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Stock Market Crash 2017; reality or all Hype

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Posted by Sol Palha - Tactical Investor

on Friday, 17 February 2017 06:16

A man profits more by the sight of an idiot than by the orations of the learned.

Arabian Proverb

We have one expert after another predicting that it is time for the markets to crash; mind you these same chaps sang this same terrible song of Gloom in 2015, 2016 and now they are singing it with the same passion in 2017. There is one noteworthy factor, though; a few former Bulls have joined the pack. Does this now mean that the markets are going to crash? Apparently not, well, at least if you look at the indices, as of Jan the market continues to trend higher. Furthermore, what is a crash or for that matter a pullback or a correction? Does it not all boil down to a perception? One individual could view it as a crash, while the other views it as a mild correction and an opportunity to purchase more shares. It would all depend on when you jumped into this market. If you embraced this bull market in 2016, then a pullback in the 10%-15% ranges would feel like a crash. On the other hand, if you embraced this beast (Stock Market Bull) anywhere from 2009-2011, it would seem like a mild orderly correction. Most experts almost gleefully try to force their twisted perceptions on everyone. Just because the experts decide to label it as a crash does not mean you should follow their lead; experts are known for getting it wrong all the time. In fact, experiments have shown that monkeys throwing darts at a random list of stocks fare much better than Wall Street experts. Hence, take their so-called sage advice with a barrel of salt.

If these experts were so astute, then why have most of them missed one of the biggest bull markets of all time. Moreover, now they want to convince you that it is time to short it after failing to embrace it. How can one trust these penguins? If they failed to identify the bull market in the first place, how is it they are suddenly able to predict the top.

Several weeks ago we penned an article (excerpt provided below) where we stated that caution was warranted as the markets should let out some steam, but as the trend was still up, we did not feel it was time to short the markets. All the experts that stated it was time to bail out and short the market must be smarting from their losses. The market loves to punish arrogant self-proclaimed know it all gurus. Mass psychology is very clear when it comes to the markets; the masses need to embrace the markets before one can claim a top is close at hand. The masses so far have refused to embrace this market for a prolonged period.

When you think about it, everything comes down to perception. Alter the angle of the observation slightly, and you modify the perception. What appears bullish to one could be viewed as an extremely bearish development by another. When it comes to investing the goal should be to determine what view the masses hold whether it is valid or not is irrelevant for the difference between a truth and deception comes down to perception also. If the masses are leaning strongly towards a particular outlook, history indicates that taking a contrary position usually pays off.

The masses have for the first time embraced this bull market. From a mass psychology perspective, this is alone is not a huge negative. Mass Psychology dictates that the masses need to turn euphoric before one abandons the ship. It is not the time to abandon ship, but it is time to take a breather and let the storm clouds pass. The Dow industrials exploded upwards and have experienced a near vertical move over the past two months. Under such conditions, one should not be shocked if the markets let out a stronger dose of steam than they have over the past 24 months. Tactical Investor

The crowd appeared to embrace this market initially, but just as fast as they embraced it, they pulled back as illustrated by one of our proprietary indicators. In Jan of this year, the gauge was in the middle of the Mild Zone, but as you can see as of the last reading, the gauge has just dipped into the “severe” zone. Given the current trajectory, we expect the needle to move deeply into the “severe” area in the very near future. Instead of pulling back the markets have continued to trend higher, and at this stage of the game, patience is called for. Ideally, the markets will let out a large dose of steam, but markets do not usually cater to your needs; barring a substantial pullback a nice consolidation would suffice. Market consolidations drive key technical indicators into the oversold ranges and allow the market to build up steam for the next upward leg.

anxietyindex

This rapid change in Crowd sentiment validates what we have stated all along last year that the final part of this ride is going to be extremely volatile. It also confirms that all sharp pullbacks have to be viewed through a bullish lens, regardless of the intensity, until the trend changes. The trend is still up, and the masses are far from euphoric. Let’s not forget that Trump continues to inject a massive dose of uncertainty into the markets. When it comes to the markets, uncertainty is a bullish factor, for it means volatility is going to soar and volatility is a trader’s best friend.

