Tag: investing

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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. 

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Is The Market Top In? 

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The Secret To Becoming A Great Investor

InvestWithAlex Wisdom 14

 

Today’s 5 Minute Podcast Covers The Following Topic: The Secret To Becoming A Great Investor  

    • The secret is finally revealed.  
    • The tools you will need. 
    • The number one thing you must posses. 
    • How long will it take before this approach makes you very wealthy? 

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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Short Sellers Are Getting Ready. Should You?

Reuters Writes: Insight: Shorts set to pounce as stocks seen pricey, Fed pulls back

short selling investwithalex

NEW YORK (Reuters) – After years of hiding under their desks, short sellers are re-emerging – slowly.

Investors who make a living betting that stock prices will fall are happy to forget 2013: The S&P 500 gained nearly 30 percent while Credit Suisse’s index of hedge funds with a dedicated short bias lost 25 percent.

Jim Chanos, president and founder of Kynikos Associates and one of the most prominent short sellers, said the market is primed for people like him and as a result he has gone out to raise capital.

“Now I think is not a bad time to be raising capital for what we do. When we got a rough going in the mid-90s, that was exactly the time to raise capital,” Chanos said, adding it was better to do this when critics viewed him as “like the village idiot and not an evil genius.”

Read The Rest Of The Article

There was a flood of similar articles over the weekend. If you have read my blog in the past, you know that I would agree.

The investment thesis for most short sellers is right on the money. After all, by most measures the market is significantly overpriced. I know the merits of any valuation work (either for individual stocks or the overall stock market) can be debated, but one thing is not. I am unable to find anything to invest in. At least for me, this is reminiscent of the 2000 and 2007 tops where the selection of undervalued stocks was nonexistent as well.

Now, we all know that the stock market has been driven up by massive credit infusion by the FED, speculation and certain factors behind my “mathematical timing work”. There is no doubt, at least based on my work, that the market is set for a significant drop here. Yet, shorts must be very careful here. Proper timing should be their number one priority.

As such, while the article galore predicting a large drop in the stock market is right on the money, I wouldn’t short “Right Now”. Based on my mathematical work the rally is not yet over and shorts should wait for a few more months or a technical confirmation before taking any meaningful short position. 

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Short Sellers Are Getting Ready. Should You? 

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Daily Stock Market Update, January 21st, 2014

Daily Chart January 21 2014

Summary: Continue to maintain a LONG/HOLD position. 

1/21/2014 – While there was a 200 point swing on the DOW, the market ended up relatively flat. With the DOW closing -44 points or (-0.27%), S&P ending the day flat while NASDAQ was up +0.67%. Just as the markets ended up being all over the place, I am beginning to see a number of divergences appear in various sectors of the market (including international markets). This should come as no surprise to us. This is consistent with our work indicating that the bear market will start over the next few months.

The market is topping out and this is what it looks like. At the same time, I did notice a constant stream of “Bear or Short” articles over the weekend. Most talk about the market being overvalued, overbought and is set for a fall. Most definitely, that is true.  However, open bearish discussion clearly suggests that the market hasn’t finished going up…..just yet. As my earlier forecast indicated, a 700 point rally into 17,100 on the DOW is highly probable. As such, everything remains consistent with our overall analysis to maintain our long position for the time being. 

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Daily Stock Market Update, January 21st, 2014

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Why Does Goldman Sachs Hates Your Money?

 

CNBC Writes: ‘No bubble troubles’ in stock market, declares Goldman Sachs

 

goldman sachs investwithalex

Goldman Sachs thinks talk of financial bubbles is misguided, and the firm is encouraging its wealthy clients to keep their money in relatively expensive sectors such as U.S. technology stocks and high-yield bonds.

“Stay fully invested—we don’t have bubble troubles yet,” Sharmin Mossavar-Rahmani, chief investment officer for the bank’s investment strategy group, said at a press briefing in New York last week.

The firm likes several relatively pricey sectors. One is U.S. technology stocks, based on strong corporate free cash flows and prospects for corporate earnings growth. The Dow Jones U.S. Technology Index has gained about 141 percent over the past five years. 

Maybe Goldman Sachs clients are too rich for their own good and are in need of a good haircut. That is exactly what they are going to get if they listed to Sharmin Mossavar-Rahmani. Instead of being risk averse she wants them to pile into highly speculative Tech stocks? You can’t make this stuff up.

