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Short Rally

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Posted by Ed Carlson - Seattle Technical Advisors

on Wednesday, 19 October 2016 07:01

We have been waiting for a bounce into the high forecast by the Hybrid Lindsay model and it looks to have come on Tuesday. Cycles warned that the high might come on the late side of the margin of error but internals now appear set-up to give us that rally early this week. Bears don't have much to worry about, however, as the high is expected no later than Wednesday.

The VXV is a CBOE index similar to the VIX that projects volatility out three months instead of the VIX's one month time frame. A simple ratio of the two indices produce excellent buy and sell signals (as seen below).

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Get your copy of the October Lindsay Report at Seattle Technical Advisors.com



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Stocks & Equities

Equity Bubble Has Run Out of Excuses and Time

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Posted by Michael Pento - Pento Portfolio Strategies

on Tuesday, 18 October 2016 07:22

UnknownIt is finally going to be a make or break earnings season for stocks. This is because the justification for record high stock prices that have been perched atop extremely stretched valuation metrics has been the following false assumptions: the hope that the Federal Reserve will not resume its interest rate hiking cycle, the U.S. dollar stops rising, the price of oil enters a sustainable bull market and long-term interest rates continue to fall.

If all those conditions were in place investors could continue to believe a turnaround in the anemic 2% GDP growth rate endured since 2010 was imminent. And, most importantly, that a reversal in the 5 straight quarters of negative earnings on the S&P 500 was just around the corner.  But even if they were perpetually disappointed in growth and earnings that didn't materialize, they could always afford to wait until the next quarterly earnings report because there just wasn't any alternative to owning stocks.

However, if earnings come in weak for the current quarter—which would be the 6th quarter in a row—that disappointment would occur in the context of a rising U.S. dollar, falling commodity prices, spiking long-term interest rates and a Federal Reserve that will most likely resume its hiking cycle in December. In other words, it would be game over for the equity bubble.



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Stocks & Equities

How Does the U.S. Stock Market Perform in Election Years?

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Posted by Visual Capitalist

on Friday, 14 October 2016 07:13

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In just a few weeks time, the ballots will be in for one of the most controversial elections in U.S. history. Whether the tally ends in a Clinton or Trump presidency, it’s difficult to know the potential range of implications that the 2016 election will have on markets. 

In the mean time, investors are wondering how to best position themselves. How could the election possibly affect their portfolio, and how can they hedge against tail risks?

MARKET PERFORMANCE IN ELECTION YEARS

The good news for investors is that historically, the market has performed well in election years with the S&P 500 ending up in positive territory 82% of the time.

The bad news? This is clearly not a normal election.



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Stocks & Equities

Stock Trading Alert: Negative Expectations Following Tuesday's Decline - New Downtrend Or Just Consolidation?

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Posted by Paul Rejczak - Sunshine Profits

on Thursday, 13 October 2016 06:10

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is neutral, following S&P 500 index breakout above last year's all-time high:

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

The main U.S. stock market indexes were mixed between -0.1% and +0.1% on Wednesday, as investors hesitated following Tuesday's decline. The S&P 500 index is the lowest since half of September. Is this a new downtrend or just more consolidation following June - July rally? The nearest important level of resistance is at around 2,140-2,150, marked by previous support level. The next resistance level is at 2,170, among others. On the other hand, support level is at around 2,120, marked by September local low. The market trades along medium-term upward trend line, as the daily chart shows:

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Expectations before the opening of today's trading session are negative, with index futures currently down 0.5-0.6%. The European stock market indexes have lost 0.7-1.3% so far. Investors will now wait for the Initial Claims number release at 8:30 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it extends its recent move down. The nearest important level of support is at around 2,100-2,110. On the other hand, resistance level remains at 2,130-2,140, marked by short-term consolidation, as we can see on the 15-minute chart:



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Stocks & Equities

Wall Street Earnings Recession is No Cause for Worry; Stock Market Bull has Been Ignoring It

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Posted by Sol Palha - Tactical Investor

on Friday, 07 October 2016 07:13

Unknown"Irony is the form of paradox. Paradox is what is good and great at the same time." ~ Friedrich Schlegel

We could sum it up in two words as to why earnings recession was, is and will be a non-event; Hot Money. However, for some strange reason when it comes to the markets individuals happen to love long explanations even though in most cases the long answers reveal a lot less than the short ones do. So let's take a look at some of these meaningless statistics.

S&P 500 companies are going to report what will turn out to be the 6th consecutive quarter of lower earnings. This is one of the longest earning slumps in over a decade and logic dictates that the markets should have been trending lower, but the opposite is taking place.

An investor following the old paradigm could not be faulted for making this statement "well then there is no way stocks can keep rising" or how long can they grow in such an environment

To get the right answer, you need to ask the right question.Such questions are irrelevant in today's environment, and answering such questions is not going to provide you with any insights on how to play this market. One person will state it cannot rise because of the negative factors listed above. The other penguin will say it can rise because inflation is low, unemployment is low, gas prices are low and a host of other rubbish.

It would be far better to focus on trying come up with the right questions. For example:



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