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Stocks & Equities

Do Not Feed The Bears - Until 2018

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Posted by Avi Gilburt - Elliottwavetrader.neter.net

on Wednesday, 23 August 2017 06:32

Back on July 15th, the title to my weekend update to members of my market analysis service was “Market Will Likely Top Within The Next Three Weeks.” My initial target region for this top was between 2487-2500SPX. One of the factors I considered in my timing for this potential top was Luke Miller’s Bayesian Timing model, which was looking for a top to our wave (3) on August 9th. And, as we know, the market topped on August 8th at 2491SPX, and we seem to have begun the multi-month pullback/consolidation we have been expecting.

For those old enough to remember, Ranger Smith of the “Yogi Bear” cartoon used to constantly tell visitors at Jellystone Park not to feed bears. So, consider me your Ranger Smith.

8-22ag

You see, people can’t help themselves but be bearish. In fact, it seems we are genetically predisposed to being bearish, as the following article explains: 

Sentiment Speaks: Your Human Brain Makes You Bearish, Not The Market Or News

This is why bearishness sells. As one commenter to a perpetually bearish author recently put it:

The material might not be helpful, and even harmful. But, it gets more clicks, as people are very drawn to scary viewpoints, and many take comfort and consolation in believing that the gains that they have missed by being more cautious will be wiped out when the big crash comes. . . Scary stuff sells. It does not need to stand up to careful examination. Most people will never look carefully at the facts, and will believe what they want to believe.

Read his last two sentences again, as it rings of the sad truth in the market. 

And, Ben Franklin explained why:

“So convenient a thing is it is to be a reasonable creature, since it enables one to find or to make a reason for everything one has a mind to do.”

As I explained in my article above, we are predisposed to bearishness. So, we will ALWAYS find a reason to be bearish. ALWAYS. This is why bearish article writers receive constant praise despite the fact that they have been wrong for years. 

Their supporters heap praise upon them due to the fact that they have “opened their eyes to the reasons why the market will not go any higher.” Yet, amazingly, the market has continued much higher. And, the higher we go, the more they thank the bearish article writers for “saving them from the inevitable crash.” Mind you, they have missed the last 40% rally in order to protect themselves from the next 5-10% downside. 

To be brutally honest, it is much tougher to be a contrarian than it is to be a bear. To be a bear means you are simply following your nature. And, to be a bear in the stock market means that you will likely be wrong the great majority of the time. Moreover, if you follow your nature, it means that you likely have significantly under-performed the market.

Does that mean you should turn bullish right now? No, it does not. But, it does mean that you have to recognize your mistakes over the last several years, and understand why you made those mistakes. I sincerely hope you consider your perspective quite strongly before you are presented with another opportunity to take a long position in the equity market in the coming months. 

Another truth in the market is that many of you will never be able to admit that you were wrong and the market was right. To put it simply, price it truth, and you must learn to accept that. Anything that tries to explain why price is false is, by definition, pure falsehood. Yet, many of you will simply continue to list all the reasons that you are right and the market is wrong. Do you really think that fighting the market is going to help you attain your financial goals?

And, here is one last shocking fact that may make your fur stand on end: It is due to your bearishness that the market has continued higher and higher. Yes, that is the truth. Until the market, as a whole, is convinced that this bull market will never end, the market will continue to climb that wall of worry that each of you bears have helped to build these last 8 years. And, based upon my analysis, we still have several more years until the bears are placed on the extinction watch list, which will then be the time that this bull market that began in 2009 will finally come to an end. So, until that time, us contrarians (along with our investment accounts) sincerely thank you for pushing this market far beyond your expectations.

Again, I want to remind those willing to listen that 4th wave pullback/consolidations are the most variable of the entire Elliott 5 wave structure. That means the market will continue to whipsaw traders until this 4th wave has run its course over the next few months.

But, as long as all “bounces” we now experience remain below 2465-80SPX resistance, I view us as being in a whipsaw-type of market, ultimately making our way down to the 2300-2350SPX support region before this pullback/consolidation has completed in the coming months. 

While there is a 15-20% probability that we can still strike the 2500-2520SPX region, even in that lower probability scenario, we will still likely resolve down to the 2300-2350 before we are able to rally to 2600SPX, likely into 2018.

See charts illustrating the wave counts on the S&P 500.

 

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.



Stocks & Equities

New Hindenburg Alert

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Posted by Ross Clark - Institutional Advisors

on Tuesday, 22 August 2017 06:39

A new Hindenburg signal was generated on August 16th. This follows the signal in May and its confirmation in June. That combination resulted in a minor correction to the 50-day moving average in the S&P.

