Weekly Stock Market Update & Forecast. June 14th, 2014. InvestWithAlex.com

Weekly Update & Summary: June 14th, 2014

A negative week with the Dow Jones down 149 points (-0.88%) and the Nasdaq down 11 points (-0.25%). Most markets left a fairly large up gap on June 11th while closing a down gap left over from June 6th. Suggesting a possible bounce.

However, we continue to have a number of down gaps, the one on May 27th, two large gaps on May 21st/23rd and two large gaps on April 14th/16th. Indicating an eventual correction. Further, there are a number of smaller gaps left leading all the way down to February 5th low. We continue to believe that the Dow will close such gaps when the next bear leg develops at below mentioned time frames (please see mathematical analysis & timing section below).

WEEKLY REVIEW:

Does The Russell 2000 Suggests An Upcoming Collapse?

About a week ago I talked about a possible Head & Shoulders pattern developing on the Nasdaq. While that pattern is somewhat in question, the Russell 2000 is now building its own. The last time it happened back in 2010 the Russell collapsed 27%.

But the technicals may be signaling a huge drop ahead, according to Richard Ross, global technical strategist at Auerbach Grayson. “I don’t like the small caps,” said Ross, a “Talking Numbers” contributor. “I’m a seller of the Russell 2000. In fact, full disclosure, I’m short the Russell in my personal account.”

The main question here is…… are the Dow & the S&P leading the market higher or are the Nasdaq & the Russell 2000 showing the early warning signs for what is to come in the overall market?

Over the last few months I have covered extensively why the stock market is approaching a top from both the fundamental/technical and the mathematical/timing fronts. It just might very well be that the more speculative indices will lead all markets lower. To start the bear market of 2014-2017. One thing is for sure, I would watch the Russell 2000 very carefully. If the Head & Shoulders develops as anticipates it would spell the impeding doom for the overall market.

What You Ought To Know About Today’s Massive Financial Bubble

A few days ago I have talked about Uber, their massive VC round at $18 Billion valuation level and what that means. Yesterday, the fools at The New York Times have argued…. “Why Uber Might Well Be Worth $18 Billion”

Think about the basic math. There are a lot of numbers floating around about the global revenue for taxis, but here are the basics: In the United States, the taxi business generates $11 billion annually, according to IBISWorld.

In big cities like New York and London, The Financial Times reports that the average person spends $238 a year on taxis. If you extrapolate that Uber could one day control a quarter of the current global taxi market, the investment would turn out to be a home run. The business is currently in 128 cities in 37 countries and says it is doubling its revenue every six months. (TechCrunch reported Uber’s revenue last year was $213 million on more than $1 billion of bookings; Uber takes a 20 percent cut of all driver’s receipts.)

This is the basic rationale of all start ups and idiot investors who believe them. “If we only get 2% of the market we will make a Trillion Dollars”. Unfortunately, I have never seen this pipe in the sky dream come to a fruition. So, why is Uber, a company with $213 Million in revenue and net losses is valued at more than Hertz Global Holdings Inc, Best Buy Co, Alcoa or another 250 companies on the S&P 500 index?

Let me tell you why. Because we are in a massive financial and speculative bubble reminiscent of the 2000 and 2007 tops.Venture Capital and the stock market tend to sync up for the most part and the excesses (or absolute insanity) you are seeing in terms of Uber valuation levels are the direct result of the massive bubble in the stock market. Let’s just not pretend or hope, we all know what happens next.

GEOPOLITICAL & MACROECONOMIC ANALYSIS:

This was not a good week from a geopolitical point of view. With so many conflicts happening simultaneously it certainly feels as if the world is going to hell in a hand basket. Let’s take a quick look at the three of the most important issues and see if they can impact our financial markets.

