4/29/2016 – A negative day with the Dow Jones down 57 points (-0.32%) and the Nasdaq down 30 points (-0.62%)
Well, at least for the time being it appears that way. The stock market finds itself in an overvaluation bubble while earnings and forward guidance is falling short….way short. That is not a good sign. At the same time, the stock market tends to surprise most people most of the time.
I will let you decide, but consider the following……(click on links below to see the charts).
Note the disastrous chart of the bear market in the junk bond ETF (HYG) (black line). As I have always said, the credit markets give the early warnings. The bounce since February so far is nothing but a bear market rally based on the rise in oil prices.
Now, I know that most bulls would disagree, but that’s what makes the market. With that in mind, understand, the market hasn’t taken out any primary resistance levels either, nor has it put in higher highs to confirm a bullish breakout. At this point both sides can claim victory.
As we have noted in the past, the lowest-rated junk bonds may have inflated a $1 trillion bubble at the bottom of the debt market. The thing is, it never should have gotten that way.
We have been aware of this problem for over a year now. With the likes of Carl Icahn and Jim Rogers expecting a collapse. You should as well and that in itself doesn’t bode well for the overall stock market.
Over the past 90 years or so the market has been in a bear market almost a fourth of the time. Half of the time you’re down 5% or worse. It’s difficult to appreciate this fact when looking at a long-term log scale stock chart that seems to only go up and to the right. This is why stocks are constantly playing mind games with us. They generally go up but not every day, week, month or year.
Stunning….isn’t it? Most investors today believe that the market only goes up. I have disproved that on this blog many times before. For instance, between 1790 -1860 (70 years) and 1899 -1949 (50 years) the stock market showed ZERO inflation adjusted appreciation. That is a long time to wait. And with Shiller’s Adjusted P/E Ratio at 26 – 3rd highest valuation level in history, that doesn’t bode well for the overall stock market and any future gains.
But wait, there’s more….
In a note to clients on Friday, UBS strategist Julian Emanuel thinks a few signs point to the “endgame” for stocks coming into view.
I don’t get this. Everyone assumes that we are still in a bull market with higher highs just around the corner. I wrote about it last night. What Bull Market Is Everyone Talking About? Yet, no one has stopped to consider that a long-term top might already be behind us.
And finally….
“I do believe in general that there will be a day of reckoning unless we get fiscal stimulus,” he said, pointing to the Federal Reserve’s maintaining low interest rates, and potentially creating “tremendous bubbles.”
I would definitely listen to what Mr. Icahn had to say during his interview.
Here is the bottom line. We find ourselves in a very complex market environment where both bulls and bears can claim a victory of sorts. At least for the time being. That will not last. In fact, our timing and mathematical works shows an upcoming move that will shock most investors. If you would like to find out what that move is, please Click Here.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, 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 when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 29th, 2016 InvestWithAlex.com
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