The article continues,  “But she reiterated the four reasons Goldman believes equities are not in bubble territory, as outlined in a recent strategy report: Credit growth is not excessive; investors are just beginning to get back into U.S. stocks; views on the U.S. are not yet overly bullish; and stock valuations have not raced too far ahead”.

Let’s take a look at each point individually.

1. Credit Growth Is Not Excessive.  Are you kidding me? Total market debt as a % of GDP stands at 370%.  The highest in the history of mankind. As a reference point, 1929 this same indicator was at just 280% of GDP. We all know what happened thereafter. Plus, the FED is printing/monetizing $85 Billion per month to add liquidity to the market. There are credit bubbles everywhere (mortgage, student loans, credit cards, even car loans) and Goldman Sachs has the balls to claim that credit growth is not excessive? Unbelievable. 

2. Investors are just beginning to get back into US stocks: I am not sure what “investors” she is talking about, but the market is up over 150% in 5 years. If they are getting back in “just now” they are dumb and this should be used as a contrary indicator.   

3. Views on the US are not yet overly bullish: Once again, views by whom? If you take a look at the bullish sentiment indicator, it is sitting close to an all time high. That is above 2000 and 2007 levels. Plus, everyone (media, financial advisors, investors, etc…) are falling all over each other while predicting the market to go up in 2014. As far as I am concerned you can’t get more bullish than this.

4. Stock Valuations have not raced too far ahead: “Too Far” is the keyword. In a sense, Sharmin is admitting that valuations are indeed high. While this point is debatable based on your valuation metrics, personally, this market is incredibly expensive. At today’s prices I cannot find too many things (if anything) to invest in. 

The bottom line is as follows. The arguments Goldman Sachs makes are nonsense and without merit. Investors must clearly understand that before making their investment decisions. As I have said so many times before, my timing/mathematical work indicates a contrary position. The bear market is about to start and it will wreck havoc on the financial markets over the next 3 years. AKA….its time to protect yourself instead of buying up tech stocks.  

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Is 30-40% Unemployment The Future?

The Economist Writes: Coming to an office near you The effect of today’s technology on tomorrow’s jobs will be immense—and no country is ready for it

robotics and job distruction

INNOVATION, the elixir of progress, has always cost people their jobs. In the Industrial Revolution artisan weavers were swept aside by the mechanical loom. Over the past 30 years the digital revolution has displaced many of the mid-skill jobs that underpinned 20th-century middle-class life. Typists, ticket agents, bank tellers and many production-line jobs have been dispensed with, just as the weavers were….

Read The Rest Of The Article Here      

The article above is an interesting “must read” for anyone with a job. While I agree with the overall premise of the article they have missed a few significant points.

First, as productivity and technology improves over the next decade, what will happen to all of the “white collar jobs” that our economy used to, and to a certain extent, still supports. Will there be another advance, either technological or otherwise, that will eat up excess labor force as it did in the 21st century? That is a difficult question to answer. While I am looking incredibly hard to find some sort of a catalyst, as of right now, I don’t see anything. Maybe it will and maybe it won’t. However, the article is missing a few other points.

Robotics & Outsourcing: Having lived in Asia for a few years, I am here to tell you that outsourcing will take a large bite out of US labor force over the next few decades. Why should I hire an American and pay him at least $15/hour when I can pay a Filipino worker (who is just as good) $2.50/hour. This is basic economics. Plus, robotics are advancing so rapidly now that in many cases the cost of labor is being pushed into the $2/hour territory. I believe you would agree that such a cost will be pushed even lower over the next decade as the cost of technology drops further. Will anyone be able to compete with $0.50/hour robots?   

Finally, there is the question of the US Economy. As I have stated repeatedly on this blog, the state of the US Economy is dismal at best. The unemployment rate is being under reported. The recovery we have experienced thus far has been driven by nothing more than speculation and massive credit infusion. When it ends and the bear market starts, the unemployment rate will surge again. Sadly, I do not see any outcome to reverse my position.    

I know I have asked more questions than I have answered. Yet, a clear trend is evident. There is a tremendous amount of pressure on the US labor force. All of it is negative and none of it is going away anytime soon. If anything it will intensify over the next two decades.

