Short Term Update

With Monday being August’s new moon, we arrive at the last higher-probability topping point mid-year 2014 for those indices which have not yet topped out:

22au9

With SP500 and Nasdaq overbought and showing negative divergences, their breakouts this week have the potential to become fakeouts here.

22au10Source: Stockcharts

SP500 hourly RSI reached >95 and previous occurrences are shown in yellow on the two charts below, i.e. typically a pullback followed:

22au7 22au8Source: U Karlewitz

ISEE put/call ratio is 3 days over 200 and the last such occurrence led to a drop in January and the previous time before that in 2011:

22au2 22au3Source: Ryan Detrick

Thursday produced the most NYSE unchanged issues since 22 Feb 2007 (source: Dana Lyons), which could be a sign of complacency as last time it preceded a 3.5% drop on 27 Feb 2007. This is supplemented by Skew which is back at historical elevation warning of a potential big down move:

22au6Source: Big Charts

Nasdaq reached a Demark exhaustion sell signal on Thursday and SP500 is expected to today.

Gold has weakened as the US dollar has surged higher. However, positioning in the Euro, which acts inversely to the USD, suggests that may be about to reverse:

22au13

Source: Emma Masterson22au12

 Source: J Lyons

In short, we have the set-up for a reversal here in both equities and USD, for at least a partial retrace of the recent gains, and as we pass through Monday’s new moon the set-up looks good for a down week next week. Margin debt has yet to be released for July, but with indices overall down in that month I expect a decline. However, if stocks were to rally further next week it would raise a question mark over margin debt in August, whilst taking the Dow to new highs and cementing the breakouts of the SP500 and Nasdaq. Alternatively a down week next week should create fake-outs on the SP500 and Nasdaq and set up the possibility of a full retrace of the rally of the last 2 weeks. The negative divergences on the new marginal high in SPX versus the July peak support this occurring:

22au15Source: Stockcharts

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88 thoughts on “Short Term Update

  1. With monday being a full moon day at best we might have a 500-600 odd points drop towards 16500 DOW again before it surges and moves towards 18300-400 by Oct.

    1. I meant Monday being a New moon day….Also i think this bull market or a pseudo one as some would like to call it might last and linger longer than most anticipate.There may not be much price movement but time wise could easily stretch another 18-24 months before calling it a day.

  2. For what it’s worth – I’ve been positioned short USD since mid week.

    A quick look at GBP/USD as well EUR/USD selling for several weeks now and from a purely “technical perspective” – where does anyone really think the Great British Pound is going given the London Bank Cartel running the planet?

    Lunar alignment / Monday mirrors current activity in currency markets to the letter as “getting long JPY” / short risk trades setting up in literally “every single JPY related pair”.

    The Fed chatter could push things a tough higher on a sleepy Friday sure….but Nikkei has swung high and next week looks set for lower.

  3. As regard to the turn to new moon on Monday 8/25, there is some interesting read from the astrology standpoint by Meriman: There are actually two major aspects arising at the end of August: Mars conjunct Saturn on August 25, and the Sun in opposition to Neptune on August 29. These are both powerful Level One geocosmic signatures related to major reversals in U.S. stocks (and probably all world stock indices, as well as other financial markets, like Gold and Silver).

  4. Also by the well respected Mr. Merriman: “That is, in conjunctions, it is the faster moving planet that dominates the collective psychology and world events. In oppositions, it is the slower moving planet that is dominant. Thus, the Mars-Saturn conjunction in Scorpio on August 25 is more likely to find Mars dominate, which means wars and conflicts. The Russian-Ukraine (as well as USA and Western Europe) turmoil is likely to get more intense, not less, especially after the Venus-Jupiter conjunction (which highlights Venus, as the faster moving planet) passes early next week.