The current signal comes on the heels of what was a very close call on August 8th when only one ingredient was missing from the strict rules. If the S&P can’t hold at the 50-day ema then we should be prepared for a deeper break to the 150-day average (2388).

See the June 28th report for further background information in the Hindenburg Omen.

Click Image For Larger Version 

Screen Shot 2017-08-22 at 6.37.55 AM

Opinions in this report are solely those of the author. The information herein was obtained from various sources; however, we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.

Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk. Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.

BOB HOYE, INSTITUTIONAL ADVISORS

EMAIL bhoye.institutionaladvisors@telus.net WEBSITE www.institutionaladvisors.com 



Stocks & Equities

Some Big Wall Street Players Are Starting to Sweat a Crash

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Posted by Shah Gilani - Money Morrning

on Monday, 21 August 2017 07:16

Here's what to do if they're right...

wall-street-signWhen it comes to the stock market, everything’s always all good… until it isn’t.

And it’s been all good: U.S. stocks have been rallying for nine years, making successive all-time highs, with only sporadic bouts of profit-taking by the Nervous Nellies along the way.

But now, some huge investors – marquee names – are getting nervous.

And they’re letting people know about it, too…

Between them, these giants are pushing around close to $1.7 trillion in capital – more than enough for them to be able to make waves wherever they go.

I’m going to show you what to do if these whales are right; they just might be…

Meet the (Very Wealthy and Powerful) Bears



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Stocks & Equities

High-Profile Sectors Start To Roll Over

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Posted by John Rubino - DollarCollapse.com

on Monday, 21 August 2017 06:42

Long credit cycles like the current one always end with a crash. But first they deteriorate. The headline numbers remain positive while under the surface a growing list of sectors start to falter. It’s only when the latter reach a critical mass that market psychology turns dark.

How far along is this process today? Pretty far, it seems, as some high-profile industries roll over:

Deep’ Subprime Car Loans Hit Crisis-Era Milestone

(Bloomberg) – Amid all the reflection on the 10-year anniversary of the start of the subprime loan crisis, here’s a throwback that investors could probably do without.

There’s a section of the auto-loan market — known in industry parlance as deep subprime — where delinquency rates have ticked up to levels last seen in 2007, according to data compiled by credit reporting bureau Equifax.

“Performance of recent deep subprime vintages is awful,” Equifax said in a slide show on second-quarter credit trends.

Analysts have been warning for years that subprime car loans pose a threat to lenders as delinquency rates have edged higher since reaching a post-recession low in 2012. But it wasn’t until last quarter that the least creditworthy borrowers started to show the kinds of late payment profiles that accompanied the start of the financial crisis.

“We’re seeing an increase in delinquencies across all credit scores, but in deep subprime, the rise is more substantial. What stood out to me was the issuers. Those that have been doing this for a decade or more were showing the ‘better’ performance, while those that were relative newcomers were in the ‘worse’ category.”

Subprime-auto-delinquencies

Used Car Prices Crash To Lowest Level Since 2009 Amid Glut Of Off-Lease Supply 



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Stocks & Equities

Todd Market Forecast: Change To Bearish Short Term

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Posted by Stephen Todd - Todd Market Forecast

on Friday, 18 August 2017 07:05

 For Thursday August 17, 2017 3:00pm Pacific.

DOW - 274 on 1850 net declines

NASDAQ COMP - 123 on 1650 net declines

SHORT TERM TREND Bearish (change)

INTERMEDIATE TERM Bullish

STOCKS: Well, it had to happen sometime. We were stopped out of the SSO for a one point loss. This is the first loss of the year. Oh well, 10 and 1 should still get a bowl bid. More below in trading.

The market was hit by turmoil in Washington. There is concern that with there is now uncertainty about the agenda of tax cuts and infrastructure programs. The terrorist attack in Barcelona probably didn't help.

I believe that this is an overreaction. What are these Congressmen and Senators going to do? Go back to their districts and say, "Sorry we just couldn't get anything done please reelect us"?

Days like this in a bull market tend to have me looking for entry points on the long side. I am a bit wary because this is a weak seasonal period so we'll have to be extra careful in here.

I went bearish on the short term because a previous low was broken on the S&P 500 daily chart, but I doubt it will last long. This is still a bull market. Bear markets tend to only occur as a result of a recession and I don't see this at all.

GOLD: Gold was up $11 on the turmoil and a flight to safety.

CHART:  I'm not liking the fact that the S&P 500 broke a previous low (top arrows) and it's not particularly good that we became oversold so quickly again after the last oversold condition (bottom arrows). But I have also seen a break of a support followed by a six month rally. The key will be breadth. The advance decline line has to straighten out. Stay tuned.

Screen Shot 2017-08-18 at 7.02.52 AM 

BOTTOM LINE:  (Trading)



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