8/5/2015 – A mixed day with the Dow Jones down 10 points (-0.06%) and the Nasdaq up 34 points (+0.67%) 

A pair of interesting bubble articles for you today.

First, John Hussman: Stocks Show 4 Signs of Major Decline Ahead

He cited the metric among the indicators that foreshadowed declines after peaks in 1972, 2000 and 2007:

1. Less than 27 percent of investment advisers polled by Investors Intelligence who say they are bearish.
2. Valuations measured by the Shiller price-to-earnings ratio are greater than 18 times.
3. Less than 60 percent of S&P 500 stocks above their 200-day moving averages.
4. Record high on a weekly closing basis.

I would have to agree with the points above. They give more credence to my own bearish case. A case where I suggest that we are on a verge of a massive multi-year bear market sell-off. The decline that will represent the final leg down in 2000-2017 secular bear market. That’s right folks, we are still in a bear market. The 2009 bottom was a mid cycle bottom similar to 1907, 1937 and 1974.

Today’s stock-market bubble is bigger than the dot-com boom

Today risk is everywhere! Valuations will never be as high in such a period. So those who are saying this bull market still has some juice because valuations haven’t reached tech-bubble levels are kidding themselves! Those valuations were an anomaly!

My research shows that valuations during calm geopolitical periods tend to be twice as high. But the valuations on this bad boy are already higher than every bubble or major bull market peak over the past century. The only real exception is the year 2000. And we’re not far off 1929. And that’s with the poor geopolitical period we’re in!

That includes the major bull market peaks of 1937, 1965, and 2007.

So don’t believe the “this is not a bubble” arguments. This is denial plain and simple — which has happened in every single bubble in history, especially near the top.

An outstanding article worth a few minutes of your time. It is nothing that we haven’t discussed on this blog before. One look at Shiller’s S&P P/E ratio should be sufficient enough to realize the same. For god’s sake, only 1929 and 2000 tops were higher. And not by much. What else do you need to know to realize that we are in a freaking giant FED induced financial bubble. And if you still don’t see it, I can’t help you. No one can.

If it looks like a bubble. Walks like a bubble. And quacks like a bubble. It’s a damn bubble.

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. August 4th, 2015  InvestWithAlex.com

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Breaking News: Find Out Why We Are In A Massive Financial Bubble TODAY!!! Google

8/4/2015 – A down day with the Dow Jones down 48 points (-0.28%) and the Nasdaq down 10 points (-0.20%).  

The market continues to trade within a tight trading range. Putting most traders/investors to sleep. With that said, I continue to maintain the view expressed here Is Our Historically Boring Market About To Get Exciting? You Bet. To quickly summarize, most markets continue to accumulate energy for a big move ahead.

AKA, don’t be caught with your pants down or asleep.

In terms of how much risk is out there, consider the following…..

• Shiller’s S&P P/E ratio is at 27. The third highest in the history of the stock market. Only 1929 and 2000 tops where more expensive (not by much). We all know what happened thereafter.
• Today, Americans have 41 percent of their financial assets in stocks, matching the high in 2007 and trailing only the Internet bubble.
• Americans already own a lot more stocks than they usually do. At 57 percent, the current holdings relative to bonds and cash are far from their peak at 66 percent in 2000, but they’re approaching levels that have coincided with market peaks in the past. The low was hit in 1982 at 27 percent.
• America’s 95 million investors are at huge risk. Remember the $10 trillion losses in the crash and recession of 2007-2009? The $8 trillion lost after the dot-com technology crash and recession of 2000-2003? This is the third big recession of the century. Yes, America will lose trillions again.
• With interest rates at zero, the FED will be powerless to backstop the next bear market leg. Even the next round of QE can backfire in a major way. Depending on how the bond market reacts.

I am not sure how most people view this, but for me, the points above represent a tremendous amount of risk in today’s financial system. A risk that is currently not being properly priced in.

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. August 4th, 2015  InvestWithAlex.com

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Google

7/30/2015 – A mixed day with the Dow Jones down 5 points (-0.02%) and the Nasdaq up 17 points (+0.33%) 

The stock market continues to behave as per our internal forecasts (subscriber section). If you would like to find out what happens next, please Click Here. 

