Stocks & Equities

What Does the MACD Tell Us About the Risk of a Major Market Peak?

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Posted by Financial Sense

on Monday, 31 July 2017 07:08

Risks to the market appear elevated over the next 1-3 months with a variety of sentiment readings edging into overly bullish territory (see Rydex Trader Bullishness Surpasses 2000 Tech Bubble). Longer-term, however, the yield curve and other leading indicators aren't suggesting the risk of an imminent major peak or recession.

Another important indicator that agrees with this outlook, which has been quite useful for identifying major trend changes in the S&P 500, is a trend-following momentum indicator called the MACD (in blue below).

We've shown green and red arrows on the S&P 500 corresponding to MACD buy and sell signals (when the blue line goes above and below the red-dotted zero line) and, though it has been less timely on market bottoms, following its advice on bearish crossover sell signals would've gotten you out near the very peak of the 2000 tech bubble, the 2007 top, and also at the intermediate-term 2015 market top.



Larger Chart

If Barry Bannister's timeline for a possible market peak and recession in the 2018-2019 timeframe plays out, we should expect to see this reflected through a combination of one or more of the following: waning momentum via the MACD above, a flattening and eventual inversion of the yield curve, or a slowdown in a variety of leading indicators.

As Chris Puplava mentioned in today's podcast and recent quarterly newsletter, Preparing for the End Game, given the potential headwinds and current risk/reward setup, we believe Bridgewater's Ray Dalio has it correct when he wrote, "our responsibility now is to keep dancing but closer to the exit and with a sharp eye on the tea leaves."

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Stocks & Equities

Salient Features of Bull Market Peaks

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Posted by John P. Hussman, Ph.D.

on Tuesday, 25 July 2017 07:25

wall st bull 0Last week, the S&P 500 price/revenue ratio reached the highest level in history, outside of the single week of March 24, 2000 that represented the peak of the tech bubble. Meanwhile, the 30-day CBOE volatility index (largely reflecting the level of fear or complacency among option traders) dropped to a record low, as bullish sentiment surged to 57.8% bulls versus 16.7% bears (Investors Intelligence), and the S&P 500 pushed to its upper Bollinger bands (two standard deviations above a 20-period moving average) on daily, weekly, and monthly resolutions.

....continue reading HERE

Stocks & Equities

A Stock Market Crash Is Coming!

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Posted by Gary Christenson - The Deviant InvestorInvestor

on Friday, 21 July 2017 06:47

Conventional “Wisdom:” Markets move up and down, but the stock market always comes back. The DOW is frothy and needs a correction, but the stock markets are healthy and big gains lie ahead.

Pessimistic version: Jim Rogers saidthe next crash will ‘the biggest in my lifetime.’” [Coming soon …]

Question: Given the craziness in politics, the Middle-East, Central Banking, and global debt levels … do you own enough gold bullion?

Conventional thinking:

“Trump will save the markets, reduce taxes, and boost stock prices even higher.” [Don’t plan on it.]

“Gold pays no interest and has gone down for six years.” [True but irrelevant.]

“The Yellen Fed can’t let market bubbles pop so they will create more QE, more bond monetization, “printing,” and Fed support. In short, the ‘Yellen Put’ is alive and will protect investors.” [Maybe not…]

“The market got hurt in 1987, 2000, and 2008. It rallied back each time and went higher. This time will be no different. Stocks may correct but they are a good long term investment.” Read “The Bull Case: S&P is heading to 3,000.” [How big a loss before the rally?]

In the long-term the S&P probably will hit 3,000 but the short-term risk is substantial. The attractive lie is appealing but not necessarily true. Sometimes reality is harsh.

Screen Shot 2017-07-21 at 6.49.05 AM

The Fed and other central banks have added many $ trillions to their balance sheets since 2008. Official U.S. national debt is roughly $10 trillion larger in ten years. Consumer prices are higher, stocks and bonds have been levitated, the DOW and S&P are trading at all-time highs, and the markets haven’t crashed … YET. Something will puncture the bubble in stocks and bonds. Bubbles in currencies and confidence in central banks also await pins.

Examine the following chart of the S&P prices in average wages. Cause for concern?


Stocks & Equities

Euro Stocks Soar

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Posted by Zero Hedge

on Wednesday, 12 July 2017 11:04


Aside from the post-Macron first-round-win in April, stocks across Europe surged to their best day since last September today, surging higher after Yellen's dovish comments, presumably due to the market's belief that as goes The Fed, so goes the rest of the hawkish hangers-on... CLICK HERE

Stocks & Equities

A Supercomputer Is Betting on a Market Crash in the Months Ahead

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Posted by Financial Sense

on Monday, 10 July 2017 08:14

historical-evolution-fraction-assetsOne of the world's most powerful supercomputers, retrofitted for trading the stock market, appears to be betting on a crash in the months ahead.

The Financial Crisis Observatory (FCO) at ETH Zurich released its latest Global Bubble Status Report on July 1st. As we discussed with FCO’s director, Didier Sornette, on our podcast in May, they use one of the world’s leading supercomputers to monitor global markets each day for two distinct bubble-like characteristics: faster than exponential price movement and accelerating oscillations (see Podcast: Using a Supercomputer to Trade the Market).

Their July report notes an increasing trend of positive bubbles across multiple asset classes.

Here’s what they say in their “big picture” section:

....continue reading HERE

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The nervousness surounding the current bull market remains significant. While there are a number of unsettling indicators suggesting a serious...

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