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The Equity Market Is Giving You A Huge Opportunity

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Posted by Avi Gilburt - ElliottwaveTrader.net

on Thursday, 08 February 2018 07:11

Over a week ago, in my analysis to my members, I noted that, ideally, I was looking for the market to pullback and test the 2800SPX region. And, the market certainly dropped down to the 2800 region, but also broke the 2796SPX support upon which I was focused. That had me begin to focus on the 2700SPX region of support. And, today, we dropped and broke my next level of support at 2700SPX. But, this is the pullback I have been looking for over the last several months which had not materialized. Now, it has come in with a bang.

While this pullback took many by surprise, the common reason attributed to the decline last week was the rise in interest rates. I need help understanding this “reason.” Allow me to explain.

Back on June 27th, 2016, we published analysis to our members entitled “Beware of Bonds Blowing Up.” That was the first long term top call we made on bonds in the 5 years we had been open to that point. And, as we now know, the bond market topped a little less than two weeks later. 

So, since July of 2016, rates have been rising. Most interestingly, the heart of the strongest segment of the drop in the bond market in 2016 coincided with the bottoming of the equity market at the time of the election, which began an extraordinarily strong rally in the equity market. Therefore, it is quite clear that the market rallied quite strongly while rates were rallying strongly at the same time.

Today, with the market dropping even stronger than last week, rates went down. Now, isn’t that a head scratcher?

So, shall we now review the common reason we read about the “cause” of the decline in the stock market last week? When we shine the light of facts on these reasons, do they really hold water? Of course not. Yet, that does not stop almost every analyst and their mother from making their specious claims.

Do you know why they make these claims? It is because they see the market dropping, and then look for what else is happening at the same time for what they can blame as the obvious cause. First, they saw good jobs numbers Friday morning, so that clearly cannot be the reason for the market dropping almost 2%. Then, they see rates rising on the same day, so they assume that this must be the cause since there is no other reason they can come up with. In truth, one could claim that the drop was due to the good jobs report, and it would make just as much as sense as blaming it on the rise in rates.

And, if rates were not rising, I can assure you they would have blamed the decline on Friday to the release of the Congressional memo (and I even heard some make this ridiculous claim). Maybe they will now claim that the drop was due to the release of the GOP memo, and then we rally when the Dems release their Memo?

In fact, why not claim that today’s drop was due to the Eagles win? 

Is this really an intellectually honest way to analyze the markets? Clearly, it is not. So, how accurate do you think prognostication can be based upon the common manner in which these people view the market? Yet, this is what you look to read day in and day out to make your assessment about market direction?

Now, don’t get me wrong. I clearly missed the market’s direct move to 2800SPX this early in the cycle, as I did not expect us to strike 2800 until the end of 2018. Rather, I expected we would only reach 2611SPX from the 1800 region based upon my market call back in 2015, after which I expected a pullback before we head up to the 2800+ region. However, because I miss an extension which resides in the category of a probabilistic anomaly does not suggest that the methodology I use is intellectually dishonest. Yet, I think it is quite clear that these common perspectives on what moves the market is clearly intellectually dishonest.

Now, when the market provides us with an upside move which is a statistical anomaly, it puts itself in a very dangerous posture. And, today, we saw the result of the unwinding of that dangerous posture. In fact, we saw another statistic anomaly, but on the way down.

ewb-01-spy5I am certain you will now hear constant talk about how this is the end to the bull market. But, I think the probability of that potential is still quite low. Rather, this is the wave (4) pullback for which I have been awaiting. And, as you saw in my last article on the market, I provided you with a chart showing that we were completing wave (3) of v of 3 off the 2009 lows. That meant we were expecting a wave (4) to be overdue. As you can see on my attached chart updated below, we are looking for the market to hold support between 2424-2539SPX, and then start a rally into year end which will target at least the 3011 region, but with strong potential to extend to the 3223SPX region.

So, while you will undoubtedly hear about how this bull market has now come to an end, I am still thinking we are going to set up another rally over 3000 into the end of the year. But, once we complete this next rally, that will likely set us up for a 20% (maybe more) correction taking us into 2019.

See chart 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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Wealth Building Strategies

Technically Speaking: Tis But A Flesh Wound

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Posted by Lance Roberts - Real Investment Advice

on Tuesday, 06 February 2018 06:53

Flesh-Wound

In this past weekend’s missive, I discussed the recent market sell-off:

“Well, this past week, the market tripped ‘over its own feet’ after prices had created a massive extension above the 50-dma as shown below.  As I have previously warned, since that extension was so large, a correction just back to the moving average at this point will require nearly a -6% decline.”

Chart updated through Monday

 

.....continue reading HERE



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Wealth Building Strategies

Once in a Lifetime

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Posted by Rambus Chartology

on Monday, 29 January 2018 06:31

bubble-phasesWith the rally continuing to power higher in the stock markets I’m going to update the portfolio combo charts so you can see how this once is a lifetime rally in unfolding. When this impulse move finally burns itself out we will get a decent sized correction that may take a year or two build out. Until then the hardest thing for most investors riding this bull is to hang on for dear life.