    By the end of that week, the Sun will be in opposition to Neptune. Thus, the slower moving planet – Neptune – becomes more dominate. This planet is even more of a challenge to get “the truth” than Pluto, for Neptune can be passive and evasive, and even worse, it can intentionally mislead and omit important pieces of information necessary for others to make proper decisions. Feelings of “betrayal,” “mistrust,” and “sabotage” are often complaints from those who are victimized. It can be a time of great embarrassment, even scandal, particularly to those who have planets located in a T-square aspect to the Sun-Neptune opposition. In this case, the Sun-Neptune opposition takes place in 6 degrees of Virgo-Pisces. Therefore, those people (especially world leaders) with planets at or near 6 degrees of Gemini or Sagittarius, are most vulnerable to these dynamics. Mr. Obama, for instance, has his natal Moon at 3 degrees of Gemini, square his natal Pluto at 6 degrees Virgo. He may be affected by these feelings and behaviors”

    1. Sorry, can’t help myself – Was that based on Hawaii or Africa as his birth place? I kid! Back to more serious aspects. I am really drawn to solar, gravity, moon, cycles, etc. However, very pragmatic. When I checked into Merriman a long while back, he was so wrong I completely abandoned him, similar to Puetz. Also the Kress cycles. He said the 120 yr, 60, 40, 30, 10, 8, 6 4 2 and 1 yr cycles are all due to bottom Oct 2014. To be even remotely correct we will need a 1987 type event. He had said all of 2013 and 2014 would be down.

      1. Merriman, like many other stock gurus DeMark, Hussman, Faber, Schiff …etc. have been wrong for the past 18 months. The reason is simple: The FED intervention has not allowed the markets to behave naturally, and has stretched the natural cycles beyond imagination. However, the market indicators and demographics as John identifies bolster the argument that the crash will take place sooner or later in 2014.

    1. During the silver bear mkt of the last 3 years, at least 2 times the silver bulls pounded the table to buy because speculative traders were at record short levels. What happened, silver went down several more dollars. So even though bottoms will be characterized by record shorts, so will the years falling to that pt. I recommend Briese’s Commitment of Traders Bible. It does the best job I have seen on how to judge net short and longs
      Oil is a good example. It is at all time record highs for speculative longs. So I have judged that it is at its limit. However, it first hit record levels, 3 years ago, and prices continued to rise.. Historically, they are right during trends and wrong on both ends.
      hence, it can go down even if there is record short interest, but not necessarily.

      1. True, on the COT, swap dealers’ (i.e. the TBTF banks) short interest has been at record high for some time, in fact they keep increasing their shorts no matter the (paper) price rises or falls.

        One thing on the watchlist is the upcoming the Shanghai Gold & Silver Exchange (mainly based on physical) will be online by late September.

  5. Difficult to see that speech providing
    a catalyst for any even short term
    sentiment change, markets may see
    it differently as the detail is poured over.

    Looks supportive as it’s been reported.

    1. Thanks John for the illustration, however CAPE doesn’t account for interest rate impact. The current super low yield cause the risk market to have little or no risk premia. I wish Prof Shiller can have another indicator that takes account of interest rate, not just normalised inflation.

  6. Will enter short /ES at EOD if current price action sticks. Took small short in Halliburton yesterday (HAL).
    Best trading to all.

  7. What is with all the bearishness on the $? It’s last major tops were in 1985 and 2001 making a huge ABC down to 2008. It has made a huge 6 year base since then. The recent lows appear to be the reliable 3 and six year cycle lows. 100 minimum target. Deflation, the US stk mkt bears (me) best chance for a big bear is a world wide credit crunch as there is a huge scramble for dollars to settle debt and trade obligations. 70% of world trade is in $. The 1932 bottom saw a steep rise in interest rates (temporary) as $ to meet obligations were very hard to get. Russia has just technically invaded Ukraine. The reaction to that could trigger a big enough interuption in world currency flows to cause such a crunch.

    1. Sornette end flag confidence was still quite low (0.22) compared to historical crashes (>0.5). Much of this feels like the correction of Jan. 2014. It was shallow enough to keep the bubble going. The latest dip seem to keep up with the same dynamics. Frustrating but it is what it is.

