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Market Oracle FREE Newsletter

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

Stocks Stealth Bull Market Touches Dow 11,000

Stock-Markets / Financial Markets 2010 Apr 11, 2010 - 01:18 PM GMT

By: Nadeem_Walayat

Stock-Markets

Best Financial Markets Analysis ArticleWhilst the blogosfear still asks the question whether this is a bear market rally or a new bull market, the stocks stealth bull market achieves a new milestone right at the end of the week by touching the Dow 11k target as indicated in last weeks brief update as the weeks most probable trend outcome.


Nothing has changed in the blogosFear as the SAME issues both fundamental and technical are laboriously put forward EVERY month for the past 12 months for reasons why the rally's end is always imminent, only succeeding in frightening all but the smart money from monetizing on one of the greatest bull runs in history -

1. Fundamentals, - Unsustainable debt fuelled economic stimulus that will soon evaporate.

The stimulus and debt are real issues, but instead of signaling DEFLATION they are signaling INFLATION with the primary driving force for economic activity being REFLATION of asset prices.

15 Mar 2009 - Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470

The markets move ahead of the economy, whilst I don't profess to know the EXACT reasons of why they will move AHEAD until that becomes apparent AFTER the market has already moved, however I do have some reasoning in that INFLATION, Zero Interest Rates (Forcing savers / financial institutions to take risks) Quantitative Easing (money printing), and HUGE Fiscal stimulus packages that are laying all of the ground work for the next bubble regardless of how bad things appear as any outcome that prevents another Great Depression will be seen as bullish! i.e. even a low growth high inflation stagflationary environment WILL be seen as a positive outcome against the present day data that points to a collapse of global demand on a scale not seen since the Great Depression. The governments HAVE learned the lessons from the Great Depression and WILL succeed in inflating the asset prices and ignite the next perhaps even bigger bubble, meanwhile the stealth bull market will continue which by the time everyone realizes what's going on stocks will already by up by perhaps more than 50% from the low.

2. Technicals - There is no investor buying because volume is not there during the rallies.

YES, Volume is NOT there on the rally's precisely BECAUSE we are in a stocks stealth bull market that is STILL only being bought by the smart money. In the analysis in my Inflation Mega-trend Ebook (Download now for FREE) I expect this trend to persist for MANY YEARS.

15 Mar 2009 - Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470

Now watch ! How this STEALTH bull market will consistently be recognised as just a bear market rally to sell into and NOT to accumulate into. All the way from 6,600 to 7,600 to 8,600 and even beyond, the move will be missed by most as consistently bearish rhetoric and data will ensure only the smart money accumulates, for the small investor has now become Conditioned to the Bear Market Rallies of 20% and subsequently plunges to fresh lows. Many, many months from now, with stocks up 30%, investors will then WAIT for THE BIG CORRECTION, THE RE-TEST to buy into the apparent BULL Market , Well these investors will still be waiting as stocks pass the 50% advance mark, AGAIN only those that will have profited are the hedge funds and fund investors (Smart Money) WHO HAVE BEEN ACCUMULATING , as I elaborate upon next.

The bottom line for investing is monetize on trends, not to get psychologically hooked by perma attitudes (bull or bear). The facts are SIMPLE in that the stealth bull market turned into an ACTUAL bull market at Dow 7,765. Everything else written since to suggest that this is a bear market rally who's end is always imminent is down to psychological blocks which is a manifestation of lack of actual trading experience.

Last In depth Analysis - 23 Mar 2010 - Stocks Stealth Bull Market Trend Forecast Into May 2010

The sum of existing analysis upto the end of January had concluded in the Dow targeting a trend during 2010 to above 12,000, targeting 12,500 by late 2010, to be preceded by a volatile sideways trend during the first half of the year.

