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Who Else Wants To Buy At The Top?

advisors

 

Business Week Writes Investment Advisers Go All In on Stocks

Advisers surveyed weekly by the National Association of Active Investment Managers have 98.3 percent of their clients’ portfolios allocated to stocks. Exposure to equities averaged 72 percent during 2013.

What a shocker!!!  Just as always and exactly at the wrong time.

This is nothing new when one sees the market from the vintage point of human psychology. Most investors make the same mistake. When speculation and advancing market psychology grips investors psyche, there only one thing left to do. BUY. BUY. BUY. Why? Well, because everyone else is doing it and just like the retail market participants, financial advisors and money managers don’t want to be left behind.

Yet, as per my article yesterday, “MARKET TOP” the markets just topped out. As always, instead of getting out or going short most investment advisors are rushing into stocks. Just like they were rushing OUT of stock in March of 2009, when they should have been buying everything under the sun.

Sometimes human nature never changes. 

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Stock Market Update, InvestWithAlex.com, January 24, 2014

Daily Chart January 24 2014

 

Summary: Continue to maintain a LONG/HOLD position. 

1/24/2014 – A horrific day in the market today with the DOW being down -318 points or (-1.96%). While not the end of the world, it got people to pay attention. 

This type of a move is consistent with the beginning of a bear market. In my earlier blog post today, MARKET TOP, I have indicated that it is highly probable that the market topped out on December 31st, 2013. Both my mathematical and my cycle work confirm the conclusion. Now, the market gapped down again leaving another 100 point hole in the structure of the market. This indicates (at least to me) that while the long-term bull market has topped out, the market is likely to bounce into the 16,400 category to close the gaps before any sustained bear market move can take place. While I do anticipate further downside over the short-term, the market should bounce in order to give us a technical indication that the bear market is indeed here. 

I will have more details on this in my weekly update tomorrow. 

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Why The Market Top Is In And What You Should Do Next

Long Term Dow Structure35

 

In my earlier blog posts I have mentioned that we had a cluster of very important turning points showing up around December 31st, 2013 and January 1st of 2014 (based on my cycle work). Indicating a significant turning point. 

Yet, my mathematical work at the time didn’t confirm. That is until Tuesday of this week. You can blame a simple brain fart or a lack of sleep on my part.  

I have shown the chart above before. To prove to you that the stock market is not random, but quite the opposite, it is exact. Showing you that there was only a 22 point variance over a 16 year period of time. Further, when we take the values on the chart above and do a few simple calculations we get a value of 12,935.

So what? 

Based on my calculations, the move between March 2009 bottom to December 31st, 2013 top on the DOW was exactly 12,836. That is an exact hit with 0.7% variance. With cycle work and mathematical confirmations coming together, I have no choice but to call for a market TOP.  

(***What calculation? Please get my book titled Timed Value coming out this Monday for further explanation. It would take too long to explain here). 

Now, even though the market top is in, we have to wait for a technical confirmation before taking our short position. Based on my previous experience that is a prudent thing to do. 

What should you do next?

Option #1: If you are in stocks, start getting out and going into cash. Earning 2-5% annually is heck of a lot better than losing 30-40% over the next 3 years (the length of upcoming bear market). Plus, you will have money when the bottom comes to buy some wonderful companies at give away prices. 

Option #2: Profit on the short side. At the same, this will be a very difficult thing to do. The upcoming bear market is unlikely to be directional. My work shows that it will closely resemble the 2000-2003 bear market with a lot of ups and downs. As such, it will be difficult to make money on the short side.

The best advice I can give you is this. Protect and accumulate cash. Once we hit bottom in 2017, the market will start its 18 year bull market.  

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Why The Market Top Is In And What You Should Do Next 

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Stock Market Update, January 23rd, 2014.

Daily Chart January 23 2014

 

Summary: Continue to maintain a LONG/HOLD position.   

1/23/2014 – An ugly day in the market today with the Dow being down -176 points or (-1.07%) and NASDAQ down -24.13 points or (-0.57%). Please note that the divergence between the DOW and Nasdaq as it continues to increase. 

Also, note that the DOW gapped down at the open to the tune of 100 points. That “hole” is still open. If you follow my blog you know what I am going to say next. This opening must be closed before the market can gather up a sustained bear move. The market always closes its gaps. For the time being, this doesn’t change our overall market position. Even thought the DOW most likely topped on December 31st, 2013, technically speaking, the overall market trend is still up. As such, we must wait for a trading confirmation before taking a short position. 

Tomorrow I will have a much longer explanation on why my work shows the market has topped out and what you should do about it. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

Stock Market Update, January 23rd, 2014.

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Warning: Did The Bear Market Already Start? Find Out Here

bear is coming

 

Today’s 5 Minute Podcast Covers The Following Topic: “Warning: Did The Bear Market Already Start? Find Out Here”

    • Is the bear market already here? Why? 
    • The secret structure behind the market over the next 3 years. 
    • How to make a lot of money over the next few years. 
    • What should I do now?  

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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Cycle Work Predicts A Bear Market. What Should You Do?

USA Today Writes: Aging bull faces fresh survival tests

 bull-vs-bear1

Sadly, no bull market lives forever on Wall Street. And the current bull, which was born on March 9, 2009, and has delivered a fat gain of 172%, is no exception.

The current bull is nearly 5 years old. That’s longer than the average bull, which tends to last closer to four years, according to data going back to 1932 compiled by InvesTech Research newsletter. “Not only is the current bull a full year longer than the norm, it is about to become the fourth-longest since 1932,” says editor James Stack. “If that doesn’t make you nervous, it should.”

Read The Rest Of The Article Here

I oftentimes talk about an important 5 years market cycle on this blog. If you go back and study the market in greater detail, you will see this 5 year cycle appearing constantly. 

For instance,  from 1932 to 37, from 1982 to 1987, from 1994 -2000, from 2002 to 2007. These are just the prominent and known cycles, but there are many others. In both bull and bear market legs.  In addition, we are not talking about 5 years +/- 6 months. In most cases, the cycles were exact as my earlier analysis on this blog showed. Now, we have a very clear 5 year pattern developing  within the existing bull market run. The cycle started with a V shape bottom in March of 2009 and will complete itself in March of 2014.

What does it all mean? The 5 year cycle simply confirms our overall hypothesis that the bear market is about to start. It indicates that the market is finishing up its 5 year growth spiral and should roll over shortly to start its 3 year bear leg. Get yourself ready.

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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. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!  

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. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

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. 

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!! 

Daily Stock Market Update, January 21st, 2014