Experts Are Not Smart Enough to Spot Stock Market Crash 2017

Stock Market Crash 2017

Stock Market Crash 2017 boils down to all bark and no bite 

For the past few years much the angst of many experts we have consistently stated that the markets were not ready to crash. Moreover, we believe that Experts are not Smart Enough to Spot Stock Market Crash 2017. If they were they would not have made the same predictions in 2014, 2015 and 2016. All these predictions of disasters proved to be nothing but idle chatter.
From late 2016 to early 2017, many former Bulls who predicted the direction of this market quite well, suddenly decided that the stock market was ready to crash. We, however, begged to differ, and we provided two very simple reasons for our stance.

Experts Fail To Realise that Emotions drive the markets:

The masses have remained nervous throughout this bull run; no bull market has ever ended when the masses are nervous.  History indicates that stock market crashes begin on a euphoric note and end on a note of hysteria.

The trend clearly states that the Experts are on the wrong side of the Stock Market Crash 2017 argument 

We focus more on the psychology of the masses than on any other single factor. However, the 2nd most important factor is the trend. The trend has remained positive throughout this bull run; occasionally it has moved into the neutral zone, but it has never turned negative.  We are not talking about the trend based on the drawing of simple trend lines but one that is calculated utilizing several factors one of which happens to price action.

So when the experts started to scream over and over again about the impending stock market crash of 2017; these are some of the comments we recently made to our readers and or subscribers

Let the experts sing their songs of doom and con the masses; it takes two to tango, one to cry and three to have a party. We have experts from the technical analysis side and experts employing fundamentals trying to use to back their faulty assertions. Unfortunately for these penguins both of them are wrong. They have failed to pay attention to the psychological factor. There is no factor more important when it comes to playing the markets then market psychology.  Market Update April 30, 2017

The market marches to its beat and those that resist are drained; financially speaking that is.  We are not fortune tellers; we reserve that noteworthy task for the experts who seem to take delight on spewing rubbish week after week. The media then regurgitates this rubbish, and a jackass is suddenly made to look like a movie star. What a wonderful world we live in and people wonder why they lose money after listening to these wise men.

We, on the other hand, prefer to listen to what the market is saying and that is why we never listen to our gut instinct or let our emotions into the equation.  We look for trends. Market Update May 19, 2017

Stock market crash anxiety index

 What’s The most nonplussing factor in this bull market?

The emotional state of the masses; the herd, for the most part, has been oscillating back and forth from the neutral to the Bearish camps; very few have dared to venture into the bullish camp. This probably explains why the bullish readings never even came close to testing the 60% ranges for the past 15 weeks and counting. During that time the market has been trending higher and higher. This has caught many an expert with his pants down. But there is no surprise here; the reason as we have stated so many times over and over again is that the Crowd is not euphoric and the trend is still bullish.

 

The same pattern holds true for most of 2015 and 2016; the number individuals in the Bearish and neutral camps outnumbered those in the bullish camp. If you are in the Neutral camp one of two things one of two things apply; you are either are a bear that got burned or Bull with no courage to take a position.

Our proprietary sentiment indicator also confirms that the masses are still antsy.

Market Structure

If the markets were extremely overbought, then it should be almost impossible to find stocks that are trading in the oversold ranges on the monthly charts. On a monthly chart, each bar represents one month’s worth of data on; these charts provide great clues of what to expect from the markets.

In the Dow, we spotted several stocks that were trading in the extremely oversold ranges to oversold ranges on the monthly charts.  AAPL, HD, DIS and NKE are examples of such stocks.

We also examined roughly 150 random Midcap to large cap stocks (ETF’s were included in this analysis) from various sectors; we found that almost 60% of the stocks examined were trading in the oversold ranges; one ETF that caught our eye was IBB; it is trading in the extremely oversold ranges.

We also noted that the net number of new 52 week highs continuously exceeded the net number of new 52 week lows. Why is this important? It indicates that the internal structure of the market is healthy.

Tactical investors Alternative Dow theory states that the experts have it wrong

Our stance for the past 11 years has been that the Dow Theory is dead; we provided an alternative Dow Theory that has proven to be far more accurate than the original.  This theory states that it is the utilities that should be followed and not the transports. We will cover this in more detail in a follow-up article next week. In essence, it is the Utilities that lead the way and not the transports.

