A negative week with the Dow Jones down 11 points (-0.04%) and the Nasdaq down 258 points (-3.20%)

The stock market finds itself at an incredibly important juncture. Things are about to move. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here. 

Back in July of 2016 we were able to identify the exact bottom on a 10-Year Note. Suggesting at the time that a 30+ years bull market in bonds was finally over. It has taken quite a while, over two years, but we now have our first longer-term confirmation point.

The 30-Year Has “Broken Out” – Jeff Gundlach Warns Stocks And Bonds Are Going Lower Together

During a webcast last month, Gundlach said the effect that stimulus has on markets is akin to the effect that miracle grow can have on plants. Too much of it burns them out – which is why it’s not encouraging that deficits are widening this late in the cycle.

And if yields continue to rise, the selling rout in both bonds and equities – a twin rally that has been fueled by QE and rising US debt levels – will likely worsen. Indeed, the bond market is facing a crucial test.

During that webcast, Gundlach pointed out that the S&P 500 and US debt outstanding have climbed in tandem since the bull market began.

Gundlach finished his interview with another bold call. Namely, that stocks outside the US are already down significantly from the Jan. 26, 2018, synchronized high, “which will go down in history as the peak for the global stock market for this cycle.”

I find the above interesting for two reasons.

First, the yield curve has actually steepened over the last few days. And while some people will argue that is net bullish, I don’t see it that way. As I have argued in the past, the yield curve is already flat and doing massive damage. No inversion is necessary.

Plus, the above will give the FED more room to hike rates. Just as Power has indicated. What’s worse, at some point the yield will move down to its trendline (most likely) and that will invest the curve in a dramatic fashion.

Second, considering today’s massive imbalances and debt levels, higher interest rates will bring Trump’s Ponzi Economy to a screeching halt.  Are the bond vigilantes back, has the FED lost control, and if so, just how high and how fast will the rates go?

Finally, will the setup above absolutely crash global stocks?

We might have an answer.

If you would like to find our exactly what the stock market will do next, based on our mathematical and timing work, in both price and time, please Click Here

10/3/2018 – A positive day with the Dow Jones up 54 points (+0.20%) and the Nasdaq up 25 points (+0.32%)

The stock market finds itself at an incredibly important juncture. Things are about to move. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here. 

Not that anyone investing in the stock market today cares, but earning estimates are feverishly collapsing.

Peak Earnings: Companies Furiously Guide Earnings Estimates Lower

The only time the cyclically-adjusted PE was higher was during the dot-com bubble. But unlike now, there were plenty of companies with low PEs and excellent profits in 2000.

Energy companies were a standout example. Now, we are in a “damn near everything bubble”. Affectionately called the “everything bubble”.

10/2/2018 – A mixed day with the Dow Jones up 123 points (+0.47%) and the Nasdaq down 38 points (-0.46%) 

The stock market finds itself at an incredibly important juncture. Things are about to move. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here. 

Now that your day trading grandma is fully invested, what happens next?

U.S. HOUSEHOLDS LOADED UP ON STOCKS

Outside of the 2000 dotcom bubble, U.S. households have never had more of their assets invested in the stock market.

The U.S. stock market, i.e., the S&P 500, soared back to new all-time highs again today – always a welcomed development for investors. And it is especially welcomed now considering the fact that investors are loaded up with stocks at the moment. That information comes courtesy of one of our favorite investment related statistics.

From the Federal Reserve’s Z.1 release, we find that U.S. Households had a reported 34.3% of their financial assets invested in the equity market as of the 2nd quarter. Outside of a slightly higher reading in the 4th quarter of 2017, that is the highest level of stock investment in the 70-plus year history of the series, other than the 1999-2000 bubble top.

The above is consistent with numerous other indicators we have looked at before. For instance, Shiller’s Adjusted P/E Ratio is at 33.50 (double the mean) and arguably at the highest level in the stock market’s history (if we adjust for 2000 tech distortions).

The margin debt is nearly 2.5 times higher than it was at 2007 top and numerous bullish sentiment indicators are flashing an all time high.

In other words, everyone is long, strong and on margin at the highest valuation level in the stock market’s history. What can possibly go wrong? 

We might have an answer.

If you would like to find our exactly what the stock market will do next, based on our mathematical and timing work, in both price and time, please Click Here