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Puplava: We're in the Final Phase of Another Market Bubble

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Posted by Jim Puplava - Financial Sense

on Friday, 04 August 2017 08:44

MONEY-BubbleOver the past two decades we've seen two major bubbles develop: the internet bubble, which burst in March 2000, followed by the real estate and mortgage bubble, which burst in 2007.

Now, we’re entering a stock market bubble in a manner we haven’t seen before, said Jim Puplava, founder of Financial Sense, in a recent podcast, Anatomy of a Bubble.

Bubble Stage One

It all begins with an attention-grabbing idea, Puplava stated.

“For bubbles to take place, what you usually see throughout history is suddenly the whole community becomes fixated on one object and they go mad in pursuit,” he said. “Millions of people become simultaneously impressed with one illusion, which develops into a delusion.”

We’ve seen this play out throughout history, with the Tulip Mania in the 1600s or, more recently, with internet stocks and real estate.



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Stocks & Equities

Is The Stock Market Up When it Should Be?

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Posted by Bob Hoye - Institutional Advisors

on Friday, 04 August 2017 06:27

The following is part of Pivotal Events that was published for our subscribers July 27, 2017.

Screen Shot 2017-08-04 at 6.48.05 AM

Perspective



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Stocks & Equities

Markets Are Virtually Risk-Free

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Posted by Avi Gilburt - Elliottwavetrader.net

on Wednesday, 02 August 2017 06:35

full-qwHZT92gOtfuMgkt9XwTjFor the last year, I have been looking for what we classify as a wave (3) to strike the 2500SPX region. And, now, we are getting quite close.

Meanwhile, this rally has brought out two camps of market expectations at this juncture, both of which I believe are wearing blinders. We read about those who believe the markets basically have no limit to their upside, and are "virtually risk-free," and we read those who have "known" that the market will imminently crash during this entire 40% rally since February 2016.

Do you know who Goldilocks is?

Yes, the quote in the title of my article was actually posted by an "analyst" this past Friday. And it seems more and more are taking this view of the market. Why not? The market can't seem to pullback, so they must be right. Right?

I wrote this not too long ago, but allow me to refresh your memory:

As George Santayana wisely said, 'Those who do not remember the past are condemned to repeat it.' And, it seems that Ms. Yellen is forgetting her history.

One of the key factors in signaling a major market top is the expectation by the masses that one cannot happen. And, anyone that knows their history knows this to be true.

For those that know their stock market history, you would know that those 'in the know' were absolutely certain about the impossibility of a market crash right before the market crashed and lead us into the Great Depression. Let me show you a few examples:

'We will not have any more crashes in our time.'

This was said John Maynard Keynes in 1927, two years before the stock market crash which lead to the Great Depression.



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Stocks & Equities

The Inefficient Market Sector That’s About to Create a Buzz

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Posted by Connecting the Dots - Mauldin Economicsl

on Tuesday, 01 August 2017 07:20

If you were to ask me what the most inefficient US market sector is, I would probably say, defense.

Now, that’s something no one likes to hear. How come the one sector the US government spends the most money on—the FY 2018 defense budget is $824.7 billion, more than that of the next nine countries combined—is the most inefficient?

Here’s what most people don’t understand: It’s inefficient by design.

Nobody wants war, yet governments are obliged to spend vast sums getting ready to fight it. They’re usually not very thrifty either.

For investors, that’s actually a perfect combination because inefficiency, in this case, spells opportunity. And right now is an especially good time to get your feet wet in defense spending.

Technology is changing the very nature of warfare. A lot of expensive equipment will get replaced in the next few years… and what replaces it may surprise you.

Image 1 20170801 CTD
Photo: David~O via

Modern-Day Knights



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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.

macd-spx

 

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."

Sign up for a FREE TRIAL to our premium podcast with leading investment strategists by clicking here.



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