Tactical investors Alternative Dow theory states that the experts have it wrong

The utilities started to consolidate roughly from Aug of 2016 and bottomed out in Nov 2016 and had consolidated for roughly three months before they started to trend upwards. The utilities are now surging to new highs, and this bodes well for the overall market. The alternative theory states that the Dow should follow suit.

This is a mature bull market so one should not expect it to trend in one direction only; it will experience several corrections ranging from mild to severe. Unfortunately, the Dr’s of doom will confuse this correction for a crash as they have mistakenly done so for the past eight years and counting. When the masses embrace this market, the end will be close at hand; until then strong corrections should be embraced.

Dow theory states experts wrong

There is a lag period between the utilities and the Dow; sometimes it comes down to just a few weeks, but usually, it ranges from 3-5 months.  The Dow has been consolidating since March; it has essentially been trading in a tight range. Even though the Dow did not pull back strongly, the sideways action helped it blow out a large dose of steam as envisioned by the MACD’s and several other technical indicators that are trading in the oversold ranges. The lag period was roughly three months as the utility bottomed out in Nov and the Dow started to consolidate in March of 2017.

 

The stock market crash theme makes for great headlines as fear sells well, but that is all it has been good for so far.  The market will experience a much stronger correction over the course of the next 6-15 months, but until the masses embrace this bull market, those corrections will prove to be buying opportunities.

The overall Market sentiment illustrates that the masses are not jumping with joy.  The trend is positive, and the Dow Utilities have surged to new highs.  Therefore under such conditions, it is hard to envision a crash like a scenario.

Every bull market experiences one back breaking correction that is mistakenly labelled as the beginning of a new bear market. When that occurs, it will be a sign that the end is close at hand. That strong correction will subsequently trigger an even stronger rally and fuel a feeding frenzy. Sentiment will turn bullish, and the masses will dance with Joy, then the bottom will drop. However, we are not at this stage, so there is no point in further developing this story line.

Our ideal setup would call for the Dow to shed 600-1000 points over a very short period; this would drive the masses into the hysteria zone. A small push is all it would take to drive the fear factor through the roof. We all know what happens next; the masses stampede, the smart money swoops in, and history repeats itself once again. For the masses, it is groundhogs day every single day.

 

A genius can’t be forced; nor can you make an ape an alderman.

Thomas Somerville

 

Published courtesy of the Tactical Investor

 

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Originally posted 2017-07-31 14:20:27.

What Every Investor Should Know about the Dow Theory?

What Every Investor Should Know about the Dow Theory?

The transports topped out in November of 2014, and according to the Dow theory this is a big negative;  the Dow Industrials should have followed suit. Instead, the Dow soared higher paying no heed to this theory proving to a large degree that this argument has lost its value. After all, it is a theory and the definition of a theory is “a supposition or a system of ideas intended to explain something, especially one based on general principles independent of the thing to be explained.”

Dow Jones Transportation Index 26 September 2016

As early as 2006 we offered an Alternative Dow Theory that has proved to be far more accurate and reliable than the original Dow theory.  Just to let this sink in, the transports topped out almost two years ago and instead of trending lower the markets have surged to new highs. If you look at the above chart, the Transports appear to be finally gathering momentum and to break out. In the Dow theory alternative, we stated it was the Utilities that lead the way as opposed to the Dow transports, well let’s see if that holds true. The reason we are using older charts is to illustrate the power behind this alternative theory fully.

Dow Jones Utility Index

The Alternative Dow Theory Has A Better Track Record than its predecessor

In the chart above, the utilities pulled back after the Dow transports, let out some steam and then soared to new highs. Even though the correction appeared to be strong, the Dow utilities held above the main uptrend line.  It is all but obvious that the Dow utilities are a better barometer of what one should expect from the markets.  The Utilities topped in Feb of 2015, and after that, the Dow trended sideways before correcting, illustrating that they follow the lead of the Utilities and not the Dow transports.

