As the WSJ article below indicates, outside of this weeks sell off in high flying technology and Biotech, markets have been fairly “boring” over the last 5-6 weeks and since the start of the year. Yet, based on my mathematical and timing work, investors should always be wary of such periods. The market loves putting investors and traders to sleep right before the big move takes place. That is one of the primary reasons why most investors are caught unprepared.
Case and point, 1987 top. The market was climbing for exactly 5 years, everyone was fat and happy, there was no indication of any trouble, the market paused gently at the top, oscillated up and down for a few week (putting investors further into sleep), then proceeded to collapse 25% in just a few trading days. Does any of this sound familiar?
No, I am not predicting a 1987 type of a crash here. I am simply stating that investors should pay a very close attention to the market when the market is “boring”. Such periods indicate shifting energy patterns within the market. When the energy shifts markets go from “boring” to “exciting” in a mad dash. As we have stated so many times before, the bear market of 2014-2017 will start shortly. When it does, expect energy patterns to shift. If you would be interested in learning exactly when the bear market will start (to the day) and it’s internal composition, please Click Here.
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
Click here to subscribe to my mailing list
Warning: Why Investors Should Be Horrified Of “Boring Markets” Google
WSJ Writes: Morning MoneyBeat: The ‘Meh’ Market
U.S. stocks are stuck in neutral. So is investor sentiment.
The S&P 500 has drifted roughly between 1840 and 1880 for the past six weeks before finishing Thursday at 1849.04. The narrow trading range is representative of investors getting neither too bullish nor too bearish on stocks, a mindset that played out in the latest American Association of Individual Investors’ weekly survey.
Neutral sentiment, the expectation that stock prices will stay essentially unchanged over the next six months, jumped to 40.2% in this week’s AAII poll, the highest level since April 14, 2005. The association releases the results of its Internet survey—which asks its members to register their bullish, bearish or neutral views on the stock market—early each Thursday.
The latest reading marked the 12th straight week in which the neutral reading remained above its historical average of 30.5%.
The nine-year high in neutral sentiment underscores how the rally has stalled after the S&P 500’s 30% surge to record levels last year. The stalemate is expected to continue until a catalyst pushes the market one way or another.
Until then, valuations look relatively pricey in many pockets of the market and the potential for the Federal Reserve to raise interest rates as early as 2015 has prompted some worries. Some investors are waiting for a significant pullback before adding to positions, while others are frustrated that the market hasn’t been able to maintain the upward momentum it exhibited last year.
The S&P 500 is up 0.68 point, or 0.04%, in 2014.
“There’s a big disbelief that things are as good as the market makes them out to be at these levels,” Charles Rotblut, vice president of the AAII, said in a chat with MoneyBeat. “Even though we had a huge rally last year, people haven’t bought into the attitude that good times are here,” he added.
There are similarities between now and nine years ago, when neutral sentiment was at these levels. Back then the S&P 500 was in the middle of about a 5% pullback that took place from March through May. The market bounced back but traded in a fairly tight trading range for several months. It was slightly higher in October 2005, six months after that lofty neutral reading, and finished up 3% for the year.
Now, the S&P 500 has bounced back from its 5.8% slump from mid-January through early February and has bounced around ever since.
“The larger story affecting markets hasn’t really changed,” says Dan Greenhaus, chief strategist at BTIG in New York. “We have been advancing our ‘lateral’ trading thesis for many weeks now and in front of earnings season, this view has largely been accurate.”
In other words, welcome back to the “meh” market.