Weekly Update & Summary: September 27th, 2014
A negative week with the Dow Jones down 168 points (-0.97%) and the Nasdaq down 68 points (-1.48%). During the week, the Dow left a number of up gaps behind. With the highest one being at 17,283, suggesting a short-term bounce. With that said, the Dow continues to maintain a number of down gaps leading all the way down to August 7th low and a large gap from August 18th at around 16,650. Suggesting an eventual correction.
And that’s just the beginning. The market continues to have two large gaps down from April 14th/16th and a number of smaller gaps leading all the way back to February 5th low. I 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).
Friday’s Update:
The market had a fairly strong rebound following yesterday’s bloodbath. What’s interesting is that everyone is still trying to figure what might have caused the decline. Cashin: What could be behind the selloff. Theories are abound and range from bending iPhones to some hedge fund liquidating a large position, from illiquidity in credit markets to Russia getting ready to freeze out the EU bureaucrats this winter. I would pay to see the last one.
Yet, all of that is irrelevant BS when it comes to financial markets and what had caused yesterday’s slide. Here is what you should consider instead.
First, the Dow declined a miserly 250 points and most in financial media lost their shit. Literally. I can only imagine what will happen if the Dow has a bear market day and loses 1,000 points or so. Armageddon? And while this might seem trivial, it is not. This gives you a psychological setup of most investors. In other words, once the market really begins to move down, given today’s psychological makeup, most investors will freak out. Leading to a possible panic and/or a crash.
Second, no one will ring the bell at the top. Most of the conversations focused on why today’s environment is not indicative of a market top and why the market still has some time run. Again, everyone is missing the point. By the time everyone realizes a bear market is in play we will already be down 10-20% or it will be too late to avoid losses.
Just look at 2000 and 2007 tops. Maybe I am suffering from amnesia, but I don’t recall neither Greenspan nor Bernanke holding a press conference and announcing that a bear market was about to start. On the contrary, they were hyping up how great the economy was. It wasn’t until the market was down 20-25% that everyone realized what was happening. As always, it was too late to do anything.
The upcoming bear market will present itself in a very same fashion. In short, anyone who is trying to identify the market top based on various fundamental reasons is playing a fools game.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. 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 2014-2017 will start (to the day) and its internal composition, please CLICK HERE
(***Please Note: 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. September 26th, 2014 InvestWithAlex.com
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