7/20/2015 – A positive day with the Dow Jones up 14 points (+0.08%) and the Nasdaq up 8 points (+0.17%)
Over the last few months a number of market pundits have suggested that we won’t see a major market top until some sort of a blow off top occurs. Here is my question……
Would recent market action on the Nasdaq and Nasdaq 100 constitute just that?
For instance, last week the Dow was up 1.78% for the week, while the Nasdaq 100 pushed up 5.5%. I don’t honestly remember the last time we had such a massive divergence. Then, take a look at the following reading from today.
Nasdaq 52 Week High/Low: Highs-64 Lows-97
This shouldn’t be happening in a bull market that is setting all time highs.
We all know that the largest stock index by capitalization, the NYSE, hasn’t moved an inch in over a year. Now, Mark Hurbert brings out an important point
Here’s one bear market sign you’ve never seen before
That’s because the degree to which stocks move together in unison is a function of the market cycle. In bear markets the vast majority of stocks do so, whereas in bull markets stocks tend to march to the beat of their own drummer. It’s at market tops, therefore, when stocks’ moves in step with the overall market tend to be at the lowest point.
Such as it is now. Last week, even as the broad market averages rose to within shouting distance of their all-time highs and some secondary averages actually did so, just 7.2% of stocks on the New York Stock Exchange hit new 52-week highs. A slightly greater percentage of stocks — 7.3% — hit new 52-week lows.
That is excellent and precisely correct. It is only a “stock pickers market” until, as Mike Tyson puts in, a bear market punches you in the mouth.
Here is something to consider. During a typical bear market about 60-70% of all stocks decline, 15% stay flat and about 15% advance. When we have severe bear market sell-offs, as we did in 2007-2009, about 80% of all stocks decline, 10% stay flat and about 10% exhibit some sort of an advance.
Point being, it is pointless to pick stocks at market tops. Particularly today. Everything is overvalued and the chances of you finding that winning stock is 1 in 10. And even if you do, it is unlikely to go up very much. Stocks should be picked at the bottom of the market cycle, not the top. That’s when you find future 10 Baggers at giveaway prices.
At the top, everything should be sold and moved into cash. Better yet, invested in bear funds with a proven track record. The fact that today’s investment advisers promote stock picking is yet another sign that the top might be near.
As for the Nasdaq, I’ll let you come to your own conclusion, but the index does bring up more questions than answers.
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 20th, 2015 InvestWithAlex.com
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