based on our mathematical and timing work). This bear market will be particularly hard on the high flying tech companies located in the valley. While you won’t see the 2000 type of a collapse, 60-70% haircuts are expected.

With one primary difference as it applies to the real estate market. 

When the last tech bubble burst in 2000-2002, the real estate market was in a technical BULL MARKET with another 5-6 years to go. This time around the overall real estate market is on a verge of a massive 3rd leg down in it’s own secular bear market. Real Estate Collapse 2.0 Why, How & When This should serve as a double whammy and it would interesting to see what happens to the Silicon Valley’s real estate under such dire circumstances.

flipping real estate investwithalex

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Will Silicon Valley Real Estate Face Annihilation As Tech Bubble 2.0 Collapses?  Google

BusinessWeek Writes: Silicon Valley’s Housing Haven Is Under Siege

East Palo Alto is the last bastion of low-rent housing in an area where companies such as Tesla Motors (TSLA), Facebook (FB), and Google (GOOG) have minted at least two dozen billionaires and thousands of millionaires. The city’s Woodland Park Apartments, a group of buildings with 1,811 units bought in 2011 by Sam Zell’sEquity Residential (EQR), is where many Silicon Valley cooks, janitors, and housekeepers live, often working second jobs to pay the rent.

For some, even two paychecks are not enough. Each month as many as 300 Woodland Park residents receive notices from Equity Residential giving them three days to pay or vacate their homes, according to an employee’s testimony in a lawsuit. Virginia Valencia, a single mother of three, has been fighting eviction from her one-bedroom Woodland Park apartment since she fell behind on her $1,064 monthly rent in November. “I’m alone, and I don’t have a family to fall back on,” says Valencia, who works in the Tesla Motors cafeteria for $12 an hour. “It seems like they just don’t want us here.”

Affordable housing is becoming harder to find as communities such as Woodland Park disappear from cities across the country. One in four renters now spends more than half of her income on housing, up from one in five a decade ago, according to a 2013 report from Harvard University’s Joint Center for Housing Studies. Nationwide, apartment rents have risen 16 percent in the past five years, according to research company Axiometrics. The surge in rents has been acute in Silicon Valley. In Palo Alto, the average apartment rent has jumped more than 45 percent in the past five years, to $2,604.69 in February, according to Axiometrics.

East Palo Alto, with a population of 29,000, is the only city between San Francisco and San Jose with a rent-control law. The statute, covering all apartment buildings built before 1988 with four or more units, limits increases in rent-controlled units to 2 percent for leases renewed during the year beginning July 1. That’s a point of pride for Ruben Abrica, a 15-year member of East Palo Alto’s city council. In early April, the council gave preliminary approval to a tenant-protection ordinance that will make it harder to demolish low-cost rentals and easier for tenants to organize against property owners. “We’re fighting landlords who have money and power,” Abrica says.

STORY: In New Housing Complex for Facebook, Dogs Get Day Care, Kids Don’t

In December 2011, Equity Residential, the nation’s largest publicly traded landlord, acquired Woodland Park, a hodgepodge of 101 apartment buildings built mostly in the 1950s and ’60s, for $130 million from Wells Fargo (WFC), which had foreclosed on the previous owner. Rents for one-bedrooms at Woodland Park started at $1,565 as of early April, according to its website. That’s 47 percent more than Valencia pays under the lease she signed in 2011. Apartment owners often try to evict residents paying low rents after they acquire properties, according to Jeffrey Langbaum, a Bloomberg Industries analyst who covers real estate investment trusts. “This is not Equity Residential-specific and is not uncommon,” says Langbaum.

“I’m alone, and I don’t have a family to fall back on. It seems like they just don’t want us here.”—Virginia Valencia, Woodland Park tenant

Equity Residential has been issuing about 200 to 300 three-day notices a month, said Norma Jaimez, senior accountant at Woodland Park, in a November deposition in a lawsuit. Tenants are considered in default for rents not paid on the first day of the month, and some are subject to $50 late charges, according to Woodland Park leases in court files. “I have the right to three-day them after the first day after when their rent is due,” Jaimez said in the deposition. Equity Residential is managing its property in complete compliance with all applicable laws, Marty McKenna, a spokesman for the company, wrote in an e-mail. Zell, Equity Residential’s founder and chairman, declined to comment.

After Valencia challenged her eviction in court, Equity Residential agreed to allow her to stay as long as she caught up with her overdue rent and made monthly payments on time, according to a Dec. 11 judge’s order. She still owes about $280, according to the landlord’s calculations, including late charges Valencia disputes. The company has been sending her monthly notices to pay or face eviction, most recently one dated March 12.

VIDEO: Silicon Valley Woman Serves Food as Eviction Looms

Valencia now works a second job so she can afford to stay at Woodland Park, earning about $300 extra a week on Friday, Saturday, and Sunday nights selling meals she prepares in a friend’s garage. Last year her oldest son got in trouble with the police, and a social worker told her she should consider spending more time with her kids. It’s a choice Valencia doesn’t have if she wants to keep her apartment. “I work a lot for my children,” she says. “How can I leave my job with the rent what it is?”