Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Stocks Bull Market Over? Are the Bears About to Break...even?

Stock-Markets / Stock Markets 2014 Feb 03, 2014 - 01:47 AM GMT

By: Nadeem_Walayat

Stock-Markets

Bearish rhetoric is once more reaching extremes FOLLOWING the tumbling of stocks to new recent lows, a decline that many market commentators have once more latched onto as a consequence of Fed Tapering of QE or more accurately money printing, this despite the fact that the stocks soared in response to the last December Taper decision which was a surprise for the markets whilst the January Taper move was expected.


Whilst at the present time I remain firmly immersed in the analysis of the housing markets as I attempt to get my latest ebook in the exponential inflation mega-trend series completed this month, as I have plowed most of my wealth into the UK housing market since early 2012.

However, I do still retain a sizeable 18% of assets invested in the stock market, so like most out there it would be useful to know whether the current sell off is a buying opportunity or not or whether it is an harbinger of the dreaded trend change that I have yet to acknowledge as a termination of the bull market trend that I have backed for the past 5 years duration of this stocks stealth bull market that began in March 2009 (Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470 ).

So first I refer to my last analysis of the stock market of mid November 2013 which laid out my expectations for the Dow over the following 4 months into early March 2014 as excerpted below -

11 Nov 2013 - Stock Market Forecast 2014 Crash or Rally? Drone Wars and the Nuclear Apocalypse

I expect the Stock market to break above the upper channel of Dow 15,770 and be trading above 16,000 by late December. Furthermore my analysis suggests that despite a volatile January that will likely bring forward many bankrupt doom merchants, the stock market will likely continue its rally into March 2014, when it is highly probable that the Dow will be trading above 17,000!

Where does the stock market stand in its oscillation around the trend forecast?

The last close on the Dow was 15,699, which translates into a deviation from the forecast trend trajectory of 5.5%.

Does a 5.5% deviation lend me to panic as many are doing in their inevitable proclamations of a NEW bear market ?

NO, a 5.5% deviation does not even constitute a NORMAL correction, on its own it is another soon to be forgotten blip, just as was the one in October 2013, remember October ? Remember that blip that elicited intense bearish diatribe ?

A reminder - 03 Oct 2013 - U.S. Government Shutdown Great for Stocks Bull Market, Bears Will be Crucified Again

The bottom line is this the US government shutdown is GREAT NEWS! because for bull markets to persist and continue they NEED BAD NEWS every few months, THEY NEED MOST PEOPLE TO BE SKEPTICAL, TOO AFRAID TO INVEST! And so it continues to be the case for the DURATION OF THIS BULL MARKET, where over 90%, NINTEY PERCENT OF Market commentators have been WRONG and continue to be WRONG, Everyone who has just proclaimed its END IS WRONG and Will BE CRUCIFIED, just as they have been crucified at every market turn for the past FIVE YEARS !

YOU WANT TO LOVE MARKETS THAT ARE HATED!

YOU WANT TO BE AFRAID OF MARKETS THAT ARE LOVED!

UNDERSTAND THIS - THIS stocks stealth bull market is one of the GREATEST bull markets in HISTORY!

For now I'll let the bears crow loudly despite the fact that THIS corrective price action was seasonally EXPECTED, for soon they will be silenced, wiped out, CRUCIFIED until they once more emerge at depths of the NEXT stock market correction.

Where do the Bears Break Even?

Every other month we get a correction like this and once more the bears dutifully emerge to proclaim that this time the bear market has definitely started, however soon to go into hibernation once more when the next rally to new highs gets underway. However the question readers need to ask themselves when they hear such commentaries is that after FIVE YEARS, at what point would the perma-bears break even ? Dow 10,000 ? 6000? 4000? Yeah as low as that!

Okay, that's the re-cap and rhetoric out of the way, now for the analysis:

DOW FORECAST - Current under oscillation of 5.5%, against earlier over oscillation of 4% is NOT abnormal. Oscillations can easily extend to 10% around the trend which currently extends to as low as Dow 15,000.

ELLIOTT WAVES - My unorthodox interpretation of EWT implies that a significant correction is under way as the rally from the October lows comprised three distinct waves which implies it was corrective and also implies that as a worse case scenario the whole move could be re-traced i.e. back to Dow 14,800.

MACD - MACD is heavily oversold which means a stock market bounce is imminent, though it would not mark the end of decline, so its going to be a tough learning experience for bottom hunting traders.

TREND ANALYSIS - The Dow has broken 1 major support trendline and is bouncing off the second, however given the velocity of the decline to date the bounce looks temporary and thus the Dow looks set to break this trend line to target the third stronger trendline at 15,000, though that does not mean that is where the Dow will bottom i.e. it may only spike below Dow 15,550 to sucker more bearish sentiment.

