Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Too Many Stock Market Dummies are Getting Rich... Huge Top Forming

Stock-Markets / Stocks Bear Market Nov 13, 2013 - 02:37 PM GMT

By: Clive_Maund

Stock-Markets

We know that the Fed and other Central Banks are printing money like there's no tomorrow to stop the fragile system from imploding, but the Little Guy is not seeing any benefit from it, instead the banks and elites are making even more money out of that which is spirited into existence and then handed to them on a platter by driving asset prices higher and higher. The Little Guy instead gets stuck with the bill as he becomes a victim of the inflation that results.


There is a widespread assumption now that "nothing can go wrong", because the Fed and other CB's will simply print more and more money as required to keep the party going so that everything accelerates upward in a parabolic arc until the eventual and inevitable hyperinflationary burnout. This is true, that is where we are headed, but what is dangerous about the current situation is that this has become universally accepted and believed. This means that there could be some very nasty speedbumps along the way, particularly if the lurking forces of deflation temporarily gain the upper hand, as is happening right now in Europe, where the elites are using the state of crisis to consolidate power.

The cleansing forces of deflation should have been allowed to do their necessary work of purging debt from the system many years ago, but politicians didn't want that - they wanted to keep the party going without a pause, and the result is now that these deflationary forces have built up to explosive proportions, and the only way to keep them at bay is by means of the most extreme money printing in the history of the world, which the crazy world of unbacked fiat money makes possible. They will succeed in keeping deflation at bay, but at a terrible price, with the resulting hyperinflationary depression being even worse than the deflationary implosion that they have worked so assiduously to avoid. Mike Maloney made the startling point in one of his Hidden Secrets of Money videos that more money is being created each year in the US, 1 trillion dollars, than in the entire history of the country up to the year 2007. It doesn't take much intelligence to realize that the eventual consequences of this will be catastrophic.

So where are we now? With market players positively bursting with confidence, we are believed to be right at the point of hitting one of those nasty speed bumps, with a high probability that we will see a potentially vicious market plunge that will deliver a stunning right hook to a lot of traders that leaves them reeling, especially all the Johnny come latelies who have been vacuuming up all the recent bullish propaganda being pumped out by the mainstream media.

Let's look at some cold hard facts now, using charts and sentiment indicators and studies from www.sentimentrader.com.

The market is overbought, at a target, and looking vulnerable to a setback here, as made plain by the following charts.

On its 20-year chart we can see that the Dow Jones Industrials have arrived at a target at the top of a huge megaphone or bullhorn pattern, after a long bullmarket from the 2009 lows, and recent action has become choppy suggesting that it is topping out.

Dow Jones Industrial Average 20-Year Chart

On the 1-year chart we can see the choppy toppy action and how the market has also arrived at a shorter-term trendline target - an excellent place for it to go into reverse.

Dow Jones Industrial Average 1-Year Chart

Now let's look at some other indications.

Dumb Money is raving bullish, which is by definition a reason to be cautious, since joining a flock of sheep is the surest way to get fleeced.

Smart/Dumb Money Chart

Chart courtesy of www.sentimentrader.com

The following more detailed chart showing Smart/Dumb money positions over time, enables you to compare these positions with market peaks and troughs.

Smart Money/Dumb Money Confidence Chart

Chart courtesy of www.sentimentrader.com

Next, newsletters, who as a group are wrong, have been raving bullish in the recent past too, as they serve to herd the sheep towards the fleecing shed. This is another negative.

Newsletters Hit a Historic Level of Optimism Chart

Chart courtesy of www.sentimentrader.com

Next, everyone is getting so confident that they are not bothering to hedge, or protect themselves. This is another obvious danger sign. We can see from the following chart that such complacency is frequently a sign of a market top.

Hedging Activity is Becoming Scarce Chart

Chart courtesy of www.sentimentrader.com

Finally, the stock bond ratio is at a historic extreme. While this could be alleviated by bonds rallying a much more likely outcome is that instead stocks will fall. After all, there is little incentive to buy Treasuries, which are intrinsically worthless trash that have little upside potential, no yield, big risk to principal, and have the full backing and guarantee of a government that is bankrupt, and diluting the currency at breakneck speed. US Treasuries are an investment that is strictly for the lowest form of fool that you can find - an absolute moron. Thus we can expect this ratio to revert towards the mean as a result of stocks dropping back.

Stock/Bond Relationship is Out of Whack Chart

Chart courtesy of www.sentimentrader.com

Someone recently made the asinine remark that money flooding out of the bond market would pour into the stockmarket, driving it ever higher. That doesn't look likely given that a falling bondmarket would drive interest rates sharply higher, creating an immediate debt servicing crisis.

So, although we are at a traditionally bullish time of year, when cash strapped consumers are encouraged to go even deeper into debt for a Christmas shopping binge, helping to drive the seasonal Santa Clause rally, it looks like the markets are going to go into reverse anyway - that's what all the above charts and indicators are saying.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2013 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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

6 Critical Money Making Rules