Are we about to surge higher or take a massive beating? Let’s take a look at both sides.

Bearish Case: 

• We might already be in a bear market
• It’s time I reminded you how expensive stocks are — a 50% plunge would not be a surprise 

It’s nothing that we haven’t talked about on this blog before. Think about it in the following fashion. The NYSE (largest index by capitalization) is already down 3-4% from its trading range initiation 13 months ago. The Dow set an important top on March 2nd, only to set in a double top on May 19th. The Dow Transports are flashing a major bearish reversal sign.

All of the above suggests that the market has been distributing for close to a year and once this distribution period ends, a new bear market leg will kick in. In fact, considering where the indices are today, it might have already started.

Bullish Case:

• Blankfein Sees Strong U.S. Market
• Why US stocks may rebound in 2nd half: Strategists

The primary argument on the bullish side is as follows.

1. The market has been consolidating after a big 5.5 year run up: It is resting before the next leg up — Fair enough. I will give them this one. That is technically possible.
2. The market is not too expensive: I am seeing this over and over again. This time is different, this sector, that sector, accounting, statistics, etc…. People try to twist their numbers in a million different ways to justify today’s valuations.  At the end of the day it is rather simple. Shiller’s S&P P/E is at 27, the third highest level in history (behind 1929 and 2000). It is never different…..case closed
3. We are in a secular bull market that has another 10 years to go. Wrong. If you study history you will see that bull/bear markets alternate in clearly defined 17-18 year cycles. The 2009 bottom was a mid cycle bottom, not a terminal point of 2000-2017 bear market. Meaning, we still in a secular bear market that will only complete in 2017-18. You can learn more about it here Market Cycles 

Who is right? 

I will let you come to your own conclusion. From my vantage point, the market has been in distribution for over a year now.

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. July 30th, 2015  InvestWithAlex.com

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Are We In A Stealth Bear Market Already?  Google

7/29/2015 – Another positive day with the Dow Jones up 121 points (+0.69%) and the Nasdaq up 22 points (+0.44%). 

As predicted here yesterday, Janet Yellen and the FED continue to beat around the bush. Here is my take on all of this. They are either really…really stupid -OR- they understand exactly where we are and literally feel paralyzed.

Further, from what I can tell, no one out there shares my view. A view I deem to be very accurate from a sheer stand point of what my mathematical and timing work shows happening in our capital markets over the next 24 months.

Sometimes a picture is worth a thousand words. The picture below is, more or less, exactly where the FED finds itself today. The plane is on fire, there is no hope, impact is imminent and it is just a matter of time.

That is to say, it is too late, they have missed the boat on raising interest rates. Let me give you a hypothetical example. What do you think will happen if the stock market crashes 25-30% between now and November, bringing the US Economy to screeching halt……in the very same fashion it did in 2008?

And if you believe that is impossible, you shouldn’t be investing in capital markets. Period. 

Well, the FED will find itself in an impossible situation. There is very little they will be able to do in order to backstop the market and/or prevent a severe recession. Remember, the interest rates are still at zero. Another round of QE? Most certainly, but there is no reason to believe that the bond market won’t throw a fit this time around.  In other words, checkmate and game over for the Fed!!!

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. July 29th, 2015  InvestWithAlex.com

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The FED: Now Powerless, Awaiting Hard Impact  Google

7/28/2015 – A positive day with the Dow Jones up 188 points (+1.08%) and the Nasdaq up 49 points (+0.98%) 

Well, as was discussed here last night, Dennis Gartman maintains his perfect “reverse” turning point track record. With that in mind, the stock market continues to behave as per our internal forecast. If you would like to find out what happens next, please Click Here. 

Tomorrow we have the Fed interest rate decision. And since they have been SO accommodating  to the market over the last few years, we shouldn’t expect anything surprising. Which brings us to my two primary Fed related themes.

First, I continue to maintain that the FED has missed the window of opportunity to raise interest rates. It is too late now. Why?  They needed to reload their recession fighting tool kit before the next recession or bear market strikes. The problem is………we are already there as per my mathematical and timing work. That will become evident to everyone else over the next 12 months.

