2/25/2016 – A positive day with the Dow Jones up 213 points (+1.29%) and the Nasdaq up 39 points (+0.87%)
I don’t remember the last time when financial media sentiment has been so bearish. Maybe in early 2009? It is a complete reversal from our May 2015 top, a time when you couldn’t find a single bearish article even if your life dependent on it.
Simply put, everyone now believes that financial Armageddon is just around the corner. Here is just a small sample from today.
- Here’s Why Oil Could Be Headed to $0
- This is why you can expect another global stock market meltdown
- ‘Smart-beta’ investing guru is now warning of a crash
- 5 things to do as we near a bear market in stocks
- It’s not going to get better for the rest of the year: Portfolio manager
My God!!!…..no wonder the market is rallying here. In other words, if you are a bear, you should be very concerned. There are just too many people jumping on the bearish bandwagon at the present moment.
Luckily, I then saw this ray of hope Historical pattern says the risk of a 2016 bear market is zero
Every single time the S&P 500 gained more than 1.5% a day for three consecutive days, it traded higher a year later.
The S&P 500 violated the low set prior to the kickoff move only twice (1987, 2000). Both times it bounced back quickly.
In 2016, the S&P 500 closed at a 52-week low before its kickoff rally. In 1970, 1987 and 2011, the S&P 500 also closed at a 52-week just before soaring higher.
Obviously, kickoff rallies like this are not the only factor driving stocks, but this particular pattern confirms the six reasons for a stock market rally listed by the February 11 Profit Radar Report (all six reasons are available here).
The Feb. 11 Profit Radar Report recommended buying the S&P 500 at 1,828 (after it fell as low as 1,810) in anticipation of a sizeable rally.
As compelling as this historic pattern may be, tunnel vision is a luxury investors can’t afford. It’s worth noting that the 2016 kickoff is weaker (in terms of consecutive percentage gains) than prior kickoff rallies, and our major-market-top liquidity indicator raised a caution flag in May 2015.
The scope of this rally has yet to be revealed, and a break below the February low is still possible (like in 1987 and 2002).
Regardless of the S&P’s near-term path, history says we shouldn’t under estimate this kickoff rally. Acting on the sentiment-based buy signal at S&P 1,828 provided a low-risk entry point and insurance against a runaway rally.
Ummm…so let me get this straight. The market has rallied 3 days in the row and now there is ZERO chance of 2016 being negative? Only an idiot would follow this line of thinking. This reminds me of “Years ending in 5 are always positive” myth propagated last year. At least it was until both the S&P and the Dow finished the year in the negative territory. And there went that 120+ year myth.
In reality, we are dealing with a very complex market environment.
That is exactly what I proposed on this free blog forum 2-3 weeks ago. After presenting the chart below and suggesting that the current market will drive both bulls and bears up the wall over the next few weeks. And that is exactly what has been happening.
That is, until we reach a certain point in both Time and Price. Most importantly TIME. When we do, the market will deliver a jaw dropping move. It could be up or it could be down. I am simply not willing to release that information here. However, if you wish to know the timing and the direction, please Click Here.
his 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. February 25th, 2016 InvestWithAlex.com
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