  8. There are only a few great market gurus: Gann, Gould, Angas, Dysart, Lindsay, and Hamilton Bolton. I don’t think Armstrong even gets an honorable mention. An interesting part of the list is Bolton. He was the first to see the importance of bank credit and the FED. So I agree with you that apparently FED policy trumps other methodologies. There has however been one exception, 1930 to 1932 when deflation trumped interest rates for a while. The drop in commodity prices, low interest rates,and the current universal belief in the credit cycle/interest rate algorithm of the market give some credence to this stance. It is a long shot, however. A deflationary spiral (annualized -5%) would force liquidation of assets to meet debt and commercial commitments. But mild deflation would cause continued money pumping and further asset appreciation. Can that go to the sky? It has already been happening for over 5 years. It has been Goldilocks so far.

  9. Just wanted to inform of my Long Term switch to the alternate (primarily due to R2k trading sideways for 9 months and not breaking down.

    http://redlinescenario.blogspot.com/2014/08/primary-wave-count-change-this-bull.html

    I am not pimping my blog (on a very long blog break) John, I had just posted something here about the long term and felt I should update with my change of view.

    This has nothing to do with shorter/immediate term view.

    Take care,
    SoulJester

    1. Interesting thesis SoulJester. Thanks for sharing.

      I would imagine the US had a demographic tailwind at that time? If anyone has some stats please share. I’m not sure the fundamentals support your view but I’d bow to those with a much better handle on these things.

      As an elliottician, are you familiar with the work of Tony Caldaro? He’s been the most accurate I’ve read since the markets fell over in 2008. He has a long term bull market in play, but is anticipating a primary wave 4 correction relatively soon, followed by a primary 5 and then cycle wave 2.

      http://stockcharts.com/public/1269446/chartbook/152741551;

      Personally I favour this outlook for my bull scenario, but then a forecast is just a forecast!

      GL

      TDL

    2. Can’t rule it out SJ, but what’s different is: the 20s were an economic boom time with a demographic tailwind and valuations in 1926/27 were -25% versus +76% now. I.e. in 3 key ways it is the opposite of now. The R2k is a going to be a key tell though: if it breaks down below support it have completed a topping process from the highest valuation it has ever reached. If it breaks upwards then it is your consolidation instead and it is going for even dizzier valuation.

      1. John, I wonder if QE can fill the gap of the demographic tailwind? There is one card that CBs have yet to play and that is QE by the Eurozone. I don’t doubt for a second that they will do this at some point. Perhaps that can really cause markets to go parabolic.

  10. It does look like we will keep going up until Labor day. It is the same pattern in 1929 and 2000. There is something about the market having to go up for the rest of the summer. If all the analogs about valuation being as bad as 1929 and 2000 holds, why not this rally until Labor day pattern?

    1. John: I don’t believe the markets will continue chugging up until the Labor Day weekend. On the contrary, I think there will be a strong reversal. Friday ended as a bearish harami candle, signaling possibility of a reversal, pending Monday movement confirmation. If the Dow is down on Monday, the market is ripe to reverse and ready for an impulse move down below 16,000 as wave 1 begins.

      Obviously the potential reversal will be assisted by the worsened condition in Russia, Gaza, Iraq …etc.

      On the other hand, I am waiting for gold to confirm bottom on Monday. IMHO miners GDX / GDXJ are ripe to moon shoot from here. Tremendous upside considering the imminent stock crash.

      1. Hope you are right. However, Harami candles do not have statistical significance, while backtests of markets before holidays and around the turn of the month show positive alpha.

        I think bears will be lucky to get 9/2014 peak. My post below suggests that it can even last as long as 9/2015. While the solar peak was in 1928, high sun activity kept the market going until 1929.

  11. Sunspot activity peaked in 1928 — if we are AT 2014=1928, we might have a parabolic move into 2015 before the peak. Twice as overvalued is still overvalued. Moons come every month, seasons come every year. There is no indicator that can determine if we crash this year or next. Who is to say the crash starts 9/2014 versus 9/2015?

    1. Good point.

      Between the SC16 sunspot peak in April 1928, and the final miniature sunspot peak in August 1929 the Dow rose from 220 to 390.

      Here’s another weak solar cycle, SC10: http://www.solen.info/solar/cycl10.html

      Between that sunspot peak (early 1860) and the final mini-peak (mid 1864), the Dow more than tripled: http://www.chartsrus.com/charts.php?image=http://www.sharelynx.com/chartsfixed/USDJIND1800-1900.gif

      Could that indicate another four years of sharply increasing US indices (from the March 2014 SC sunspot peak? One major difference between now and then is that the Dow was bearish leading into 1860.