That is to say, the stock market/economy will collapse while interest rates remain at ZERO. What will they do…..another round of QE? Most certainly, but that won’t save the day. The bond market might react to such a development in a negative way this time around, driving yields higher, not lower.

Second, every FED Chairman since Paul Volcker, and to a certain extent before, has been baptized by fire of a large scale market sell-off. Let me give you an example.

• Paul  (The Iron Will) Volcker: Took office in August of 1979. Last down leg of a 1966-1982 bear market started in April of 1981. Baptized by fire 1.5 years into his tenure.
• Alan (The Master Printer) Greenspan: Took office in August of 1987. Baptized by fire just two months later, when the crash of 1987 took place.
• Ben (The Savior) Bernanke: Took office in February of 2006. The 2007-2009 bear leg started in October of 2007. Baptized by fire 1.75 years into his tenure.
• Janet (Everything is Peachy) Yellen: Took office in February of 2014. Now 1.5 years into her tenure.

I am sorry to tell you this Ms.Yellen, but if the trend above holds true, you are about to get creamed along with every other bull out there. Just saying!!!

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. July 28th, 2015  InvestWithAlex.com

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Is Janet Yellen Ready For Her Market Hazing Google

7/23/2015 – Another negative day with the Dow Jones down 119 points (-0.69%) and the Nasdaq down 25 points (-0.49%). 

To be hones, I have no idea. Everyone I know, money manager or individual investors, are extremely bullish. And despite numerous bearish divergences or sentiment indicators, the market is sitting a stone throws away from all time highs. Did you see the rally off of July 8th bottom? The Nasdaq just put in a new top. Still, some people don’t get it.

Big-name investors stand atop a welcome ‘wall of worry’

Ray Dalio’s Bridgewater Associates, is on the front page of the markets’ newspaper of record turning negative on Chinese stocks, saying there is “no safe place” for clients’ money there. This alarmed – and alarming – message comes mere days after the brilliant billionaire investor Carl Icahn told us all that junk-bond ETFs were a disaster-in-waiting – tinderbox theaters just waiting to ignite and trap their customers.

Earth to bulls, there is no wall of worry. I hope the author realizes that he is talking about Mr. Icahn and Mr. Dalio, not some Joe off the street. This is utter nonsense.

You really want to know why the “smart money” is starting to ring the warning bell?

Wall of worry or not, they clearly understand that the drivers that took this market to bubble level valuations are going away.

For instance, The stock market is disappearing

And as we noted on Tuesday, net flows into US stocks have been relatively flat since 2006, while net issuance, or the amount of new stocks being introduced onto the market, has plummeted. This math, then, indicates that the most recent bull market has been all about reduced share counts.

QE gone. Stock buybacks are slowing down and going away. The Fed is about to increase interest rates. Credit expansion cycle is over and CAPEX is dead in the water. Corporate earnings are slowing down, Apple watches are not selling and “unofficial” economic data points to a severe recession.

Call me stupid, but I don’t see what will drive the stock market up this proposed “wall of worry”. Wall of Jericho might be a better definition 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. July 23rd, 2015  InvestWithAlex.com

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What Wall Of Worry Is Everyone Talking About?   Google

7/21/2015 – A down day with the Dow Jones down 180 points (-1.00%) and the Nasdaq down 11 points (-0.21%) 

I’ll give you just one example. Facebook is now worth more than General Electric

• FB: Market Cap – $ 275 Billion on $13.5 Billion in revenue.  P/E = 95
• GE: Market Cap – $270 Billion on $144 Billion in revenue.   P/E =17

Still too blind to see the bubble? Fine…..

I often talk about Shille’s S&P P/E being at 27 or at the 3rd highest level in history. Right behind 1929 and 2000 bubble tops. What is it for more speculative indices or stocks out there?

• Russell 2000: P/E of 76
• Google:  32
• Netflix: 205
• Amazon: 171
• Tesla: 79
• Twitter: What earnings?

You get the idea. At least the companies above are somewhat profitable and/or leaders in their respective arenas. That cannot be said for 50-75% of the companies found on the Nasdaq/Russell indices today. And that is during the good time or at the end of this Credit Expansion cycle.