SEASONAL ANALYSIS - A DOWN JANUARY is usually a bad indicator for the stock market for the whole of the year i.e. implies a down year. This means that it is going to be tough for the stock market to reclaim and HOLD its recent all time highs as many demented bears will be piling in on the short-side by jumping on the Down January band wagon. So 2014 is NOT going to be a re-run of 2013, and instead from what I can see through the mists of time that it is more likely to resemble an upwardly sloping trading range.

PRICE TARGETS - Upside targets are 15900, 16200, 16400, 16800, and 17000. Downside targets are 15,550 and 15,000. Which implies a lot of overhead resistance and less support, which again points to probability that we have not seen the low for the current move.

Stock Market Interim Conclusion

The current stock market correction looks set to attempt to revisit 15,000. How close it gets to 15,000 I can't tell, perhaps half way, just that the correction is not done to the downside. Following which the price chart implies that the Dow will enter an upwardly sloping trading range that would target a NEW all time high. However given the nature of trading ranges it is difficult to say how many swings it would take for such an outcome to occur, i.e. the last such trading range comprised 7 swings before breaking higher. This one could be quite brief and just comprise 2 swings as indicated by the chart, which could imply a New Dow high by early April, though that does not mean that the Dow would be able to hold the high as it could remain in the upward sloping range for some time which implies Sell in May and Go away as probable.

So to answer the question - Is the stocks bull market over ?

NO ! No sign whatsoever that this (what people decades from now will look back on as being the greatest bull market in history) bull market is anywhere near being over!

Again, remember that this is my quick interim analysis as first I need to get the ever expanding housing market ebook out of the way, and then I have plenty more analysis to complete that I am doing in parallel such as on the Scottish Independence Referendum (big mistake for Scots as they look set to vote to jump over the economic cliff) and then the frenzy that will soon surround the run-up to the UK General Election (which I expect the Conservatives to win outright), but I will come back to take an in-depth look at the stock market by mid April at the latest.

The Stocks Stealth Bull Market 2013 and Beyond EbookWhat I am going to do?

My existing stocks portfolio (18% of assets) is staying put so no panic here. My favourite sector for investing in 2013 - BIO-TECH (as stated in my last ebook of Feb 2013 - FREE DOWNLOAD) has soared, most holdings even after the current stock market sell off have tripled! So I want to buy more biotech stocks, about another 1% worth of assets if the general stock market indices take a further tumble, though its not certain that biotech stocks would follow suit, so to be blunt I would prefer MORE PANIC OUT THERE! So I CAN BUY MORE BIO-TECH for the long-run.

What do I fear ?

Yes, I am human, I do fear, and what I actually fear right now is that the stock market indices FALL HARD but the Biotech Stocks instead RISE! Which would mean having to consider BUYING at a higher price! and that would be painful!

Also a reminder that the good people at EWI have made available a load of analysis that they say they normally charge $500 for to our readers for FREE!

The State of the Global Markets -- 2014 Edition

Posting Schedule

Monday, Jan. 27
Elliott Wave Financial Forecast Editor Steve Hochberg's U.S. outlook on stocks, bonds, gold, silver and USD & Staying Safe, a special report from Robert Prechter

Tuesday, Jan. 28
Steve Hochberg's 'Elliott Speaks: What Lies Ahead?' - a presentation from the New Orleans Investment Conference

Wednesday, Jan. 29
Asian-Pacific Financial Forecast Editor Mark Galasiewski's outlook on China, Hong Kong, Korea, India, Japan and more & Two Special Reports: Emerging Markets Reflect Social Mood and Australia: Labor's Loss and the Bull Market Ahead

Thursday, Jan. 30
Mark Galasiewski's 'How to Thrive in Asian-Pacific Markets Using The Wave Principle and Socionomics' - a presentation from Harry Dent's Irrational Economics Summit

Friday, Jan. 31
European Financial Forecast Editor Brian Whitmer's outlook on stocks and the euro & Special Report: Europe's Monetary Magicians are Out of Tricks

Saturday, Feb. 1
Brian Whitmer's 'A Tale of Two Europes' - a presentation from The Society of Technical Analysts of London

Monday, Feb. 3
Awesome Charts, from Robert Prechter's Elliott Wave Theorist

Tuesday, Feb. 4
Robert Prechter's 'Batten Down the Hatches' - a presentation from the New Orleans Investment Conference

Get The State of the Global Markets Report -- 2014 Edition now (for FREE)

Your genetically modified stocks bull market analyst.

Source and Comments: http://www.marketoracle.co.uk/Article44238.html

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2014 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 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 focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 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

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


Comments

Rajplay
03 Feb 14, 10:28
Bio-tech Stocks

Hi Nadeem

Thanks for the article.

Out of interest which Bio-tech stocks did you choose and what made you select those over others?

Thanks

:-)


Nadeem_Walayat
04 Feb 14, 21:45
Biotech stocks

Hi

Sorry, but I never give small cap stock picks. Stock market investing is from high to extremely high risk.

The best starting point for investors would be ETF's and investment tursts (I don't like unit trusts cos they can print units too easily) such as BBH.

Best

NW


Post Comment

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

6 Critical Money Making Rules