The Dow utilities bottomed towards the end of August 2015 and rallied until Nov of 2015 before pulling back again. The Dow followed in the utility footsteps. It bottomed in Jan of 2016, while the utilities bottomed on Dec of 2015; once again leading the way.  The Dow utilities rallied until July 2016 before pulling back.

The Dow rallied until Aug of 2016, proving again that the utilities are a better indicator of market direction than the Dow transports.  At this point, it appears that the utilities are building momentum to take off again. If the pattern holds, then the Dow should follow in its path.

 

How are the Dow Industrials and Dow Transports faring in 2017?

Dow Industrials and Dow Transports faring in 2017

Well, as you can see the transports took off like a rocket after September 2016 and have not looked back since. The picture of the Dow industrials is almost identical to that of the Dow Transports.

Dow Jones Industrial Average Index - Dow transports

Once again, we have clear evidence illustrating that the Dow utilities provide a much clearer picture of where the Dow is heading as opposed to the Dow Transports.

Out with the Old Dow Theory and In with the New Dow Theory

The Dow utilities and the Dow industrials both traded to new highs; this means rather than leading the way up the Dow transports are propelling individuals to draw the wrong conclusion. The Dow Theory ceased to work properly a long time ago, and in the era of hot money, it is having a hard time trying to be relevant. The alternate Dow Theory that focuses on the utilities is a better option. Thus, maybe it is time to put this 100-year-old theory to rest; we will let you be the judge.

Paying attention to what the utilities are doing going forward could prove to be rewarding. Once the Dow utilities start to trend upwards, it should serve as a strong signal that the Dow is going to follow in its path. Applying the principles of Mass psychology and Contrarian investing we were able to state with confidence that the experts were wrong when they stated this market would crash in 2014, 2015, 2016 and so far in 2017. In fact, we went on record to the state over and over again that this Stock Market Bull would trade to heights that would shock everyone.

 

Published courtesy of the Tactical Investor

 

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Originally posted 2017-07-25 10:00:20.

The Psychology of Contrarian Investors

Contrarian Investor

A contrarian investor focuses on the facts and not the noise

We are going to use the precious metals to illustrate some of the Psychological principles of being a Contrarian investor. Keep in mind that most contrarian investors are not real contrarians but fall under the category of Fashion contrarians.

Contrarian investing is based on taking a position that is opposite to that of the masses. In general contrarian, investors get in an investment too early as their analysis is based on doing the opposite of the masses.  In contrast mass psychology dictates that you wait for the emotion to hit a boiling point, euphoria or panic before a position is taken. Mass psychology involves the actual study of what the masses are doing as opposed to just determining that their current action is wrong and using that information to take a position in the opposite direction.

A contrarian Investor takes a position that is contrary to the Masses

Contrarians only take a position that is contrary to the masses and that about wraps up the ideology of being a contrarian today. Very few of today’s contrarians are true contrarians; they fall into the category of fashion contrarians.

Contrarian Investors Psychology Zebra

Investors that adopt the doctrine of mass psychology correctly look for something more.  Mass psychology takes the principle of contrarian investing and then pushes it to the next level.

Mass psychology focuses on extreme situations

Students of Mass Psychology look for extreme type situations. In other words, sentiment should not just be bullish before an opposing strategy is put into play, it should be at the boiling point and only then will the student of mass psychology look for an exit and attempt to take an opposing position to that of the masses. To illustrate this point, we will use the following example.

The commodities sector has several components to it, two of them being the Gold and Silver. Throughout 2002 and early 2003, the hate and disgust for both these sectors were extremely high. Fast forward to 2004 and Gold was being mentioned everywhere; even CNBC had a little ticker that stated what the price of Gold was throughout the day. The hate or disgust for both these sectors was no longer there, and even though both these sectors have a long way to go before the masses fully embrace them, they did not provide a psychological basis for taking an opposing position to that of the masses in  2004.

Gold went on to soar to untold heights, heights that most would have deemed impossible in 2003. All along the way we continually stated that Gold would continue to trade higher and higher until 2011. We warned our subscribers to bail out of Gold very close to the top.

 A Contrarian Investor pays close attention to what the masses are doing

Even though the masses have still not fully embraced Gold, this concept does not matter in the long run. A more important criterion would be to find out what % of investors has taken positions in these sectors or not. Next one would try to find out what the Gold bugs (the most bullish individuals ever created on earth) are doing. If all the Gold bugs are bullish, then based on the contrarian rules of investing you should take a contrary to a neutral position because all the individuals in your group are now optimistic.