So, is 30-40% unemployment rate possible? While it seems extreme, I wouldn’t rule it out. Anything is possible. Some sectors of Greek and Spanish economy are already there. One thing is for sure. Make yourself as valuable as possible so your job cannot be axed.

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Is 30-40% Unemployment The Future? 

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Daily Stock Market Update, January 17th, 2014

Daily Chart January 17 2014

Summary: Continue to maintain a LONG/HOLD position.  

01/17/2014 – Slow day in the market. While the S&P and NASDAQ were both down to the tune of -0.50%, the DOW inched up 40 points or (+0.25%). As mentioned yesterday, the DOW closed the “DOWN GAP” that was originated on Thursday during the trading day today. We continue to be stuck in the trading range since the beginning of the year. According to my work this has to do with a number of cycles topping out on or around January 1st of this year. In other words, the powerful rally we have witnessed in the late 2013 is running out of steam. While the trend is still Bullish the market is starting to exhibit signs of a fatigue and an eventual roll over. Still, as of today, it is prudent to maintain our long position while we wait for a confirmation. Weekly summary coming up tomorrow.   

Daily Stock Market Update, January 16th, 2014

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How To Make A Killing In The Stock Market

InvestWithAlex Wisdom 11

Today’s 5 Minute Podcast Covers The Following Topics and is in direct response to one of my readers questions, “What do I have to do to make a killing in the stock market, fast?” – Robert Hitt

    • Your options and what no one else will tell you. 
    • The secret way to getting it done. 
    • How you should position yourself now. 
    • How big are you cojones? 

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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Did Bernanke Predict The Stock Market Crash?

bernanke meme

AP Writes: Bernanke likens ’08 financial crisis to car crash

WASHINGTON (AP) — In his final public appearance as chairman of the Federal Reserve, Ben Bernanke took a moment to reflect on the 2008 financial crisis and compared it to surviving a bad car crash.

During an interview Thursday at the Brookings Institution, Bernanke recalled some “very intense periods” during the crisis, similar to trying to keep a car from going over a bridge after a collision.

The government had just taken over mortgage giants Fannie Mae and Freddie Mac. Lehman Brothers had collapsed. He recalled some sleepless nights working with others to try and contain the damage.

“If you’re in a car wreck or something, you’re mostly involved in trying to avoid going off the bridge. And then, later on, you say, ‘Oh my God!'” Bernanke said.

Read The Rest Of The Article Here

An innocent car crash Mr. Bernanke? Just an accident? I guess that’s one way to look at it. There is another. How about getting so drunk that you drive your car into a pole.  

Of course, the above is an analogy for using entirely too much credit to propel our financial system and our underlying economy right after the Tech crash. As we know, that led to the housing bubble, the stock market bubble and the credit market bubble that all blew up in 2007-09. Now, you can’t blame Mr. Bernanke for that. For the most part, another “brilliant economist” under the name of Mr. Greenspan was responsible for the financial collapse we have all suffered during that time.

You can, however, blame Mr. Bernanke for what happened between 2007 and today. It seems like he took Mr. Greenspan’s playbook, squared it and then multiplied it by 100. By pumping a tremendous amount of credit into the system since the market meltdown of 2007-09 Mr. Bernanke upped the ante for any reasonable resolution to our current financial issues.

Make no mistake………..the current stock market, real estate and economic recovery has very little to do with the underlying fundamental economy and everything to do with massive infusion of credit into the financial system by the FED.

It is a speculative illusion at best. When the credit card is finally maxed out, there will be hell to pay. Based on my mathematical work we are just a few short months away from the start of the bear leg. Get yourself ready.

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Daily Stock Market Update, January 16th, 2014

Daily Chart January 16 2014

 

Summary: Continue to maintain a LONG/HOLD position.  

1/16/2014 – The stock market is stuck in the trading range since the start of the year with the DOW being down -68 points or (-0.41%). It is important to note that the market opened with a gap down and while trading closed the “UP” gap opened yesterday. Why is that important? Market always closes its gaps. Sometimes right away and at times it takes a few years. The gap down in the morning means the market must close this gap before any reasonable down move can start. This works very well with our overall analysis and the notion that the bear market will start over the next few months. We continue to hold our overall long position as there has been no change in the overall trend. 

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Daily Stock Market Update, January 16th, 2014