      1. Data is very sketchy for the 1800s – very difficult to cross reference anything and prove one way or the other, which is why I don’t reference it. However, an inflation adjusted Dow chart shows the market made a secular bull from 1860 (smoothed solar max) to 1906 (smoothed solar max). Much like from 1980 to 2000, 1980 stocks bottomed, then 2000 was the stocks peak. My guess is 1860-1906 was a similar demographic trend, but I have no data for that.

        Here in Aug 2014 we see many different indicators with different angles on the market showing that stocks have been in a topping process since the turn of the year. We also see commodities breaking down under deflationary pressures, in line with demographics, and the CRB:SPX ratio right back to 2000 levels.

      2. Yes, that old sketchy data (economic/technical/surveys etc) problem is why I’ve not looked very closely at all the weak solar cycles timing in detail before. But the sunspot and Dow data from back then are reliable.

        So looking at all five weak cycles (SC10, 12, 13, 14 and 16), shows that in four of them the Dow roughly doubled or tripled between each smoothed sunspot peak and the subsequent final miniature peak. And these were not just a part of a bigger or longer rally – the doubling/tripling started very near each SSN peak, and stopped at each final peak (the shortest was 1 year [SC16] and the longest was nearly 5 years [SC10 and 13].

        SC14 was the exception, where the Dow doubled into the SSN peak and then nearly halved again as SSN fell away (the lead-in to the famous Panic of 1907). Ironically, speculation during that extremely weak SC14 behaved more as we would expect during a strong cycle.

        So a big question is whether we will witness an SC14 1907 style panic; or SC10/12/13/16 style bubble euphoria..?

        2015 is due to be a lunar standstill/Gann Financial Timetable panic year. But then again, out of all the weak solar cycles, SC14 was the least like SC24: http://www.solen.info/solar/images/comparison_similar_cycles.png

        So, a panic or a Dow bubble? Or both? My guess is an incredible bubble, then an unimaginable crash.

      3. Found the answer. The 1800s data was piece-meal complied retrospectively. The first 20 years comprises 7 banks. The next 25 years adds one insurance company. Then are gradually added 27 railroad stocks. In total, these comprise 3% of all stocks that were traded in that century.

      4. Mark,
        Thanks for the update. When we say bubble I guess it means spike in relatively small period of time. As I mentioned I always compare period of 1996-2000 with 2012-2016. In just 1 year of 1999 we saw 100/200 PEs for most of Internet companies from 15-20. See this famous article by Jeremy Siegel and accompanied data on lofty valuations of year 2000 – http://tinyurl.com/otjucpv
        Can we see similar valuation for Social Network/Ecommerce stocks in 2015 before it bursts?

      5. John – that’s interesting about the calculation of the 1800’s Dow. But for it to relevant (in other words, if those old records are in fact false or misleading to a material degree), then the unquoted 97% stocks would have to have been consistently trading in a significantly different way to the quoted 3%.

        In any case, my comments above all refer to the 1860 to 1929 period. The markets from that era were well documented: https://en.wikipedia.org/wiki/Panic_of_1857

  12. SPX enters 5th wave of 5th wave of 5th wave of 3rd wave of super cycle 2. Target is above 2035.
    The commence of the 4th wave of SC2 is thereby nearby ahead (a few weeks) with probability of similar dimension to wave 2, being of the order of 300 points pullback over a 3 to 5 month timeframe.
    Wave 5 of SC2 is with probable similarity to wave 1. Elliott analysis will answer any and all questions to enable a frame to be constructed within which it is possible to work with significant increase of confidence.

  13. Republish from Falcon

    New Moon…AUG 24, 1987
    New Moon…AUG 25, 2014

    Dare to dream

    (The DJIA did not regain its August 25, 1987 closing high of 2,722 points until almost two years later.)

  14. Started have a closer look at Geroge Soros increasing his S&P puts recently. What is interesting is that it now makes up 17% of his portfolio. He is still net long so it could be a hedge but have a closer look and thats where it gets interesting! He has increased his long positions and opened new positions in gold miners. Now that does sound like a very defensive portfolio. What could he be seeing i wonder.