Do not pay attention to the masses; they know not what they are doing when it comes to investing

Should one care what the masses are doing that much or focus on the Gold bugs (the group) that are emotionally tied up with Gold?  The masses in general, will not embrace Gold fully until it becomes fashionable and by then a large portion of the Bull Run will be a thing of the past. In the last Gold Bull Run, the masses did not even know what was going on, let alone take a position in this sector.

So one measure would be to determine if all the people who believe in Gold have already taken positions if they have then the market has become saturated. The only way the market can continue its upward run is for momentum players to jump on the bandwagon.  These players have very short time spans of concentration, and thus, they jump in and out very fast. Once they decide to bail out the corrective phase could be very painful as was the case of precious metals topped out in 2011.  The housing collapse and internet bubble serve as two stark reminders of what happens once momentum has run its course.

A Good Contrarian Investor understand the core principles of Mass Psychology

Mass psychology is the constant analysis of the playing field to determine how the game is being played. Are the rules changing, are the players become more aggressive or docile, is the playing field soft, rocky or worse yet on extremely high and treacherous ground.  One has to take measures at different levels and then compare it the pattern you have already established from past observations.

In this sense, mass psychology is dynamic compared to the methodology most contrarians put into play. Contrarians do not measure their position relative to those of other contrarians; they only measure their position relative to that of the masses, and therefore, they fail to obtain a vital piece of data.  This usually results in pain, misery and taking on substantial losses   In, other words; they do not measure the intensity of emotion in their camp.

The gold bugs are a classic example of contrarian investing gone wrong. They moved from the Euphoric phase to the having found religion period, to the gnashing of teeth and pure misery phase, as they watched Gold plunge from 1800 ranges down to the 1000 ranges.  They still cannot fathom why this happened, especially as trillions of more dollars have been created since 2011.

The Internet boom lasted one-year longer after all the TA and contrarian indicators were in the extremely bearish zones. Euphoria for this sector was running sky-high.  If one had shorted the markets based on these contrarian factors only one would have lost one’s pants and well as underwear. In other words, you would have most likely lost a small fortune.

Gold bugs should have banked some of their profits. Instead, they continued to plough money into Gold, and as it pulled back, they jumped in joy and added even more. Once the correction moved from the mild to the wild phase, they panicked and started to pray. Today the sentiment is almost as bearish as it was in 2003.  From a long term perspective, a great buying opportunity could be at hand.

Be A true Contrarian Investor and not a fashion contrarian

Most so-called contrarians were caught flat-footed when the Equity markets mounted this huge rally from Oct 2004. Their contrarian indicators suggested that taking a short or neutral position was the right thing to do.  Only 10% of the investors can win at any given time. The moment the number surges past this level (no matter what side of the fence they are on contrarian or the masses side); the markets will adjust to bring this ratio back to its norm.

Investing based on psychology amounts to not only taking a position against the masses but also against the fashion contrarians.  Once sentiment has reached the boiling point, one should go into cash; risk takers can consider shorting the markets.  Finally, less attention is being given to the precious metals sector, so establishing a position now could be viewed as a prudent long term investment.

On the same token, most investors and experts expected the Market to Crash after Trump won and we stated that it would create a buying opportunity just as Brexit did. In fact, since 2013 we have been stating that a stock market crash was a long way in the making and that all strong pullback should be viewed through a bullish lens.

 

Published courtesy of the Tactical Investor

Originally posted 2017-07-24 16:47:04.

Tap water quality investigation: Lead in some Canadian water

Tap water quality investigation

Tap water quality investigation: MONTREAL (AP) — Hundreds of thousands of Canadians have been unwittingly exposed to high levels of lead in their drinking water, with contamination in several cities consistently higher than they ever were in Flint, Michigan, according to an investigation that tested drinking water in hundreds of homes and reviewed thousands more previously undisclosed results.