Ukraine/Russia/NATO/USA/EU: As I have mentioned in last week’s update this situation continues to die off. While there is an all out conflict and a mini civil war, this issue might be on a verge of completion. With that said and as with any conflict, a quick re-escalation is always a possibility. Unfortunately, the US relationship with Russia will continue to deteriorate for as long as this administration remains in place. If the conflict dies off, there shouldn’t be any impact on our financial markets.
China/USA/NATO/Philippines/Vietnam/Taiwan/Japan: China has already said, in no uncertain terms and a number of times, that it wants the US military presence out of Asia. China will continue to flex its military muscles to try and control the entire region. While there have been a number of incidents, thus far they have not caused any major problems. Yet, make no mistake, the pressure is building and this powder keg will explode. Sooner or later. No impact on our financial markets as of today.
Iraq/Syria/USA: In a stunning turn of events, various factions of Islamic militants, crazies, al-queda, etc….. have nearly completed their takeover of Iraq in a matter of day. Given the circumstances and the reports coming out of the Iraq, it is just a matter of days before Baghdad falls and militants gain control of the entire country. No amount of “strategic bombing” by the US will prevent this. Only an invasion can and no one is willing to do that.

This is the most important issue now….. on two fronts. First, if successful, these Islamic militants will be able to use Iraq and parts of Syria as lawless land where anything and everything goes. Further destabilizing the region and having the ability to train as many terrorists as their little hearts desires. Eventually, this will come back to hunt the USA. Second, OIL & OIL money. They might end up as the wealthiest terrorist organization ever created, destabilizing the oil markets in the process. We must watch this situation very carefully and anticipate that it WILL have an adverse impact on our financial markets.

Bonus question. What’s the common denominator in all of the above?

TECHNICAL ANALYSIS FOR THE DOW JONES:

Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market. Same applies to the market action over the last few months. Yet, that in itself can be misleading as per our timing analysis discussion below.

Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.

Short-Term: Short-term trend remains positive for the time being. The Dow would have to break below 16,000 for the short-term trend to shift from positive to negative.

Again, even though all 3 trends are bullish for the time being, that might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.

MATHEMATICAL & TIMING ANALYSIS:

It’s going to be a long one.

First, a re-cap. Particularly for our new subscribers. Over the last few months we have maintained that the DOW will…..

(*** Please Note: This time around about 90% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public. As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).

In conclusion, xxxx

Longer-Term Overview:

The next turning point is located at……

Date: XXXX
Price: XXXX

TRADING:

I am now fully committed to the XXXX side of the market with 11 individual positions taken at the prices outlined below. A lot of them have done incredibly well thus far and I hope you were able to benefit as well. I will be updating you of any changes or anticipated changes before they take place.

Remember, you should have an exact strategy and entry/exit points based on the forecast above.

The list below is for your reference point. It entails my investment strategy for my own investment purposes. While you are free to follow me, please do so at your own risk. Do not take this as a trading advice. Please note, all of the positions below have been triggered.

Stock	Entry Point ($)	Action Taken	Stop Loss @
xxxx	xxxx	xxxx	91
xxxx	xxxx	xxxx	1250
xxxx	110	xxxx	121-123
xxxx	74	xxxx	80
xxxx	xxxx	xxxx	260
xxxx	xxxx	xxxx	460
xxxx	35	xxxx	39
xxxx	65	xxxx	70
xxxx	120	xxxx	120-130
xxxx	100	xxxx	108-112
xxxx	112	xxxx	120

Otherwise, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).

If You Are A Trader: XXXX

If No Position: XXXX

If Long: XXXX

If Short: XXXX

CONCLUSION:

An incredibly important week is coming up. We are now looking for our forecasts above to be confirmed over the next few trading days/weeks. I have also described what to anticipate over the next few months and exactly what you should do now. With increased volatility, multiple interference patterns and an incredibly important long-term turning points coming up over the next few months we must be very careful and risk averse here. Those anticipating the moves and those who can time them properly will be rewarded appropriately.Weekly Stock Market Update & Forecast. May 31st, 2014. InvestWithAlex.com

Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start.

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