Category Archives: Stock Market

4 Reasons Why…

Today MarketWatch treats us to…

Four reasons why the market will rally for the rest of 2014

Aside from the fact that I hate it when people talk in absolutes (because there is no such thing as a guru who can really predict absolutes) the writer, a CFA and regular Fox Business and CNBC guest tells us why stocks will rally all the way to the end of 2014.  Wow, two whole months?

Before I even read the article let me just say that the irrational fear became extreme earlier this month and while we anticipated the bounce, its strength is now pushing through the top end of expectations.  Got to love the markets, and that ploy of putting a supposed Fed hawk, James Bullard, in front of a mic to go on about QE extension the moment the market took a decent correction.  Right there belies vulnerability and desperation.

Anyway, to the article written by the CIO of the aptly named Global Guru Capital…

He highlights how sentiment is still way too pessimistic out here…

1) The Market’s Manic Mood

Americans haven’t felt this bad about their country since Jimmy Carter’s malaise years. According to a recent POLITICO poll, 64% of respondents believe things in the United States feel “out of control” right now. Exactly half said the country was “on the wrong track.”

Yes and do you know why?  It is because the majority have not participated due to the inequality and inequity of the current recovery, born of policy and aimed at those who already have capital and have assets.  What do ‘Americans’ have to do with this?  It is all about keeping asset owners whole.  Next…

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SPY 1, 2 & 3

Just as we (well, NFTRH) did with the GDX gold stock ETF over the summer, when we gauged resistances 1, 2 & 3 on the Ukraine hype b/s (GDX stopped at #3), we now have established resistances 1, 2 & 3 on the S&P 500, DOW and NDX on the rebound rally, which itself we had anticipated.

SPY hit a trend line today, which I have a feeling will not hold as ultimate resistance.  So understanding that in my nature I have a sort of chronic mental problem with being a strong short (this is me the faulty trader speaking, not me the top notch* macro market manager), I took the small step of shorting SPY today.  No leverage, just a short.  This is against some still held longs but the last 2 weeks have been pretty good and I want to seek out balance again.

This chart of SPY shows what could be the ultimate resistance level beginning at 196, but the indexes (ref. SOX post earlier) have started hitting some bounce targets so I thought it was worth a shot to begin creeping shorter the stock market.

spy

* Sorry, but that’s just how I feel about my own work.  It continually adjusts the faulty trader and keeps his head on straight.

Semi’s to Bounce Target

I found myself feeling self-satisfied at the profit already taken in LSCC and the growing profits in SIMO and INTC (all added on the Semi sector wipe out as bulls puked them up left and right), to go along with the profit in MLNX, which I held through the blood bath last week.  I found myself satisfied and realized that might not be a good sign.

I looked at the chart of the Semiconductor index and saw that it has hit my bounce expectation (not that it can’t bounce higher) and thought ‘book it’.  So I sold the first 3 items mentioned and hold MLNX for another hour, week or month.  In NFTRH we are watching correction leaders for clues on the rebound rally.

sox

Market Summary; Saturday Morning Cartoons

Allow me to share a simple sketch I drew that was part of an NFTRH interim update for subscribers last night.  The black line is where we have been.  The blue line is a projection of what a typical correction (whether a healthy interim one or a bear market kick off) might look like.

marketgraph

We used real charts of the Dow, S&P 500 and Nasdaq 100 to gauge the entry into the current correction and now the resistance points to the expected bounce off of the US market’s first healthy sentiment reset in quite some time.  But our cartoon above gives you the favored plan on how the correction could play out.

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Bank Index, Key Support

In poking a lower low and pointing MACD down, the Bank Index needs the bulls to prove their case, not the bears.  Still, it is for now holding the critical support we had been noting in NFTRH over the months of sideways action leading up to last week’s kick off of the bearish festivities.

bkx

Semiconductor Index @ Support

Looking at a couple places where the downside started we note the Russell 2000 trying to be green for a 3rd day in a row and we note the Semiconductor index still holding the key identified support level, which has touch points dating back over a decide.  In other words, it’s mucho significanto.  Adding to the drama, the measurement off the Double Top pattern has been registered, so SOX is a candidate to bounce if it so chooses.

sox

Free Report: “This is It”

[edit] From EWI, which has taken enough grief over its patient stance these last few years.  Whether this is “it” or not, find value in a range of opinions.  This is an extreme and possibly correct opinion.  Good old Bob… ;-)

As Bob Prechter says, bear markets move fast and are intensely emotional.

Please read this free report that could help you sidestep perhaps the biggest bear market in living memory.

Anyone who has been watching the market for the past few years knows that Wall Street wanted the stock market to get back to where it was.

You know, to the optimism and price levels in the time before the 2008-2009 financial crisis.

And Wall Street did get its way in the Dow Industrials more than a year ago. The index reached new all-time highs in 2013.

As for the return to pre-crisis optimism, that took a bit longer. But return it did, and very recently, in two measureable ways:

  1. Stock ownership just hit “a rare extreme” — 34.4% of total financial assets among US households. That’s a higher percentage ownership than in 2007.
  2. The percentage of bears among advisory services fell to 13.3%, the lowest in 27 years. “This means 87.6% of advisors are bullish on the long term trend.”