Residents in some homes in Montreal, a cosmopolitan city an hour north of the U.S.-Canada border, and Regina, in the flat western prairies, are among those drinking and cooking with tap water with lead levels that exceed Canada’s federal guidelines. The investigation found some schools and daycares had lead levels so high that researchers noted it could impact children’s health. Exacerbating the problem, many water providers aren’t testing at all.

It wasn’t the Canadian government that exposed the scope of this public health concern.

A yearlong investigation by more than 120 journalists from nine universities and 10 media organizations, including The Associated Press and the Institute for Investigative Journalism at Concordia University in Montreal, collected test results that properly measure exposure to lead in 11 cities across Canada. Out of 12,000 tests since 2014, one-third — 33% — exceeded the national safety guideline of 5 parts per billion; 18% exceeded the U.S. limit of 15 ppb.

In a country that touts its clean, natural turquoise lakes, sparkling springs and rushing rivers, there are no national mandates to test drinking water for lead. And even if agencies do take a sample, residents are rarely informed of contamination. Full Story

 

Trump may face fight over planned move from NYC to Florida

NEW YORK (AP) — Donald Trump a Florida man? Not so fast.

Despite a stinging “good riddance” tweet from New York’s governor, the president’s home state may not let him go to Florida without a fight.

Trump’s plan to shift his permanent residence to Palm Beach will likely be heavily scrutinized by New York state officials, who are notorious for auditing wealthy residents seeking to flee to lower-tax states to make sure such moves are real and not just on paper.  Full Story

 

Prosecutor reviewing Russia probe known for tenacity, ethics

HARTFORD, Conn. (AP) — The man leading the inquiry into the origins of the Russia probe is no stranger to politically sensitive investigations.

In his 41-year career as a prosecutor, John Durham, the U.S. attorney for Connecticut, has led investigations into the FBI’s cozy relationship with Boston mobsters such as James “Whitey” Bulger and the CIA’s use of tough interrogation techniques on terrorism suspects.

Former colleagues and defense lawyers who have squared off against him say he is unlikely to be concerned about any fallout from his findings during this new assignment. Full Story

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Originally posted 2019-11-04 13:29:21.

Will Bitcoin Crash Chart

Bitcoin Crash Chart

Will Bitcoin Crash or Backbreaking Correction? (Bitcoin Crash Chart)

The dot.com insanity experienced a backbreaking amendment before the market launched and beat out toward the finish of 1999. The picture below represents that Bitcoin likewise experienced such an adjustment, but since of the expansive finish move it has all the earmarks of being only a blip. Tactical Investing amounts to combining Technical analysis with Mass psychology  creating a system that is second to none.  The Trend Indicator is an example of such a system.

Bitcoin Crash Graph

It combines the most important aspects of Mass psychology with the best of Technical analysis to yield a system that identifies the trend in advance of the event. Our technical indicators also enable us to identify crucial turning points in the market accurately.

Think about that from a high of 2977 (June 10, 2017); it dropped to a low of 1808 set on the fifteenth of July 2017; it shed generally 40% in that brief period (shown by the green box). Everybody recognizes what pursued.

Depressed people tend to depress everyone around them, however it keeps an eye on Pay’s all around inadequately over the long haul

It looks horrid, the media is siphoning apocalypse type situations, solid bulls are appearing of shortcoming, and even contrarian investing specialists are beginning to break. Unadulterated Contrarian Investors are more intelligent than the majority, yet they do have imperfections; the most astute financial specialists are the ones that put the standards of mass brain science into play.

They watch the mass outlook, and they comprehend that notwithstanding when dread begins to crawl into the condition, they are constrained to make this inquiry: Was the group in a condition of elation when the market beat out? On the off chance that the appropriate response is “no”, at that point regardless of how horrendous the image may look, the end amusement is that the group is being set up for a bogus descending move. Furthermore, the ordinary reaction would “why”. Basic answer, this is a propelled type of Pavlovian preparing.

The Bitcoin Crash Chart resembled the Tulip Bubble, it was a trick from the earliest starting point. The ones that made the cash were the ones that got in first, the ones that got in late were given their heads on a stinky tin platter. Never get into a speculation when the majority are euphoric, purchase when there is blood in the lanes and the other way around.

