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Timing & trends

Another Bubble? Bring it On!

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Posted by Cliff Droke - Momentum Strategies Report

on Friday, 24 February 2017 06:02

Anytime the Dow makes a new high you can be reasonably assured of hearing the B-word bounced around in the media. Memories of the last bubble are still vivid and painful enough to trigger flashbacks of the bubble's collapse. It's only natural then that investors fear a return of irrational exuberance. Despite these fears, the evidence of a newly formed bubble is surprisingly lacking, as we'll uncover here.

Asset manager Jeremy Grantham famously defined a bubble as any asset whose price has moved at least two standard deviations above its longer-term statistical mean, or norm. This definition is too rigid, however, and can sometimes be misapplied to see bubbles where none actually exist. Markets can sometimes exceed the 2 standard deviation rule in non-bubble environments, as when the utilities sector last year experienced a 3 standard deviation event.

This definition also is overly reliant on statistics and is lacking in the psychology department. Investor psychology, after all, is a primary driving force of the pricing mechanism in all free markets. What Grantham's 2 standard deviation event rule fails to consider is that if a market experiences a record-breaking and sustained run-up, it can sometimes occur without widespread participation by small traders and investors. And without large scale participation among retail traders the psychology of a bubble is lacking, i.e. there is no bubble.

The latest rally in the major stock market averages has once again fueled talk of a mania for equities in the popular press. As discussed in previous commentaries, though, there is as yet no evidence of widespread direct participation in the equity market by small investors. Much of the movement behind the rally to new highs is courtesy of institutional activity, with the public participating only indirectly via retirement savings funds. Nowhere to be seen is the incessant preoccupation with day trading, swing trading and stock picking which were symptoms of the last two bubbles.

One explanation for this startling lack of bubble psychology despite the all-time highs in stock prices is the K-wave. Readers of this commentary should be familiar with this most basic of all long-term economic cycles, which answers roughly to the 60-year equity market cycle. The K-wave deflationary descent bottomed in 2014 based on the Kress cycle count. K-waves are often divided into four sections or "seasons" with each section being assigned a season of the year (e.g. winter, spring, summer, fall). The following graph was devised many years ago by P.Q. Wall and does an admirable job of describing the K-wave seasons.

43771 a



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Timing & trends

DJIA Elliott Wave View: Extension Expected

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Posted by Elliottwave-Forecast.com

on Thursday, 23 February 2017 06:56

Short term Elliott wave view in DJIA (Dow Jones Industrial Average) suggests that the rally from 1/19 low is unfolding as a 5 waves Elliott wave impulse structure where Minute wave ((i)) ended at 20125.28, Minute wave ((ii)) ended at 19784.7, and Minute wave ((iii)) remains in progress.

Internal of wave ((iii)) is showing an extension and subdivided also as an impulse structure where Minuette wave (i) ended at 20155.3, Minuette wave (ii) ended at 20015.3, Minuette wave (iii) ended at 20639.8 and Minuette wave (iv) ended at 20532.6. Index has broken above Minuette wave (iii) to confirm that wave Minuette wave (v) has started. Up from 20532.6, Subminuette wave (i) of (v) ended at 20747.6, and Subminuette wave (ii) of (v) is proposed complete at 20677.4.

Near term, while dips stay above 20541.2, expect Index to resume higher. We don't like selling the Index and expect buyers to appear in 3, 7, or 11 swing while Index remains above Minuette wave (iv) at 20532.6. If Index breaks below 20538.7, it can be an indication that Minute wave (iii) has ended, and that Index has started Minute wave (iv) pullback.

DJIA 1 hour chart

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Larger Chart 



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Timing & trends

The Return of Stagflation

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Posted by Gary Christenson - The Deviant Investor

on Wednesday, 22 February 2017 06:54

The following graph shows the SI/GC ratio versus the S&P500 index beginning in August 1971 when President Nixon severed the final gold backing of the US dollar. Currency in circulation, debt, consumer cost of living, and most prices including gold, silver, crude oil, and the S&P rose in devalued dollar units.

I-SIGCSP-raw-768x530

The two lines follow each other over long periods, and diverge during other periods. The next graph shows the same monthly data but smoothed with a ten month moving average. I divided the graph into four sections:



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Timing & trends

The 3 Top Articles Of The Week

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Posted by Money Talks Editor

on Saturday, 18 February 2017 08:57

popping-champagne-cork1. Hang Onto Your Hat - Trump Rally Nowhere Near Over

Things are not good in Europe and investors there are flooding into the North American Stock Markets. Much higher numbers in the next 4-5 years. What about the Free Trade agreement with Europe?

...read more HERE

2. Is the Gold Silver Ratio Predictive?

Precious metals bear markets always hit silver hard, while bull markets always see Silver outperform gold.  As a result, the Gold Silver Ratio rises during bear markets and then falls during bull markets.

....continue HERE

3. Is This What They Mean By “Crack-Up Boom”?

In the past year, stock prices have risen from "near-record, overvalued-by-every-historical-measure" levels, to "new-record, grossly-overvalued" levels - and show no signs of slowing down

....continue reading HERE



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Timing & trends

Gold, Silver, Dollar Cycles – Part III

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Posted by Chris Vermeulen & John Winston: TheMarketTrendForecast.com

on Friday, 17 February 2017 10:11

atpperffeb-290x130Gold is setting up for a historic rally based on my analysis.  Recent news provides further evidence that the Precious Metals and Currencies are in for a wild ride.  Just this week, news that China’s reserves fell below $3 Trillion as well as the implications that the fall to near $2T in reserves could happen before the end of 2017.  Additionally, we have recent news that the EU may be under further strain with regards to Greece, the IMF and debt.  The accumulation of Precious Metals should be on everyone’s mind as well as the potential for a breakout rally.

Based on my analysis, I would estimate that near June or July 2017, Gold will be near $1315 ~ $1341 (+13% from recent lows).  This level correlates to a Fibonacci frequency that has been in place for over 3 years now.  A second Fibonacci frequency rate would put the project advancement levels, possibly closer to October/November 2017, near $1421 (+21% from recent lows).  After these levels are reached, I expect a pullback to near $1261 if the Gold rally ends near $1315~1341 or to near $1308~1309 if the Gold rally ends near $1421.  This pullback would setup a massive next wave rally to $1585 or $1731.  So, if you need confirmation of this move, just wait for any rally to end above $1315, then wait for a pullback below $1280 or $1315 and BUY.

Subscribers and followers of my work profited handsomely this month locking a 112% profit with NUGT ETF with my service at ActiveTradingPartners.

....continue reading HERE



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