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Timing & trends

Understanding the Rally

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Posted by Martin Armstrong - Armstrong Economics

on Friday, 17 February 2017 06:40

QUESTION: Marty is the rumor true that there is huge short-covering going on that is taking the US share market higher?

ANSWER: Of course. As I have stated, our model tends to show the point of no return is in the 23000 level, not here. This rally since 2009 has been the most BEARISH rally ever in history. Think of this like the mirror image of gold. Gold has declined for 5 years and you have people screaming here we go with ever $20 rally. In the stock market, it has been exactly the opposite. Every time the market decline, they say here we go it will crash by 70-90%.

This is what I mean that the MAJORITY must always be wrong for they are the fuel that moves markets. I have been stating persistently that the Dow cannot “C R A S H” when the majority are bearish and retail participation is at historic lows (see Gallup poll).

Gallup-Poll-on-Media

The only real buyers have been due to the dollar, and sophisticated traders. The bulk of everyone else are BEARISH and cannot bring themselves to buy for they are still fighting the last rally in 2007 when they got caught. Therefore, the bulk of buying is short-covering – not fresh longs. This is very important. Fresh longs buying new highs turn sellers on a downturn. Short-covering does not. They may attempt to short against, but typically into a low – not highs.



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Timing & trends

The bull market no one believes in

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Posted by Clif Droke - Momentum Strategies Report ies Report

on Wednesday, 15 February 2017 06:22

The stock market continues to make new highs, yet none of the signs which accompany a market bubble are evident.  Investors are asking, “When will the Dow finally correct?”  By “correct” they mean “decline.”  However, a market correction doesn’t always entail a decline for the major averages and can sometimes take the form of a lateral consolidation or trading range.  That appears to be the case for the 2-month period from December through early February when the Dow and S&P made little headway.

In fact, in January the Dow Jones Industrial Average (DJI) recorded its tightest trading range of only 1.1% in over 100 years.  This continues a prolonged sideways pattern in the Dow and other averages since mid-December when the post-election rally reached a plateau.  The question everyone was asking was whether this plateau was merely a temporary “pause that refreshes” in an ongoing rally or the end of the rally and the prelude to another market setback.  The Dow provided the answer to that with the last week’s breakout above the top of the trading range ceiling.  It has rallied each day since, putatively on the hopes generated by President Trump’s forthcoming tax-related announcement. 

dji

While the bull market in equities continues, a surprising number of investors are either mistrustful of the rally or outright bearish.  According to a recent article in BBC News, there are a growing number of wealthy and politically liberal U.S. citizens who are doing things in the wake of Donald Trump’s election that were commonly seen by politically conservative citizens during the Obama years.  That is, they are buying guns, becoming survivalists, and preparing for an impending catastrophe related to the Trump presidency, the article reported.



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Timing & trends

Time-Stamp of Speculative Euphoria

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Posted by John P. Hussman, Ph.D.

on Tuesday, 14 February 2017 06:12

If there’s any point in U.S. stock market history, next to the market peaks of 1929 and 2000, that has deserved a time-stamp of speculative euphoria that will be bewildering in hindsight, now is that moment. Perhaps there’s room for this burning wick to shorten further, but across every effective, value-conscious, historically-informed classification method we use, the estimated downside risk of the market overwhelms its upside potential. The chart below shows monthly candlesticks for the S&P 500 Index since 1996, including the tech bubble and collapse, the Fed-induced mortgage bubble and collapse, and the speculative first half of the current, wholly uncompleted cycle. I believe the equity market now faces the likelihood of deeper losses over the completion of this cycle than any other in history, save for the collapse that followed the 1929 peak.

wmc170213a

....continue reading HERE

 

....also from Martin Armstrong: Eastern Europe & World War III



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Timing & trends

The Most Popular 3 Articles Of The Week

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Posted by Money Talks Editor

on Saturday, 11 February 2017 09:09

hhghhg1. Canada 6-City Housing Prices Slide Off Their Highs

In January 2017 Canada's big city metro SFD prices coiled about or slid off their near term highs except in Toronto where detached houses and town houses fetched new peak prices.

...read more HERE

2. Why you shouldn’t fear rising interest rates …

"the notions that rising interest rates will kill off equity market gains, particularly in the U.S. … or choke off a real estate recovery … or kill the gold market for good — are myths. Period"

....continue HERE

3. Extreme Readings in the Bond Market

Janet Yellen, you're fired!

For the past 20-30 years, the Federal Reserve has been dominated by academics largely out of MIT. Jim Bianco at Bianco Research says that's all going to change under Trump, starting with Fed chair Janet Yellen.

....continue reading HERE



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Timing & trends

Eastern Europe & World War III

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Posted by Martin Armstrong - Armstrong Economics

on Wednesday, 08 February 2017 06:18

Romania-Protest-Feb-2017Europe could become the site of a new global war in the East as tensions build there against refugees and the economic decline fosters old wounds. The EU is deeply divided over the refugee issue and thus it is fueling its own demise and has failed to be a stabilizing force. After five days of demonstrations, Romania’s month-old government backed down and withdrew a decree that had decriminalized some corruption offenses. They were still acting like typical politicians and looking to line their pockets. After one month, the people have been rising up saying “We can’t trust this new government.”

....continue reading HERE

....also from Martin:

Stock Market Bubble Still to Come



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