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Weekly Stock Market Update. January 25th, 2014. InvestWithAlex.com

daily chart Jan24, 2014

 

Summary: Continue to maintain a LONG/HOLD position. 

It was a really rough week for the market with the DOW being down -517 points or (-3.16%). While most people will dismiss this move as a “typical correction” that we need to have, I tend to disagree.

I have argued for months that the bull market that had started in March of 2009 is coming to an end and shall soon be replaced by a bear market that will take us into the 2017 bottom and the end of the Cyclical Bear Market that started in 2000.

In my earlier post, MARKET TOP, I have concluded that the market had indeed topped out on December 31, 2013, ushering in the bear market that will develop over the next 3 years. Both my mathematical, timing, cyclical and technical work tend to confirm this fact.

Now, there is a number of other issues to consider.

First, we must wait for a technical confirmation before establishing a short position. I believe such confirmation will present itself over the next few weeks.

Second, my work shows that the bear market of 2014-2017 will not be directional. In other words, the market will not collapse as it did in 2007-09, but on the contrary, decline in a volatile fashion as it did between 2000-03.

Finally, my mathematical work shows that the market will decline into the 9,000-10,000 range and not lower. As such, I continue to advise people to get out of the way and go into cash as opposed to taking a short position. This will be a very difficult market to short.

In the meantime, we maintain our long/hold position while waiting for a technical confirmation.      

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Weekly Stock Market Update. January 25th, 2014. InvestWithAlex.com

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Is It Possible To Predict The Stock Market? YES

InvestWithAlex Wisdom 15

Today’s 5 Minute Podcast Covers The Following Topics:

Reader’s Question: Why are you so confident that we have hit the top? As far as I know no one can predict the markets. Please explain your approach…” – Roger Strand  

    • Is it possible to predict the market? 
    • The secret behind timing and/or predicting the market? 
    • What does it tell us about the future? 
    • What to do in case my timing work is incorrect. 

Did you enjoy this podcast? If so, please review it on iTunes and share it with your friends as we try to get traction. Gratitude!!!

 

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Who Else Wants To Buy At The Top?

advisors

 

Business Week Writes Investment Advisers Go All In on Stocks

Advisers surveyed weekly by the National Association of Active Investment Managers have 98.3 percent of their clients’ portfolios allocated to stocks. Exposure to equities averaged 72 percent during 2013.

What a shocker!!!  Just as always and exactly at the wrong time.

This is nothing new when one sees the market from the vintage point of human psychology. Most investors make the same mistake. When speculation and advancing market psychology grips investors psyche, there only one thing left to do. BUY. BUY. BUY. Why? Well, because everyone else is doing it and just like the retail market participants, financial advisors and money managers don’t want to be left behind.

Yet, as per my article yesterday, “MARKET TOP” the markets just topped out. As always, instead of getting out or going short most investment advisors are rushing into stocks. Just like they were rushing OUT of stock in March of 2009, when they should have been buying everything under the sun.

Sometimes human nature never changes. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

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Stock Market Update, InvestWithAlex.com, January 24, 2014

Daily Chart January 24 2014

 

Summary: Continue to maintain a LONG/HOLD position. 

1/24/2014 – A horrific day in the market today with the DOW being down -318 points or (-1.96%). While not the end of the world, it got people to pay attention. 

This type of a move is consistent with the beginning of a bear market. In my earlier blog post today, MARKET TOP, I have indicated that it is highly probable that the market topped out on December 31st, 2013. Both my mathematical and my cycle work confirm the conclusion. Now, the market gapped down again leaving another 100 point hole in the structure of the market. This indicates (at least to me) that while the long-term bull market has topped out, the market is likely to bounce into the 16,400 category to close the gaps before any sustained bear market move can take place. While I do anticipate further downside over the short-term, the market should bounce in order to give us a technical indication that the bear market is indeed here. 

I will have more details on this in my weekly update tomorrow. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!  

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Why The Market Top Is In And What You Should Do Next

Long Term Dow Structure35

 

In my earlier blog posts I have mentioned that we had a cluster of very important turning points showing up around December 31st, 2013 and January 1st of 2014 (based on my cycle work). Indicating a significant turning point. 

