Some more charts:
1. Financials leading down:
2. Consumer Discretionary leading down:
Source: Charlie Bilello
3. Defensives outfperform:
Source: Charlie Bilello
5. Investors Intelligence sentiment leading sharp corrections:
6. New highs consistent with 2000 peak:
7. Q ratio valuation now exceeds 1907 and 1929 peaks:
8. Market Cap to GDP valuation also now only superseded by the 2000 mania:
9. Evidence for a bubble:
10. Tom DeMark’s indicators predict peaks in the large caps are now at hand. He says the Dow effectively peaked on December 31st and a secondary move up to a level of 16,660 will create a top for the Dow.
At this point, the number of bearish indicators I have amassed is a source of great conviction. It will be a long time before such an opportunity re-appears. Those who suggest that too many bearish indicators is conversely bullish are confusing contrarian investing. Too many bulls, too much euphoria, too much allocation to equities: those are contrarian indicators. They are measures of ‘all-in’ and no-one left to buy.
I have more than 50 bearish indicators, each with a reliable history. Just one on its own should be a reason to be cautious. Many different angles, and together a solid cross-referenced case. To dismiss them all is effectively to argue that this time is different for each indicator, that each one was valid until now but no longer. To proponents of this time it’s different: Fed policy does not trump all, but has been the mantra behind bidding up equities to historic valuations; Low interest rates and low growth reflect recessionary deflationary demographic trends that cannot be stopped; Secular bulls do not erupt from these levels of valuations, leverage and euphoria – in fact, the worst bear markets in history do. Anyone still playing the long side at this point is playing a truly woeful risk-reward set-up.
Don’t trust me, trust the indicators. This is as good as it’s ever going to get for a medium/long term trading set-up. It’s right here, and I’ve done my best to demonstrate what that is so by drawing it all together as objectively as I can. I withhold from putting it more bluntly because I am not an advisory service, so I just share what I am doing, which is deploying my biggest ever trades in shorting the US stock indices (with the biggest in the RUT), trying to negociate a level of exposure which reflects maximum opportunity-taking whilst avoiding risk of wipe-out.
Unprecedented collective demographic downtrends in the major nations suggest this is a short-and-hold opportunity on a par with the Nikkei at the end of 1989, and accordingly I believe it’s RIP Warren Buffet’s buy-and-hold value strategy 1950s-2014, which only works if the long term nominal is up.