Of course, these are contrary indicators. Many other similar measures have reached similar extremes. So when it comes to a “Return to 2007,” the real question is:

How far will the re-enactment go?

Markets are most likely to turn when the fewest number of participants expect it. The reason truly big market meltdowns become meltdowns is because so few people are ready beforehand.

We’ve seen a lot of down days in the stock market since the September 19 high. And, after every one of those losses, I read and hear the same idea from the media: This is “a buying opportunity.”

In truth, that notion is also part of the re-enactment.

It’s hardly been two weeks since Bob Prechter published his Special Interim Report. It posted in the afternoon on September 19, the same day as the high.

In 20-point type, Bob said

“This Is It.”

It’s times like these that investors need to prepare for the coming bear market. What we’re seeing is only the beginning. We would rather see you prepare early instead of late.

Preparing early means sidestepping perhaps the biggest bear market in living memory. It means safeguarding your spending power as others struggle to make ends meet.

As Bob Prechter says, bear markets move fast and are intensely emotional; investors and traders who are prepared have greater opportunities on the downside than on the upside.

Please read this free report, “This is It.”

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

Huey to Russell: Strike 1

Huey has a lesson for all those punch drunk small cap speculators out there.  That lesson is “in 2010 some chart wise guy came up with a cute 3 Snowmen (888) target for me and I tried, like the little choo choo that thought it could… but I couldn’t.”

The first red arrow represents Strike 1, thinks Huey.

rut.hui

Bull Stocks Added

CCJ, INTC and GOOGL added to a couple Semi’s bought on Friday to take a shot on a bounce.  Got to buy the bulls’ fear and pukage, right?

These are against a diminishing list of shorts and are not recommendations because dudes, the bull has temporarily ceased operation if not ended.

The real focus shifts to the gold sector for increasingly positive fundamental reasons as we have been gauging in NFTRH.

googl

Gold vs. S&P 500 (big pic)

[edit]  Adding the daily view of GLD-SPY from this morning’s NFTRH ETF update.  I’d say some progress is being made here as GLD-SPY threatens to join several other indicators in a macro phase.  The trend is still down, but this is impulsive stuff.

gld.spy

For all you gold vs stock market sports fans, here is the big picture view of gold measured in S&P 500 units.  Though the stock market is making bearish technical signals and indicators are flashing a counter cyclical warning, the best that the Gold-SPX monthly chart can say at this moment in time is that MACD is getting interesting, RSI has a positive divergence and momentum to the downside by a Rate of Change (ROC) is slowing down.

The macro is changing in a big way, but we continue to note the poetic justice that would be satisfied if gold fills the 2008 ‘fear gap’ before resuming a bull market vs. SPX.  Given the damage that the US market is incurring, this could be satisfied with one final plunge with gold declining faster than the SPX or it could happen by other means.  Or it could not happen at all if MACD furthers its signal.

But it looks like we are grinding around, leaving one macro phase and entering another in the coming months.

au.spx

Club Misery +1

A long-time subscriber has a great nickname for gold stocks and gold stock investors.  That nickname is Club Misery.  Comfy US stock market bulls, so well tended by Big Daddy’s policy for so long are starting to wake up and feel just a tiny bit of it now too.  Yet there is an embedded confidence in place that was not there even 2 years ago when we began to note real indicators for coming strength.  The bulls now think…

Big Daddy Momma will weaken the dollar, create more credit and do what ever it takes to get me comfy again!  Frankly, I am not used to discomfort.  I am simply going to click the heels of my ruby slippers and await more seed corn to devour because I am set in my thinking now.  I watch CNBC and Jeremy Siegel is resolute and smirking (now that’s confidence!) and the other guys sound a little cautious short-term but even Jeff Saut does not question this secular bull market.  Maybe I am not so miserable after all.

And do you know what?  Our dullard bull here could be right.  Personally, I find no need to define this other than a satisfying disturbance to a robo market that drifted ever upward on policy and then on momentum to over valuation.  My big picture fundamental view is that it is and has been bogus with respect to real fundamentals (not the PE’s and growth metrics all built upon destructive policy that they talk about incessantly in the mainstream financial media), but that policy’s windmills can keep turning longer than you can tilt at them.

So for me, if this has been a market top I’ll be happy.  If it is a big buying opportunity in the making, I’ll be happy because the damned thing is now trade-able both ways and the macro is moving.  There will be opportunities aplenty going forward and I don’t just mean long or short the stock market.  Too much to go into in one post, but I now declare Robo Market dead.  It is still a FrankenMarket however, as it has been since I began my public writing journey a decade ago.

Anyway, here’s the venerable one… the headliner of headliners, Mr. Dow making his lower low today and introducing himself to the other Club Members.  I expect a savage market bounce back soon, but as noted in an NFTRH+ update earlier, these breaks of trends can be considered like scouts for what may still lay ahead on the near to medium term.  Doing the work of identifying support and resistance levels in service to being prepared is going to be fun.  Robo this.

indu