Financial exchange crashes are diverse as they don’t speak to one segment, so it is simply an issue of time before the business sectors will return to the standard. From a mass brain research point of view, financial exchange crashes are only long haul purchasing openings. Disregard the what occurs if the securities exchange crashes situation, and spotlight on what you would do if stocks you were biting the dust to possess before are currently selling for pennies on the dollar.

Pavlovian Type Training Is Being Used On The Masses

At the point when the market puts in a base subsequent to encountering a backbreaking remedy, and after that proceeds to mount an amazing rally; the group engraves the accompanying information in their brains. Purchase the pullback, since it is a phony snare to drive us out; they likewise begin to have confidence in the accompanying mantra “the more grounded the pullback, the better the chance”. Next time when the Market puts in a best, bullish slant will remain bizarrely high, and that will be the notice to understudies of Mass Psychology that the genuine skull pulverizing revision is en route. Once more, we point you toward the not very far off Bitcoin stupendous buyer advertise and the similarly fabulous accident. From low to high Bitcoin attached 11,000% in increases and the majority still expected that the main bearing it could exchange was up. When it bested the Bitcoin swarm was past overjoyed.

Concerning whether the bitcoin crash is finished, we trust that one should hold up somewhat longer before bouncing in and in every way that really matters, Bitcoin chart is exceptionally far-fetched to test the 20,000 territories for quite a while. On the drawback, bitcoin is probably going to test the 3000 territories with a conceivable overshoot to the 2,500 territories before a significant base grabs hold. Right now, there are numerous different stocks that look fascinating and unmistakably more appealing than bitcoin, for instance, PG, MRK, TCEHY, and so on.

 

Courtesy of Tactical Investor

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Originally posted 2019-03-19 13:41:12.

Rate of Inflation not an issue according to Bond Market

Rate of Inflation not an issue according to Bond Market

The Bond market is Indicating that The Rate of  Inflation is not an issue in 2017 

Bonds should have continued to plunge, but notice that bonds bottomed in April and have started to trend higher. After the July rate hike, bonds should have taken out their April lows, but they did not.  Instead, they went on to put in a series of higher lows; higher lows are usually indicative of higher prices. Furthermore, the stock market hardly reacted to the last rate hike; after a very mild reaction, it has continued to trend higher.

rate of inflation

We tend to focus more on the technical and psychological outlook, and both are indicating that inflation is still not an issue.    The Gold market is also indicating that inflation is not an issue. Last July Gold traded past $1400; at that time rates were lower and the US dollar was trading at higher levels.  But today rates are higher today, and the dollar is trading lower than it was in 2016, but Gold instead trading at or above $1400 can’t even trade above $1300 for a sustained period.

Mass Psychology seems to support the theory that US inflation is not a big problem

The psychological factor does not support higher prices; the economy is not doing well as the consumer is not spending wildly. Consumer confidence is increasing, but consumer spending is not marching in tandem with consumer confidence.  Income growth is weak; the rise in incomes and net worth has primarily benefited high income and high net worth households. These are the same individuals that have the most money invested in the stock market which has tripled since its March 2009 lows.

We have listed a plethora of factors that illustrate that inflation is not an issue; at least not yet.

Even James Bullard, president of the Federal Reserve of St Louis went seems to be in agreement

“Low inflation has been the major surprise of the era,”

He also went on to state that he was still waiting for inflation to return to the 2% ranges and would not support any increases in the Fed’s benchmark rate until 2018 to allow inflationary forces to recover. He might have to wait a lot longer than that. AI and technology, in general, are going to continue to fuel lower prices. The retail sector is in freefall; the remaining players battle it out, and price wars will continue for the foreseeable future. Food prices are going to plunge due to the price war that new entrants like Lidl and Amazon have triggered.

The bond market is not supporting the higher inflationary outlook, in fact by all measures the bond market appears to be building momentum to trend higher.

US Jobs Report misses the mark

The unemployment rate edged up to 4.4% and wages barely grew. Only 156,000 jobs were added as opposed to the 180,000 consensus number.

The retail sector continued to get hammered; retailers shed 9,00 jobs, while the public sector shed another 9000 jobs.

“In months where there are anomalies like this, we look at the three-month average, which is 185,000,” said Michael Gapen, chief United States economist at Barclays. “The labor market is healthy, but we still have the conundrum that solid employment gains haven’t translated into faster wage growth.”