That is to say, I do not see how this is any different from 2000 and 2007 bubble level tops. I was there when it happened and what I saw back then is exactly what I am seeing today. It is as simple as that. And even if market participants end up celebrating Apple’s (AAPL) earnings later today, the laws of physical can only be circumvented for so long.

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. July 21st, 2015  InvestWithAlex.com

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Just How Stupid Is Nasdaq’s Bubble Valuation?  Google

7/14/2015 – A positive day with the Dow Jones up 72 points (+0.42%) and the Nasdaq up 33 points (0.66%). 

The stock market continues to perform as per our forecast to subscribers. A massive and rather rapid stock market decline is coming later on this year. And while we won’t have a crash, considering the amount of margin debt out there, quite a few people will get wiped out. If you would like to find out exactly when this move will develop, to the day, please Click Here. 

As of today, the FED is facing the following set up.

• Massive stock market, bond market and other asset bubbles.
• Slowing economy and collapsing macro data. We are a stone throws away from an “official” recession. I can argue we are already in one.
• Zero interest rates and limited options to stimulate the economy further.

As a result, the FED has only two options.

1. Raise interest rates NOW in order to reload their recession fighting toolkit before the next recession hits. Again, we are nearly there.
2. Cancel rate hikes and eventually introduce QE4 to further “stimulate” the economy. Also known as, maintaining financial market stability. This scenario includes postponing interest rate hikes until we are in a recession.

You don’t have to be a genius to figure out which scenario the stock market is betting on. And while it would be prudent for the FED to reload now, in reality, no one really knows what they will do. I don’t think they know. 

At the same time, it is a no win situation for the FED. There is no guarantee that the stock market won’t crater even if the FED introduces another round of QE while cancelling interest rate hikes. And I am not the only person who thinks that way.

• The Federal Reserve poses the biggest threat to the stock market — and the reason why will surprise you

While most are focused on the risks around a withdrawal of liquidity, we believe the biggest hit to confidence could be the opposite: if another round of US QE is necessary to prop up the economy. While the market could have a knee-jerk rally on an indication of forthcoming stimulus, we think this would likely be short-lived and could end in the red. QE fatigue is already evident: each subsequent round of QE has seen diminishing risk rallies.

Bingo. That’s how complex today’s macro economic setup is. We are at the end of this massive credit expansion cycle and there is nothing that can save this market now. Not even another round of QE. Well, unless the FED goes into a full monetization drive. But that’s entirely another matter.

Now, to margin debt. A few weeks ago I displayed this chart of skyrocketing margin debt and why it is yet another bearish indicator. That is to say, most investors are extremely bullish at the precise moment when they shouldn’t be.

Not everyone agrees with my assessment above. Traders are borrowing tons of money to bet on stocks … and it’s just not a big deal

“Margin debt does not, by any statistical measure, lead equity prices. They are, essentially by definition, coincident. As stock prices move higher, outstanding margin debt does as well. If and when stock prices move lower, margin debt will follow.”

While I would have to agree with the statement above, they are looking at the wrong metric. It’s not the fact that margin debt moves in tandem with the stock market, it is the fact this metric is now 33% higher than at 2000 and 2007 tops. All while the stock market hasn’t gone anywhere over the last 12 months (NYSE). In other words, the market is storing a tremendous amount of fuel for a correction. And given how much margin debt is out there, any such correction can very quickly turn into a violent sell-off.

Further, I would have to agree with the following sentiment. The stock market is becoming a ‘lose-lose’ situation

Investors are in the grip of “Stockholm syndrome” because there is a trust that central bankers don’t want to hurt markets, which more or less forces investors to maintain a “risk-on” positioning, buying things like stocks and lower-rated bonds.

I couldn’t agree more. I continue to maintain that this is the worst trade out there today. The problem is, everyone is in it. By the time most investors realize the FED is not in control and cannot backstop the market, it will be too late. At least 50% of the down move will be over by that point. Oh well….

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. July 14th, 2015  InvestWithAlex.com

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Fed’s Achilles Heel & Margin Debt Monstrosity Google