Conclusion



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Asset protection

Is This What They Mean By “Crack-Up Boom”?

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Posted by John Rubino - DollarCollapse.com

on Thursday, 16 February 2017 13:15

In 1980, the US government - along with pretty much all of its peers - began borrowing at an accelerating rate. Note on the following chart how the trend line steepened in the 2000s and then steepened again in this decade, with a sudden and unexpected pop in 2015 and early 2016, even as the current recovery entered its 8th year.

US-fed-debt-Feb-17

Also in the past year, stock prices have risen from "near-record, overvalued-by-every-historical-measure" levels, to "new-record, grossly-overvalued" levels - and show no signs of slowing down. Note the massive jump in S&P 500 trading volume that began in January and has persisted throughout the year.



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Asset protection

Reflation Trade Creates Historic Breakouts – What This Means For The Gold & Silver Markets

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Posted by King World News

on Tuesday, 14 February 2017 07:01

King-World-News-Gold-Surges-As-Peter-Boockvar-Issues-An-Ominous-Warning-864x400 cAs the world continues to experience the “reflation trade,” we are witnessing historic breakouts.  What this means for the gold and silver markets is fascinating.

From top Citi analyst Tom Fitzpatrick:  “The London Metals Exchange saw a bullish breakout at the end of last week as we made higher highs and rallied through the trend line resistance (see chart below).”

....see chart HERE



Asset protection

This Is How Crazy The Situation Has Now Become Across The Globe

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Posted by King World News

on Friday, 10 February 2017 08:37

KWN-Boockvar-II-292017-1-864x400 cWith the Dow hitting new all-time highs and the U.S. dollar strengthening, this is how crazy the situation is across the globe.

Here is what Peter Boockvar wrote today as the world awaits the next round of monetary madness:  There has been a distinct disparity between the Investors Intelligence measure of stock market sentiment which survey’s newsletter writers and the AAII survey of individual investors. As stated yesterday, newsletter writers are euphoric.....

....continue reading HERE

...related from KingWorldNews:

Is The Public About To Get Torched In A Stock Market Plunge? The Answer Will Shock You



Asset protection

The Danger of Being Bearish in a Bull Market

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Posted by Cliff Droke - Financial Sense

on Tuesday, 07 February 2017 06:44

One of the biggest contributors to losses for traders in the financial market is the temptation to sell short. Borrowing shares of a company that are not owned by the seller in the hopes of making a massive profit has shipwrecked more traders than probably any other factor. With stories abounding of the quick and easy profits to be made in selling stocks which are supposedly on the verge of plummeting, it's no wonder that the allure of "shorting" is so irresistible to so many.

Selling short is a simple enough proposition: place a short sale order with your broker for a company whose shares you believe are overvalued or technically "overbought". Then just sit back and wait for the profits to start rolling in. If only it were that easy! The trouble with selling short is that in most cases the odds are against the short seller. This is due to a number of factors, some of which we'll examine here.

Perhaps the biggest risk for short sellers is the crowded short trade. A high-profile example of what happens when too many traders pile into a single stock on the short side occurred recently – a cautionary tale if ever there was one. It involved the loss of one man's entire fortune due to a misguided attempt at selling short one of the most widely traded U.S.-listed stocks.  It's a textbook case of what can go wrong when attempting one of the most dangerous of all trading maneuvers.

According to MarketWatch, Canadian investor F.S. Comeau bet his last $249,000 against Apple Inc.(AAPL) in an attempt to reclaim $2.5 million lost in poor investments. At the time of the trade, shares were valued around $122, and MarketWatch reported that an increase of just $6 would deplete Comeau's savings.

Apple shares screamed higher last week when the tech giant released an impressive Q1 earnings report and Comeau lost substantially. As of this writing, AAPL shares had risen to a 52-week high of $130.50.

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