Yet, my mathematical work at the time didn’t confirm. That is until Tuesday of this week. You can blame a simple brain fart or a lack of sleep on my part.  

I have shown the chart above before. To prove to you that the stock market is not random, but quite the opposite, it is exact. Showing you that there was only a 22 point variance over a 16 year period of time. Further, when we take the values on the chart above and do a few simple calculations we get a value of 12,935.

So what? 

Based on my calculations, the move between March 2009 bottom to December 31st, 2013 top on the DOW was exactly 12,836. That is an exact hit with 0.7% variance. With cycle work and mathematical confirmations coming together, I have no choice but to call for a market TOP.  

(***What calculation? Please get my book titled Timed Value coming out this Monday for further explanation. It would take too long to explain here). 

Now, even though the market top is in, we have to wait for a technical confirmation before taking our short position. Based on my previous experience that is a prudent thing to do. 

What should you do next?

Option #1: If you are in stocks, start getting out and going into cash. Earning 2-5% annually is heck of a lot better than losing 30-40% over the next 3 years (the length of upcoming bear market). Plus, you will have money when the bottom comes to buy some wonderful companies at give away prices. 

Option #2: Profit on the short side. At the same, this will be a very difficult thing to do. The upcoming bear market is unlikely to be directional. My work shows that it will closely resemble the 2000-2003 bear market with a lot of ups and downs. As such, it will be difficult to make money on the short side.

The best advice I can give you is this. Protect and accumulate cash. Once we hit bottom in 2017, the market will start its 18 year bull market.  

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

Why The Market Top Is In And What You Should Do Next 

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Why Smart Hedge Funds Are Betting On Further Housing Collapse and Why You Should Do The Same

abandoned_house_2 investwithalex 

Bloomberg Writes: Gundlach Counting Rotting Homes Makes Subprime Bear

For Jeffrey Gundlach, the U.S. housing recovery isn’t so rosy.

The founder of $49 billion investment firm DoubleLine Capital LP is largely avoiding the subprime-mortgage bonds that jumped about 17 percent last year after home prices surged by the most since 2006, deterred by the lengthy process to sell foreclosed houses and the destruction that’s creating.

“These properties are rotting away,” Gundlach, 54, said last week on a conference call with investors, about homes stuck in foreclosure pipelines, adding that it could take six years to resolve defaulted loans made to the least creditworthy borrowers before the real-estate crash.

 “The housing market is softer than people think,” Gundlach said, pointing to a slowdown in mortgage refinancing, the time it’s taking to liquidate defaulted loans and shares of homebuilders that have dropped 13 percent since reaching a high in May. D.R. Horton Inc., the largest builder by revenue, has tumbled 20 percent.

Read The Rest Of The Article Here

A great read to understand why the housing market is in a Bear Market Bounce as opposed to any sort of a sustained recovery.  Well, what used to be a bounce.  In a gutsy call, I called for a real estate market top on October 3rd, 2013. You can read about it here I Am Calling For A Real Estate Top Here  Further, I believe my call was right on the money and we should see negative year over year numbers once October of 2014 rolls around.

No doubt, just like the stock market, the real estate market is rolling over. While I have already talked about various stages of the bounce and what awaits us in the future, I haven’t really talked about what is driving this housing recovery. There are a couple of things.

1. Cash Buyers (aka. Investors, Hedge Funds, Financials):  Nationwide that number stands at around 30%.  This staggering number has one driver. Too much credit. In layman’s terms, the FED floods the market with cheap credit, financials/investors take this FREE money and invest/speculate in real estate or other mortgage backed instruments. Driving the recovery and housing prices higher.

cash-sales

“Blackstone Group LP and Colony Capital LLC have been central to the rebound, buying more than 366,200 properties in just a few cities”. — I mean seriously, come on!!! Good luck unloading those.

2. Backlog Inventory: Financials and banks, whether directly or through mortgage backed securities are sitting on a massive stockpile of properties even though the market has rebounded. How many? The article states 1.2 Million, but I fathom the number is a lot higher due to various off balance sheet and accounting tricks the banks are playing.

