What You Ought To Know About Today's Fundamental Picture

Daily Chart AJanuary 27 InvestWithAlex

1/27/2016 – A negative day with the Dow Jones down 223 points (-1.38%) and the Nasdaq down 99 points (-2.18%)

I am sick and tired of talking about the FED. The view expressed here last night What To Expect Out Of The Fed is just as accurate today as it was six months ago. Nothing has changed. The Fed cannot avoid the “Judgement Day”. It is time we talk about something else.

Today, you can easily find very smart people on both sides of the market. And while some suggest that a new secular bull market is just starting up, others see nothing but trouble ahead. Let’s explore.

“We’re actually kind of early or still maybe in the middle innings of a bull market, and we’re not near the end as many think,” she said. Where we think investors want to go now are dividend growth stocks,” she said. “These are companies that might not have the highest yields around, but they have the best potential to grow their yields.”

Well, that’s kind of exciting….isn’t it? According to both analysts the stock market is about to surge higher. And while one suggests a bull market will continue for many years to come, the other implies it will terminate soon, but only after a blow off top is put in place.

In other words, load up on call options.

I am just a little confused as to why it would start now if this bull leg initiated at 2009 bottom. Also, I find it curious that everyone is awaiting some sort of a blow off top. First, the market rarely repeats itself and/or gives investors what they want. And second, couldn’t we all be friends and consider May 19th top on the S&P/Dow and June 20th on the Nasdaq as blow off tops? I was there and they definitely felt like “blow off” tops to me. At least at the time and if you were shorting the market. On the flip side……

I would encourage you to check out the last article. It has quite a bit more substance than your average “buy the dip, asset allocation, bull market never ends, etc…” nonsense.

Given two widely different view points from equally intelligent people, who is right?

I think we have to concentrate on the fundamentals to ascertain what happens next. Here is all you need to know.

Shiller’s S&P P/E Ratio is at 24. Fourth highest level in history. Right behind 1929, 2000 and 2007 tops. That measure alone suggests we are in a massive bubble.
Forward guidance in Q-3 was down 2%. Biggest drop since 2008. That suggests economic and earnings slowdown. Something I have covered here extensively.
Multiple technical patterns suggest the market is ready for another bear leg. Once today’s bounce works itself out. For instance, the NYSE (largest index by capitalization) has been in distribution for 1.5 years, now getting ready to breakdown.
Etc..

Point being, I don’t think one has to be a genius to figure out what happens next.

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.January 27th 2016 InvestWithAlex.com

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