11/3/2015 – Another up day with the Dow 89 points (+0.50%) and the Nasdaq up 18 points (+0.35%)
While some believe this rally doesn’t make sense, others believe this rally is just getting started. That’s what makes the market. Let’s explore.
Get ready for a bigger Santa Claus rally: Strategist
“We looked at what happens when we have a big rally in October,” said Gibbs. “We found that on years where October is up over 5%, November and December end up being even higher than normal, with an average of 5.5%.”
Well, there you go. It is as simple as that. Who knows, based on that logic we might even get to see the Dow 20K by the end of the year. On the other hand….
There is a big problem with the rally
“This has been very prevalent among stocks that break out artificially and then fall back into the trading range and eventually break the support. So that’s something that we want to watch very carefully,” she said.
Basically, she is seeing the same things I am seeing. A number of non-confirmations. Particularly, the Russell 2000, NYSE, Dow Transports, Biotech, etc…. are not following primary indices such as the Dow/S&P/Nasdaq. To one degree or another.
Plus, the fundamental picture hasn’t changed. Shiller’s Adjusted S&P P/E Ratio is now at 27. The third highest level in history. Now behind 2007 top and on par with 1929. If anything, the fundamentals have gotten worse. Forward guidance in Q3 was down 2%. Biggest drop since 2008.
Finally, the market left a number of massive gaps to the downside. Gaps it will have to close sooner or later. This leads to rather simple conclusion. While it is possible that Santa will be extra generous this year, it is just as likely investors will be holding a lump of coal by the time Christmas arrives. I guess we will have to wait to find out.
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. Noveber 3rd, 2015 InvestWithAlex.com
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