For over six months or longer we’ve heard the never ending story about how overbought this market is, but the stock market doesn’t care what we think. The investors that have missed this rally are crying the loudest that the stock market has to crash because they’re not in it, if they were they would be enjoying the ride of a lifetime. At any rate the correction is going to come at some point and I can guarantee you that we won’t hit the absolute top tick. We have some price objectives that hopefully will get us out in time to enjoy our profits.

I’m going to start off by looking at the daily stock market combo chart. When looking at all the combo charts to follow note the two dominate chart patterns, the H&S’s and the rising flags and wedges. So far there is nothing on these charts that are suggesting a top is in.”



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Wealth Building Strategies

Investing in 'Tears of the Gods'

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Posted by Editor

on Thursday, 25 January 2018 09:32

a6d523bf535b1e50337274c2ebcc4721The charming mysticism of precious stones is the stuff of legend, and today, these ‘tears of the gods’ are opening up major new opportunities for investors.

Now estimated to be worth north of $100 billion, the gemstone industry is growing in leaps and bounds, with analysts projecting that demand for diamonds and gemstones will continue to outstrip supply.

A lack of new discoveries, a growing inclination towards branded ornaments, a plunging dollar and ease of access thanks to online shopping have combined to make this one of the hottest markets of the year.

While diamonds have led the gemstone surge in recent decades, it’s emeralds, rubies and saphires that are poised to boom, with Technaviot predicting that the global gems and jewelry market will reach $292 billion by the end of 2019.

One only needs to look at the prices of colored gemstones today to see where this market is going.

A 5-carat sapphire that was sold for $10,000 in 1965 fetched $1,000,000 at a recent auction.

- In June 2017, the famous Rockefeller Emerald sold for an eye-watering $5.5 million, making it the most expensive emerald – per carat – ever sold at auction.

- An 8.62 carat unheated Burmese Ruby sold for $3.62 million at Christie's in 2006, setting a new world record of $420,000 per carat for unheated ruby.

Prices of diamonds vs. colored gemstones are traveling on opposite trajectories right now, with diamonds in a years'-long slump and rubies and emeralds on the rise. 

1516838059-fr1

But that's only one part of the reason why colored gemstones are rapidly becoming 2018’s hottest investment.



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Wealth Building Strategies

Join the Few Who Gain from Economic Armageddon

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Posted by Marc Faber - Gloom Boom & Doom Report

on Thursday, 18 January 2018 06:44

Market CollapseThe warning signs that a market crash is looming are becoming louder and more frequent. Despite this, most market participants are behaving like it can never happen. In fact, bullish trading is pushing the markets to new highs on an almost daily basis. The warnings are seen, heard and then ignored.

Join the few who will take advantage of what's about to happen. The same few who profited handsomely when billions were lost in the last global economic crisis almost a decade ago rather than those who simply follow the herd.

For most people these warnings are like the graphic images printed on today's packets of cigarettes, they spell out the dangers and yet all the same people are still smoking.

Warnings about an impending market crash are being made by people who predicted with considerable accuracy in 2006 and 2007 what was ahead when the US sub-prime mortgage market collapsed and triggered the global financial crisis.

The one thing these analysts can't predict is an exact time and place for when the crash will happen. It's the same reason people continue to smoke; nobody can say with certainty the number of cigarettes required to kill a person.

So, trading continues regardless until the day the sudden dramatic drop in prices exceeds the 10 per cent threshold that officially marks the point that the crash has arrived.

Just as smokers only decide to stop when the physician says: "Mr Smith, I regret to inform you that you have lung cancer."

Swiss investor Marc Faber, also known as "Dr Doom", predicts that stocks are set to plunge by 40 per cent or more. Mr Faber, the editor of 'The Gloom, Boom & Doom Report' recently told CNBC: "We have a bubble in everything."

His caution is echoed by Nobel Prize-winning economist Robert Professor Shiller who has urged investors to tread cautiously because market valuations are at "unusual highs".

In a recent interview with CNBC, he said: "We are at a high level, and it's concerning," highlighting that the only times valuations have been higher were in 1929 and 2000.

Mark Zandi is chief economist at Moody's Analytics. In August he joined the chorus of analysts preaching caution after determining that the stock market is overvalued.

In an article in Fortune he said: "The stock market is due for a significant correction" adding, "stock returns in the next several years will be very pedestrian if they increase at all."

Last month HSBC issued a Red alert warning. They're looking at two key levels: 17,992 in the Dow Jones Industrial Average and 2,116 in the S&P 500.

"As long as those levels remain intact, the bulls still have a slight hope. But should those levels break and the markets close below, which now seems more likely, it would be a clear sign that the bears have taken over and are starting to feast," said head of technical analysis Murray Gunn. "The possibility of a severe fall in the stock market is now very high," he added.

However, according to Bill Blain, a strategist at Mint Partners, this time bond markets will trigger the mayhem.



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