The bottom line is this. Don’t confuse this “dead cat bounce” with true economic recovery. The real estate market bounce has been driven by cheap credit and speculation. Nothing more. When the steam runs out, expect the housing market to decline below 2010 lows. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

Why Smart Hedge Funds Are Betting On Further Housing Collapse and Why You Should Do The Same

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Stock Market Update, January 23rd, 2014.

Daily Chart January 23 2014

 

Summary: Continue to maintain a LONG/HOLD position.   

1/23/2014 – An ugly day in the market today with the Dow being down -176 points or (-1.07%) and NASDAQ down -24.13 points or (-0.57%). Please note that the divergence between the DOW and Nasdaq as it continues to increase. 

Also, note that the DOW gapped down at the open to the tune of 100 points. That “hole” is still open. If you follow my blog you know what I am going to say next. This opening must be closed before the market can gather up a sustained bear move. The market always closes its gaps. For the time being, this doesn’t change our overall market position. Even thought the DOW most likely topped on December 31st, 2013, technically speaking, the overall market trend is still up. As such, we must wait for a trading confirmation before taking a short position. 

Tomorrow I will have a much longer explanation on why my work shows the market has topped out and what you should do about it. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

Stock Market Update, January 23rd, 2014.

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Warning: Did The Bear Market Already Start? Find Out Here

bear is coming

 

Today’s 5 Minute Podcast Covers The Following Topic: “Warning: Did The Bear Market Already Start? Find Out Here”

    • Is the bear market already here? Why? 
    • The secret structure behind the market over the next 3 years. 
    • How to make a lot of money over the next few years. 
    • What should I do now?  

Did you enjoy this podcast? If so, please review it on iTunes and share it with your friends as we try to get traction. Gratitude!!!

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Cycle Work Predicts A Bear Market. What Should You Do?

USA Today Writes: Aging bull faces fresh survival tests

 bull-vs-bear1

Sadly, no bull market lives forever on Wall Street. And the current bull, which was born on March 9, 2009, and has delivered a fat gain of 172%, is no exception.

The current bull is nearly 5 years old. That’s longer than the average bull, which tends to last closer to four years, according to data going back to 1932 compiled by InvesTech Research newsletter. “Not only is the current bull a full year longer than the norm, it is about to become the fourth-longest since 1932,” says editor James Stack. “If that doesn’t make you nervous, it should.”

Read The Rest Of The Article Here

I oftentimes talk about an important 5 years market cycle on this blog. If you go back and study the market in greater detail, you will see this 5 year cycle appearing constantly. 

For instance,  from 1932 to 37, from 1982 to 1987, from 1994 -2000, from 2002 to 2007. These are just the prominent and known cycles, but there are many others. In both bull and bear market legs.  In addition, we are not talking about 5 years +/- 6 months. In most cases, the cycles were exact as my earlier analysis on this blog showed. Now, we have a very clear 5 year pattern developing  within the existing bull market run. The cycle started with a V shape bottom in March of 2009 and will complete itself in March of 2014.

What does it all mean? The 5 year cycle simply confirms our overall hypothesis that the bear market is about to start. It indicates that the market is finishing up its 5 year growth spiral and should roll over shortly to start its 3 year bear leg. Get yourself ready.

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!


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Is The Market Top In?

Daily Chart January 22 2014

Summary: Continue to maintain a LONG/HOLD position.  

1/22/2014 – ALERT.  My additional work suggests that the DOW topped out on December 31st, 2013. I will explain further over the next few days. In the meantime this doesn’t impact our trading position. We must wait for a confirmation. 

Another slow day in the market with the Dow finishing -41 points (-0.25%) while NASDAQ was up 17 points or (+0.41). This further amplifies the divergence between the indices since the start of the year and is exactly what I was talking about in my earlier updates. YTD the Dow is down -1.23% while NASDAQ is up 1.6%. While not a significant divergence it is yet another confirmation that the market is topping. Further, while the cyclical composition of the DOW might have already topped out, the cyclical composition of NASDAQ is yet to reach its point of force. As you know, the most speculative issues tend to top out last. 

The bottom line is, the market is topping here. While this doesn’t impact our existing position, we must be ready to go short at the moments notice. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!  

Is The Market Top In?