One wild card in the second half of 2017 will be gasoline prices. The surge following Hurricane Harvey’s devastation in Texas will leave less money for consumers to spend on other goods and services.

“For the economy, it’s steady as she goes, but for the markets, it’s Goldilocks,” said Torsten Slok, chief international economist at Deutsche Bank, referring to the not-too-hot, not-too-cold August payroll increase.  NY Times

The markets are holding up well and trending higher as we stated they would all along in 2016 and now in 2017.  Until the sentiment turns bullish the markets are expected to trend higher.

Originally posted 2017-12-08 15:55:47.

Price of Copper Signalling Inflation or higher Stock Market Prices

Price of Copper probably a bullish Development for the Stock market

Many pundits associate higher copper prices with inflation. This is the wrong metric to look at; higher copper prices are usually associated with an improving economy.

Copper has traded past a key resistance point ($3.00) and it has managed to close above this important level on a monthly basis.  The long term outlook for copper is now bullish and will remain so as long as it does not close below 2.80 on a monthly basis.   Copper is facing resistance in the 3.20-3.25 ranges and as it is now trading in the extremely overbought ranges. As copper is now trading in the extremely overbought ranges, it is more likely to let out some steam before trading past this zone.  A healthy consolidation will provide copper with the force necessary to challenge the 3.20 ranges and trade as high as $3.80 with a possible overshoot to $4.00, provided it does not close below $2.80 on a monthly basis.

 

Price of Copper Signalling Inflation or higher Stock Market Prices

Now that copper has traded past $3.00 on a monthly basis,  the Fed deserves another pat on the back for they have managed to further cement the illusion that this economic recovery is real. Copper is seen as a barometer for economic growth, so pulling off a Houdini here is probably going propel a lot of former naysayers to embrace this economic recovery.

Mass Sentiment is still Negative so Stock Market likely to Correct only

 

Combining this data with the action in the Copper markets leads us to believe that the stock market is more likely to experience a correction than an outright crash. Higher copper prices are usually indicative of higher stock market prices.  Therefore, the copper markets are confirming that the long term trend is still intact.

What about the Inflation issue?

The chart below puts an end to that argument for now. If inflation were an issue, the velocity of M2 money stock would be trending upwards. Until it starts to trend upwards, inflation is not an issue and the focus should be on higher stock market prices.

 

Conclusion 

Don’t focus on the noise; focus on the trend as it’s your friend and everything else is your foe.

 

Published courtesy of the Tactical Investor

 

Originally posted 2017-12-08 15:43:34.

Stock market corrections or stock market crashes

 

Stock market corrections or stock market crashes

Stock market corrections or stock market crashes: The Dow would have to drop below 9000 to break below the main uptrend line; an unlikely event in the near future. However, this does not mean it’s impossible. Every once in awhile the markets experience a monumental crash that can shave of as much as 60% of the Markets current value.   In this is instance we are using weekly charts; each bar on the chart represents one week’s worth of data.  Straight off the bat, you can see that back breaking corrections translate into long term buying opportunities.  Remember when there is blood in the streets and the masses are in panic mode, the opportunity is knocking.

Crashes are buying opportunities

Market Crashes are Buying Opportunities

The first zone comes into play at 16,000. If the Dow closes below this level on a monthly basis then there is a chance it could trade as low as 13,000.  However, based on the current market sentiment, there is very little likelihood of such a scenario coming to pass.  Mass Psychology is very clear when it comes to dealing with stock market crashes. Market crash on a note of Euphoria and bottom on a note of despair. Mass psychology states that optimum time to get into the markets is when the masses are in panic mode.

 

Anxiety index is a great market timing took

 

A fortress of support comes into play at the 13,000-13,500 ranges

To trade any lower than this level, the Dow would need to close below the above ranges on a quarterly basis. If it were to do that then the main uptrend line could be tested. Note that this trend will continue to trending upwards, so in 12 months, the trend line could move from the 9000 ranges to the 10,000 plus ranges.

