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Stocks & Equities

Where Did TINA Go?

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Posted by Matthew Kerkhoff - Financial Sense

on Thursday, 31 August 2017 06:15

A few years ago, TINA was everywhere … she was the life of the party. Whenever people wondered why stocks kept rising, she’d show up and people would scream, TINA!

But I haven’t heard anyone mention her recently … did she take off? Or did she drink so much from the punch bowl that she’s passed out, sleeping somewhere?

Of course, I’m talking about TINA the acronym, not Tina your old drinking buddy. As in, There Is No Alternative … to stocks.

Let’s be clear. Choosing your investments by process of elimination is not the best way to approach things. After all, you shouldn’t invest in something just because everything else looks worse. That investment could also have little intrinsic value and a poor risk to reward ratio.

But TINA is not a way of investing, it’s a narrative … one that’s been with us for years and may be here for a while longer. So far, this narrative has helped investors achieve substantial returns. Will it continue to do so moving forward?

For most investors, the highest level asset allocation decision typically involves deciding between stocks, bonds, and cash. Let’s begin with these three and then we’ll expand our discussion to encompass alternative asset classes such as precious metals, real estate, and currencies.

Since stocks are the shoe-in here, let’s take a look at cash and bonds to see what type of case can be made for investments there. First cash.

As you well know, the returns on cash have dropped to zero over the past couple of decades. The chart below exemplifies this, showing how the return on savings accounts has dwindled since the early 90’s.

squeezed-for-returns

....read more HERE



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Stocks & Equities

Martin Armstrong: Is the Stock Market Really Overvalued?

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Posted by Martin Armstrong - Armstrong Economics

on Wednesday, 30 August 2017 07:52

2016-Liquidity-Total-Value-as-GDP-600x273

All we have been hearing since 2011 is how the stock market is going to crash and then there will be hyperinflation and all sorts of strange relationships that never materialize. They simply focus on the level of the stock market in nominal terms without adjusting it for inflation or showing how it has performed relative to the rest of the economy. Here is a chart of the stock market expressed as the total value of shares traded annually as a percent of GDP. Sorry, this illustrates that the retail market is not in crash mode just yet and it is still nowhere near the overbought levels of 2007.



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Stocks & Equities

Wall Street Cries Wolf

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Posted by Kurt Kallus via Financial Sense

on Tuesday, 29 August 2017 06:53

There is no question that the stock market is richly valued and the economic expansion since the 2008 mortgage debt panic has endured far longer than normal cycles. Recent pessimism has arisen with major banks and analysts warning that the sky may start falling soon. Increased negative forecasts can be a positive contrary opinion signal, so let’s look at some of the concerns the major bulge banks are propagating.

Recently, $30 billion in funds flowed out of US equities and the current mid-2017 outflow is at record levels, which is being portrayed as a scary signal of impending doom. Oddly, past extreme spikes in fund outflows were good times to begin buying stocks. In particular, the two most impressive rush for the exits occurred in mid-2004 and early 2016. In hindsight, these were a couple excellent points to buy stocks hand over fist. Apparently, many institutions equate this extreme proxy of equity fund outflow and today’s high priced stock market as a valid correlation when their own evidence would indicate otherwise.

01-fund-outflow-8-17

....continue reading HERE



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Stocks & Equities

Stocks Extend Their Fluctuations - Which Direction Is Next?

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Posted by Paul Rejczak - Sunshine Profits

on Monday, 28 August 2017 07:18

Briefly:

Intraday trade: Our Friday's neutral intraday outlook has proved accurate. The S&P 500 index extended its short-term consolidation. The market may continue to fluctuate today. There have been no confirmed positive signals so far. On the other hand, the S&P 500 index remains above support level marked by last week's Tuesday's daily gap up of 2,430.58-2,433.67, and there is no clear short-term downtrend. Therefore, we prefer to be out of the market today, avoiding low risk/reward ratio trades.

Our intraday outlook remains neutral, and our short-term outlook is bearish, as we expect downward correction. Our medium-term outlook remains bearish:

Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): bearish

The U.S. stock market indexes were mixed between -0.1% and +0.2% on Friday, extending their recent fluctuations, as investors reacted to economic data announcements, Jackson Hole Economic Policy Symposium speeches. The S&P 500 index remained within a relatively narrow trading range, as it traded along the level of 2,450. It is currently 1.9% below the August 8 all-time high of 2,490.87. The Dow Jones Industrial Average remains close to 21,800 mark, and the technology Nasdaq Composite trades 3.0% below its record high of 6,460.84. The nearest important level of resistance of the S&P 500 index remains at 2,450-2,455, marked by last week's Tuesday's local high. The next resistance level is at 2,465-2,475, marked by previous support level and local highs. The resistance level is also at 2,490-2,500, marked by the above-mentioned all-time high. On the other hand, support level is at 2.430-2,435, marked by Tuesday's daily gap up of 2,430.58-2,433.67. The next support level remains at 2,400-2,420. The market retraced some of its recent downtrend on Tuesday, but then it failed to extend its short-term uptrend. There have been no confirmed positive signals so far. We still can see some negative technical divergences. But will they lead to medium-term downward correction? The S&P 500 index continues to trade within a medium-term consolidation following early June breakout above 2,400 mark, as we can see on the daily chart:

1

More Fluctuations?



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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.



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