  15. In ref to Duncan Smith… continue having fun with the number game.
    Major catastrophic events in 2014:

    Flight 370, Boeing 777: It is about number 7

    Flight MH-17 on 17/7/2014. Boeing 777: It is about number 7.

    New Moon 25/8/2014: 2+5 = 7: It is about number 7

    298 people on board MH-17: 298. As a prediction, how about a market correction starting on 29/8/2014???? Notice number 29

    then sentiment sets in over the long weekend, then waterfall selling on 2/9/2014: Notice number 29

    1987 vs. 2014… Another coincidence where number 7 “accidentally” shows up?

    What do you think? 🙂

    1. Forgot another important “7” event:

      Market initiated selling off on 31/7/2014: 317
      Dow was down 317

      It is not about number 7???

  16. Hmmm. very interesting number game indeed Duncan, where number 25 which makes up 7 stands out.

    New Moon 25
    SPX top 25
    1987: 25

    Monday new moon 25/8/2014 will be indeed special, a turning point

  17. so far the markets have responded negatively to the Russia news. For instance, the big drops on 07/17 and 07/31. imho the meeting between Poroshenko and Putin on Tuesday would be a catalyst for the markets to tip over and fall.

    war may be an end result after all. any peace talks over the past 4 months have basically escalated the violence and exacerbated the situation. The American’s controlled Poroshenko is simply a joke compared to Putin. And the West… Obama, Merkel, Cameron, Kerry…. have been played by Putin/Russia like a yoyo.

    The attached video would totally be worth your 15 minutes.

    http://www.zerohedge.com/news/2014-08-23/putins-chief-integration-advisor-warns-transition-has-always-come-about-through-war

  18. This week was a learning experience. So things have changed. Earlier this week I said I would combine 2 stations : Sandy Hook and Reedy Point. Looking from the moon they are at the same location, so the gravitational pull should be the same. And gravity is what we are looking for.

    It is amazing how 2 stations can give such different signals sometimes. Made me aware of the impact of harmonic calculations on my analysis. All the while the apo/peri cycle was up from the 10th until 24th. So now I see how it helps to combine those two. For every apo/peri turn I have matching tides and they are always right, high indicator value for bottoms and low values for tops.

    It’s the tides in between that are challenging; those are the jokers. Last Tuesday was such a tide. I said it would be a high. Tuesday we did see a high but not the high, as the apo/peri cycle was still up. Using apo/peri to filter the tides helps. And now I see the power of this combination : tides give an exact timing but apo/per gives the most robust trend. Sometimes they all turn in sync but sometimes there is a time gap (apo/peri turns, but the matching tides not yet). Now the true turn will fall in between.

    Next week I will have to work out this new analysis so next week I will give a new forecast. For now : gravity does work; no doubt in my mind.

    Next I looked for some more confirmation. I am a big fan of John Ehlers as he has the most sophisticated indicators available. I would like to invite you to take a look at http://www.stockspotter.com/In/Analyzer.aspx?Sym=SINE and see how the timing here coincides with apo/peri turns.

    For longer term trends I look at this site : http://www.forecasts.org/stpoor.htm They forecast a bottom in November. How to reconcile this with my lunar cycles? The 4-something year lunar cycle has been right so far; up from early 2010, around the flash-crash what was imo the W5 low if the FED hadn’t changed the rules with QE1 at the end of 2009. But this cycle gave a top end of 2006 and the real high came in okt 2007. So it seams it turns too soon when turning against the current trend. Could this be happening in 2015 as well? I like to think so.

    So my expectations now would be a low in November with a possible next leg up into 2015. But that would have to be the final leg up as the 4-someting year lunar trend is down by then.

    Next two weeks down into September 6th as the apo-peri cycle has turned. I think Monday will give the high..

    So much in my head now…have to think things over. Next weekend new forecast for September (if SoulJester can change his mind, so can I ;-))

    Enjoy your Sunday.

    Cheers,

    André

    1. Thanks Andre. I suggest continue posting your views with supported tide/apo-peri data where your thinking is original. I am also learning this thing. Eventually, We may get some result simply because it has nature behind it.
      Surprisingly, Historic Pattern I follow suggest same thing – down up to 6th Sep 2014 and then up for whole of Sep 2014 but pattern also says uptrend up to 29 Aug 2014 where your data suggests down.