Buy the Fear Sell the Joy 

The individuals who arrive at the party late are the first ones to come out and mistake a correction for a crash.The crowd panics when it sees blood in the streets; instead of joining the crowd do something different take advantage of stock market crashes and buy as the crowd dumps quality stocks and flees for the exits.

Crash or correction boils down to the angle of observance 

What is stunning to one, could appear ugly to another; it comes down to the angle of observance. Alter the angle and the image changes. Mass media and most experts try to alter the angle and direct you to see what they want you to see. They are in the fear “Selling Business” because fear sells, so they focus on creating a mountain out of a mole hill.

History clearly indicates that the Astute investors build very large stakes when there is blood in the streets.  Moreover, they keep building these positions as long as the main driving force is fear.  Take a look at the current Bull market; the Dow is trading at 22,000 and the masses are still nervous. It’s history in the making. The masses are always on the wrong side of the markets in the long run.

The astute investor always views financial disasters through a bullish lens.  Instead of panicking they take advantage of stock market crashes. 

Normality highly values its normal man. It educates children to lose themselves and to become absurd, and thus to be normal. Normal men have killed perhaps100, 000 of their fellow normal men in the last fifty years.
R. D. Laing
1927-1989, British Psychiatrist

Published courtesy of the Tactical Investor

 

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Banking system: Why is the Fed pumping money?

Banking system: Why is the Fed pumping money?

The US central bank has pumped more than $200bn (£160bn) into the banking system  this week – the first time there’s been such an intervention since 2008.

The Federal Reserve’s aim was to stabilise what is usually a calm part of the market.

Interest rates in the so-called “repo market” had shot up to 10% in some cases – although the cost of borrowing in that market more typically hovers around the benchmark rate set by the Fed – around 2%.

So what happened and should we worry?

First things first: what’s the repo market?
Banks, hedge funds and other players borrow money regularly on a short-term basis to ensure their books are in order, no matter what their daily activities.

The borrowers typically offer government bonds or other high quality assets as collateral, which they repurchase, plus interest, when they repay the loan – often the next day.

Those repurchase agreements give the repo market its name.

What happened this week?
This is a huge market, with some $3tn changing hands each day, according to the US Office of Financial Research.

Under normal conditions, interest rates in the repo market are low, since the loans are considered safe and there’s plenty of cash on hand.

But this week the cost of borrowing shot up – toward 10% in some cases. And the rate at which banks lend to each other – the Fed’s benchmark – exceeded 2.25%, the top of its desired range. Full Story

 

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The retailer said its decision was due to “uncertainty” about the rules governing e-cigarettes, which US health authorities have linked to more than 500 cases of lung injury.

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Originally posted 2019-09-21 09:07:34.

Brexit Boris Johnson prime minister ‘s 12 December election

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Brexit Boris Johnson prime minister ‘s 12 December election plan has cleared its first hurdle as MPs backed it.

They are continuing to debate and will vote later on amendments, including a Labour proposal to change the date to 9 December.

The prime minister can only hold an election with the support of MPs – who have blocked it three times.

Efforts by opposition MPs to lower the voting age to 16 and allow EU nationals to take part have failed.

Proposed changes to the PM’s early election bill to extend voting rights were not selected for debate by the Deputy Speaker despite enjoying cross-party support.
It removes one major potential obstacle to a pre-Christmas poll as No 10 had said it would abandon the legislation needed for it if the franchise was altered at such a late stage.

One proposed change that will be considered is a call by Labour – backed by the other opposition parties – to hold the poll three days earlier on 9 December.

This, they argue, would ensure that university students are more likely to be able to take part because it would still be in term time.

MPs will vote on this amendment and one calling for the poll to be pushed back to 20 May before being asked to give their final approval to a 12 December poll at about 20:00 GMT. Full Story

 

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The accusation came as Boeing chief executive Dennis Muilenburg was quizzed by the Senate Commerce Committee.

Senators said they had serious concerns that Boeing put profits over safety as it rushed to get clearance. Full Story

 

Philippines hit by deadly earthquake in south

The death toll from an earthquake in the southern Philippines has risen to seven, officials said, with many more injured.

The victims included a seven-year-old boy and his 44-year-old father who died after they were struck by a boulder, officials told the Reuters news agency. Full Story

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Originally posted 2019-10-29 19:32:01.