As we approach the end of Q1 the trend is showing relative strength against this forecast, the key manifestation of this is that the stock market did NOT retest the February low as I was expecting to take place i.e. to generate a double bottom pattern. This coupled with current analysis (above) suggests we are going to get what cycle analysts would know as 'left translation' in the projected trend, which implies we get the rally to 12,000 far earlier i.e. during Q2, rather than Q3 to Q4. Which on face value also suggests a weaker trend later in the year, but more on that in May.

SELL SIGNAL COMING !

The above analysis continues to resolve towards a Major SELL SIGNAL by Mid May 2010 Dow £12k target, which will probably be just about the time when the perma-bears have thrown in the towel and gone long! How far the correction will run is not quantifiable at this point in time. But to ensure you stay several weeks if not months AHEAD of the curve subscribe to my always FREE Newsletter!

The Real Secret of Successful Trading?

Not Technical Analysis, Not the latest grand puba theory but Money Management and Practice of Entering and Existing REAL positions, the actual mechanism for which is NOT important, rather it SHOULD be SIMPLE. Forecasting requires a LOT of analysis, plenty of layers to peel away, Trading requires virtually NONE as the trends are self evident in the breakdown of ones portfolio that is subject to money management rules where the bulk of your open positions will be in the RIGHT direction. Most traders go from analysis to positions, in actual fact it should be the other way around - From open positions TO analysis (if you need to).

I will cover the "real secrets of successful trading" in future articles and eventually in detail in a book, (at least a year away).

UK General Election, Most Voters Need Not Bother to Vote

The Politicians have entered into a frenzy of activity which is illustrated by the high frequency of bare faced lies that spout from every orifice. One good development from the mainstream TV news channels are the fact and reality checks that attempt analyse the truth behind the most repeated lies of the day.

Voting is a waste of time for most of the British electorate as the election outcome will be decided in the marginal constituencies which at 120 are less than 20% of the 650 seats, which is why the parties are deploying resources into these constituencies, promising new health centres and increased local services whilst the other 80% of the population in non marginal constituencies have to make do with what's termed as the "postcode lottery" garbage third world level health and public services as the sitting jobs for life MP's only appear for the occasional photo opportunity to include in their next leaflet knowing full well that mainly gullible labour and conservative voters in the constituencies will turn out in their thousands to vote them back in regardless of performance.

Britain needs a political revolution that turns EVERY constituency into a marginal constituency, that is the only way EVERY MP will pay any attention to their constituents.

Source: http://www.marketoracle.co.uk/Article18559.html

Your index trading analyst.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved

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(c) 2005-2010 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )


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Comments

Ajay
15 Apr 10, 09:22
Dow projection

Hi Nadeem,

Thanks a lot for your excellent articles about the economy and the stock market. In your previous article, you had mentioned that you were expecting a brief sell-off and a retest of 10600 on the Dow. Is that projection still valid?

Would appreciate if you could also add targets for other major US indices.

Thanks again for everything,

Ajay


Nadeem_Walayat
15 Apr 10, 11:06
Stocks Signals

Hi

The markets not giving any sell aignals for a short-term reaction to occur.

For instance in the 4th April aritcle / newsletter the short-term triggers were -

Short-term Trading- The short-term trend STILL remains UP, Last Close 10,927, BUY Trigger 10,957 Targets 11k resistance, nearest SELL Signal is at Dow 10830, that targets 10,550. Fridays Positive Jobs report implies that the Buy trigger looks set to be taken out Monday therefore targeting Dow 11k as most probable early week trend.

As expected we got the buy but NO SELL.

I'll update saturday for triggers for the followign week, but the trend remains up until there is an actial sell signal, note that there has been NO SELL SIGNAL since FEBRUARY ! Which is the longest time period that I can remember for the Dow to run higher without reacting.


Ajay
18 Apr 10, 07:24
Dow Forecast

Hi Nadeem,

It looks like the major indices will sell-off this week. Please do provide us with your latest updates as and when that happpens.

Thanks,

Ajay


Nadeem_Walayat
18 Apr 10, 13:09
Dow Take

Hi

I'll be including my dow take in tonights newsletter

Best

NW


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