Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
S&P 500 Just 2% Below Record High, But There's More Stock Market Uncertainty - 19th Jul 18
Stock Market Technical Picture - 19th Jul 18
Gold Market Signal vs. Noise - 19th Jul 18
Don’t Get Too Bullish on Gold - 19th Jul 18
Bitcoin Price Rallies to Upper Channel – What Next? - 19th Jul 18
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18
US Stocks Set For Further Advances As Q2 Earnings Start - 15th Jul 18
Stock Market vs. Gold, Long-term Treasury Yields, 10yr-2yr Yield Curve 3 Amigo's Update - 15th Jul 18
China vs the US - The Road to War - 14th Jul 18
Uncle Sam’s Debt-Money System Is Immoral, Tantamount to Theft - 14th Jul 18
Staying in a Caravan - UK Summer Holidays 2018 - Cayton Bay Hoseasons Holiday Park - 14th Jul 18
Gold Stocks Summer Lows - 14th Jul 18
Trump US Trade War With China, Europe Consequences, Implications and Forecasts - 13th Jul 18
Gold Standard Requirements & Currency Crisis - 13th Jul 18
Focus on the Greenback, Will USD Fall Below Euro 1.6? - 13th Jul 18
Stock Market Outlook 2018 - Bullish or Bearish - 13th Jul 18
Rising Inflation is Not Bearish for Stocks - 13th Jul 18
Bitcoin Picture Less Than Pretty - 13th Jul 18
How International Observers Undervalue the Chinese Bond Market - 13th Jul 18
Stocks Trying to Break Higher Again, Will They? - 12th Jul 18
The Rise and Fall of Global Trade – Redux - 12th Jul 18
Corporate Earnings Q2 2018 Will Probably be Strong. What This Means for Stocks - 12th Jul 18
Is the Relative Strength in Gold Miners to Gold Price Significant? - 12th Jul 18
Live Cattle Commodity Trading Analysis - 12th Jul 18
Gold’s & Silver’s Reversals’ Reversal - 12th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Stealth Stocks Bull Market, Sell in May and Go Away?

Stock-Markets / Stock Index Trading Apr 26, 2009 - 06:11 PM GMT

By: Nadeem_Walayat

Stock-Markets Best Financial Markets Analysis ArticleThe stealth stocks bull market that has soared by 27% on the Dow and 20% on the FTSE these past 7 weeks has left the bears battered and bruised after EVERY decline that 'MUST' signal the proverbial resumption of the bear market was subsequently BUSTED, with some of the herd piling in on the tail end of the rally these past few weeks with the bulk still awaiting the RETEST. To answer many requests for an update to may last article (5th April 09) of where next, this is therefore an interim update that aims to give my immediate term view on where the stock market could be heading. The full in depth analysis that will aim to map out the trend for several months will follow later, to receive this you email in box make sure to subscribe to my always free newsletter.


Stealth Stocks Bull Market Analysis Recap - Consistency and Certainty.

1. Stocks Bear market Bottom forecast - 20th Jan 2009 - Target 6,600. Warning that the bear market bottom WILL be accompanied by overwhelming and highly convincing bearish fundamentals that speculators / investors will need to ignore to prevent themselves from missing out on the BOTTOM.

2. Stocks Bear Market Target Fulfilled - 8th March 2009 - Dow 6526. Preparing for a spike higher that was expected to trigger the first of a series of buy triggers to start accumulating - As you MUST WAIT for Entry Triggers, so as to give the trades a greater probability of success, and again the message to IGNORE the media / fundamentals.

3. Stocks Stealth Bull Market Born - 15th March 2009 - Dow Bear Market Bottom confirmed on multiple buy triggers during the week - Warning to ignore the fundamentals or should I say fundamentalism, bearish commentary and in many cases double speak in favour to reacting to the ACTUAL PRICE movements.

4. Stocks Stealth Bull Market Carpet Bombs the Bears - 24th March 2009 - Short-term 33% Correction, before new stealth bull market highs. End year target 50% from 6470 i.e. 9,700.

5. Stocks Stealth Bull Market Closes above Dow 8,000 - 5th April 2009 - Psychology of investing and trading. There is no point everyone seeing the rally in a the rear view mirror if FEAR kept them from monetizing on it!