      1. Thanks Jigs,

        The more I learn the more I get convinced we will find the answers. Using 2 stations and the apo/peri filter has taught me how difficult it is to extract gravity from tides. At the same time I realize this could be the break through we need to make a big step forwards. I only saw this connection last week, so I need to digest it. But it solves a lot of issues. I will keep posting as long as everybody understands that the only way to learn is from mistakes.

        Cheers,

        André

  19. RE: Gold. Armstrong now projecting a Feb/Mar 2015 low.

    A cycle turn date approaches Sept 3/4 for the ECM. How things unfold after this date should offer clues to the future. He shows Aug 25 as a directional change date, and increased volatility into Oct/Nov with panic cycle Oct 13. Says watch for a trend to emerge after this. But which way???

    If any of u follow Armstrong, you know he is looking for a Cycle Inversion in the bond markets, where the bubble pops and all those trillions make their way into the stock market for a final and spectacular blow off/Phase Transition. The question is when.

    September 2015 is the ECM peak…when the sovereign debt crisis implodes…

  20. Maybe a coincidence or total madness, but July 29 the moon moved into Virgo. And Monday August 25 the moon moves into …..Virgo

    August 8 was an important low and the moon moved into capricorn on the 7th
    Sept 3 the moon moves into ……Capricorn.

    Could it be some signs are more equal than others? Usually I leave astro stuff to others. But the moon isn’t a planet so the astro’s never talk about the moon.

    Just trying to think outside the box.

  21. Something to chew on. I read somewhere that markets tend to rise into the venus/jupiter conjunction. In 2014 this happened on aug 18th. The next one occurs july 1st 2015. This is not a rule but a tendency.

    Could july 2015 be the top for the last leg up?

  22. André,

    Finally, we’re on the same page, you and I. July/august 2015 is what have. But then again, you have to ask yourself: why is conformation so important? For almost a year John posts confirm his bearish outlook. The indices may take a dive or not, but conformation.is clearly not the tool for judging the stockmarket as long as the bankers pull the strings.

    Why not accept tides and moon are not confirming each other and only map the times when there is more certainty about the direction instead of wanting to predict every little move? Again, this is no critism: focus on what works. One does not have to be in the stockmarket all the time. If I knew ‘for certain’ the market went up for three weeks in a row twice a year, I would trade only these two occasions. Don’t make it harder for yourself than it already is.

    We are entering a period when panics can occur. Hopefully this will bring the much anticipated waterfall decline.

    Peter..

    1. Peter,

      My aim is to help improve timing of turns. And I do believe confirmation is important. Not to confirm John’s analysis, but my own timing tools.

      The moon and tides are directly related but in a complex way. I have stated earlier gravity is not an on/off thing; it is a natural process that moves in a natural way. From gravity to tides is a step and from tides to harmonical tidal forecasts is yet another step. I do believe we will understand this issue some day and that gravity will be a valuable additional insight into market behavior.

      And this is not hard on me; I have fun analyzing things and see this as an intellectual challenge.

      If bankers were really in control of the market we would go up in a straight line for always. This is clearly not the case. 80 billion may sound like a lot of money but for a multi trillion market it’s a drop of water in the ocean. It’s all about faith; not actual control. That’s why the FED is trying to lie it’s way out of everything. Once the community loses faith hell will break loose.

      Flat or consolidating market are always the result of different counter acting cycles. So John’s analysis was correct, but with the help of gravity I do believe we would have been able to predict this ‘frustrating’ market. And that would have given us the opportunity to choose the best moment for entering.

  23. I’ve been bearish since December. Every post since then has had a bearish slant, because of what I perceive to be overwhelming bearish evidence. My first topping call was for 31 Dec. Although most indices did not top out then, that date is still the peak of the Nikkei, HYG:TLT, INDU:GLD, XLY:XLP and other risk measures. SP500 & Nasdaq have gone up since, Dax & Nikkei are down for the year, FTSE and RUT are flat. So although it’s been a very frustrating time, my analysis has not been invalidated. What happens next is key.

  24. Yes, when will it roll over?

    Lumber futures: (2-year triangle or continued ascent?):
    http://www.nasdaq.com/markets/lumber.aspx

    Recession models:
    St Louis FREDs smoothed U.S. Recession Probabilities (3 months lag):
    http://research.stlouisfed.org/fred2/series/RECPROUSM156N

    http://www.financialsense.com/contributors/cris-sheridan/still-no-sign-bear-market

    http://easynomics.com/updates/recession-risk-easy-pod/

    http://dashofinsight.com/
    http://dashofinsight.com/recession-forecasting-misinformation/

    Any worthwhile free recession models out there?
    Most I find are subscription-based, like these:

    http://traderedge.net/2014/07/10/recession-model-forecast-07-01-2014/

    or the wellknown RecessionAlert Index
    http://recessionalert.com/
    originating from this S.A. site:
    http://www.powerstocks.co.za/recessionspublic.php

    Regards
    sigge

  25. I always read the financialsense articles, helps put
    much of the macro news in context.

    Lots appear to be looking for falls this week,
    at least some retrace following such a rapid
    reversal would not surprise me, soon see.

    It’s the resilience of US markets that has
    really struck me so far in 2014.

  26. John, I don’t question your thesis, nor your ability to time the markets. Otherwise, I would not visit your page as frequently as I do. Your research is great, your evidence is ‘overwhelming’, indeed. But all the evidence so far has not led to the outcome you and I would anticipate, based on this. It can turn againt you when having a huge short position. In that regard, your timing is off, and the evidence may be solid, the man on trial may may walk away with murder if the jury thinks otherwise.

    In a way it is Ironic that my turndates, for the most part based on US-indices, do work in Europe but not in the US itself. Just like in 2011, the US kept going higher while in Europe…
    “It’s the resilience of US markets that has really struck me so far in 2014”, to quote Phil.

    And that is what we are dealing with. In short, as stated before, my hope is you will be right before you will be “burnt by the sun”. September/october are qualified for it to happen, a waterfall decline. But what if the don’t? I am sure this has crossed your mind too.

    And André, do as you please, I hope you succeed and keep us informed. My suggestion had more to do with your urge to predict every move of the market, while the instruments you use may be better suited for an approch like the one I mentioned. To give you a different take on the same matter.

    Peter.

    1. Ive said it before the setup just isnt there for waterfall declines. Higher highs, higher lows. This hasn’t changed.

      Yes, internals are breaking down and this should be taken seriously. However, a 10% correction can reset these. Why must markets crash? We’ve had two 50%+ declines since 2000. Markets could just chop around at these levels for years to reset valuations without having to crash.

      I personally think we are due a modest correction now and probably a 30% starting next year which could last up to 2 years frustrating both bulls and bears.

  27. John’s research is fascinating, and watching him connect the dots is inspiring.
    Ofcourse we’re influenced by ”the natural world” somehow, and science will forever try and quantify the world around us.
    Perhaps lunar/solar combined with price/fundamentals can lead to low drawdown models.

    RecessionAlert have this fundamental model:
    http://recessionalert.com/the-sp500-market-timing-project/
    Been thinking of subscribing, but it might be too much info and variables as often with subscription-sites.

    And what works in bulls is not what works in recessions, so I fully expect their model to break down when we roll over.
    No-one knows yet what the coming shift in demographics will bring, if new technology or sociological changes can offset that headwind. Interesting times.

  28. Futures hit SPX2000. I don’t think we move decisively over it until later in the week.

    This further damages the secular beat case in my opinion. We are over 25% above the secular bear range from 1999. We might come back down to retest the breakout zone at 1570 at some point in the future but imo secular bull began last year.

    1. Smells like a stop hunt to me. Cash market wont get intraday or close above SPX2000 till later in the week imo.

  29. It looks like the DAX is destined to test its 200dma. That may be the turning point?

    Given that it has been the leading indicator a sharp downturn off that level might entice some selling across the board, but who knows, anyones guess.

  30. With a positive yield curve, oil prices down YOY and strong corporate earnings don’t expect anything more than a shallow pullback this fall.

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