Getting straight to the point. Seasonal's ! - The seasonal tendency for the Dow is to sell off going into / during May is the most probable on the basis of the strength of the preceding rally and given this years mega rally, the probability of a severe downtrend is now pretty strong.

The anticipated target for the current bull market by year end is 50%, the move to date amounts to more than 54% of the target in less than than 15% of the time period which gives ample time for several reactions lower against the trend. Therefore the only question now is how deep could the downtrend be, in that regard we have price points, retracement levels, and the MACD indicator to look at.

MACD - The MACD indicator cross has given a SELL signal, at best this means sideways price action, but more probably a significant downtrend that will seek to correct the up trend from Dow 6470.

Trend Analysis - The rally has been strong AND powerful, but it is showing signs of running out of steam, this is evidenced by the shrinking gap between each up thrust following each correction with the most recent correction 'so far' failing to break to a new trend high which gives a risk of a lower high. The rally is tired folks, it needs to take a break.

Retracement Levels - 33% - 50% - 66% - The Dow has rallied from a trough of 6470 to a peak of 8190 totaling 1720 points, key retracement levels are 33% = 7,622; 50% = 7,330; 66% = 7,050. Therefore the minimum correction from the current swing peak is expected to carry between 7,622 to 7,330. Anticipating a rally to 8,750 this points to levels of 33% 8,000; 50% 7,610 - Which reinforces the target of 7,600, with probable overshoot lower implying 7,500.

Price Points - Immediate support levels are 7,800, 7750, and then 7,440. For the health of the stealth stocks bull market a correction should not carry below 7,440 this therefore implies support in the region of 7,500 to 7,440. Overhead resistance is clearly first at 8,190, then 8,400; with major resistance in the area 8,900 to 9,080. This implies the current upswing should continue into the area of between 8,400 to 8,900 with probability favouring 8,800.

Elliott Wave - My elliot wave interpretation implies that the market should continue rallying for another to 3 weeks to mark the end of the first impulse major wave towards 9,000. to be followed an A-B-C correction towards 7,500 for a larger wave 2 correction.

Swine Flu Black Swan ? - Swine fever is spreading, is this the big pandemic that we have been fearing all these years with the previous focus on avian flu. There is a good probability that the financial markets will discount the worst case scenario along the lines of avian flu a few years ago early next week, therefore this brings in an immediate bearish influence against what looked set as a continuing rally into early May which implies greater volatility than expected depending on the progress of the virus. Though amidst the overall gloom big pharma that produce treatments should rally.

Conclusion - Immediate term conflicting analysis, will there be a continuing rally into early May or not ? Clearly early week will be weak and a lot now depends on whether the support of 7,800 holds, the 280 point gap between the last close and support should give the market plenty of swine flu room to breath, it is a tough call but after that early week wobble, I would go with a continuation into early May to set up for the main move which is for the significant correction that targets a decline of about 14% or Dow 7,500 from 8750. If 7800 fails early week that implies Dow 7,100. So just as the herd is starting to pile in the smart money will be positioning for a significant correction and importantly the move will be TRADEABLE, none of these 1 or 2 day falls that have suckered the bears in during the rally, but for a sustained down trend though swine flu may bring this forward to the start of the week. Note this is an interim update, my in depth analysis will attempt to more accurately map out the Dow swings of several months so make sure your subscribed to my always FREE newsletter to get this on the day of publication.

To post a Comment on this article click here

Want 120 Pages of Forecasts and Analysis on ALL Major World Markets? For Free! Download Now, hurry this offer ends soon.

Newsletter Schedule of in depth Analysis -

  • UK Recession Forecast Update 1 - Last - Feb 2009
  • Gold Forecast 2009 - Update 1 - Last - Jan 2009
  • Stocks Stealth Bull Market - Significant Summer Correction?

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

sixpack
27 Apr 09, 14:37
bond crisis

Hi Nadeem.

AEP talks of the volume of bonds to be issued this year and the market appetite for them, with some countries literally going broke / icelandic ! Others with perhaps higher interest rates as a result. Do you see this as affecting what you are seeing ? thx. Excellent writings as ever.


RAJ PANDIT
03 May 09, 13:02
Stealth Bull market

OUTSTANDING ANALYSIS!!


sami
04 May 09, 21:57
Market forecast

Nadeem - this is the best forecast I seen so far - right on target,


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules