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Market Oracle FREE Newsletter

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

Stock Market Crash, Collapse Imminent.... Again?

Stock-Markets / Stock Markets 2014 Oct 03, 2014 - 07:48 PM GMT

By: Nadeem_Walayat

Stock-Markets

Wednesdays 228 point (1.4%) drop on the Dow triggered a hyperbolic wave of bearishness across the mainstream broadcast channels and the BlogosFear that  in near unison proclaimed that the 5.5 year old stocks bull market had finally, DEFINITELY come to an end! The media's after the fact consensus coalesced around the reason that expectations for the U.S. Fed to bring QE to an end this month and signal that interest rate hikes are around the corner. So the market apparently panicked, that's if you call a 1.4% drop a panic, and despite the FACT that stocks actually do quite nicely during the early years of a RATE hiking cycle! In fact its rate CUTS that stocks bulls need to worry about for they signal WEAKNESS ahead. The complete opposite to what is being taken as granted by journalists who just tend to regurgitate what dribbles out of the mouths of clueless academics or salesmen.


Waves of bearishness have been washing over the mainstream media that predominately at least 80% of the time remains obsessed by BAD news, for FEAR SELLS! be it Islamic State, literally created by the CIA in the deserts of Libya in 2011 (remember CIA and British agents were wandering around the Libyan desert with suitcases full of dollars looking for Jihadists to recruit against Gaddaffi Duck). Be it China on the verge of Tiananmen-lite in Hong Kong. Or what will turn out to be the real threat of 2014 - EBOLA ! Where 1/1000th of the amount being spent on bombing the Islamic state midges is being spent on halting a Pandemic that has killed over 3,000 people with the number infected looking set to snowball from 7,200 towards what ? to 1 million by January 2015?  Yes, 1 million is increasingly looking PROBABLE! that's what happens with exponential inflation trends that double every few weeks!

And then we arrive at the stock market, where every lurch lower sends the broadcast news channels into a frenzy and gets the perma bears literally foaming at the mouth for its finally time for their 5 year old prophecy to finally come true! Though we ALL know where this story has ALWAYS ended to-date!

It's no wonder that many common people would be surprised when they take a look at the stock chart of the Dow to realise that the stocks bellwether is trading within 3% of its ALL TIME HIGH! The impression given by the mainstream and the BlogosFear is that stocks have already been more or less decimated as the media only tends to focus on the big down days and not the subsequent relentless grinds higher.

Harry Dents Dow Megaphone Pattern

Not to pick on any particular analyst, just that Harry Dent shared his dire stock market warnings today in - Stock Market Dow Jones Today Shows Warning Signs.

That’s why selling pressure is not as high as it could be here in the final stages of this great bubble. This could be the secret indicator that does not flash as clear or bright a sell signal. Even the smart money tends to miss it at first. We’ll see.

We don’t know when that final grain of sand will drop — but it’ll create an avalanche when it does drop. Bubbles don’t correct, they crash!

We continue to advise that it’s better to get out a bit early than too late. I still see very little upside from here and a huge downside of a possible 65% drop on this Megaphone Pattern.

Be warned and have the courage to act decisively… protect your assets!

Earlier I had responded to Harry Dent's Megaphone warning - Stock Market Broadening Top Pattern Meets the Inflation Mega-trend

Looking at the same chart through my own perception which is born out of pain and gain rather than academia or journalism. I see two key things, first a series of clearly defined trending significant bull and bear markets that collectively comprise a high volatility trading range, so the market has been exhibiting high volatility.

And secondly an 15 year exponential inflation and technologically wealth creating coiled spring that is ultimately being primed to propel the stock market to the next higher equilibrium level, just as occurred during previous similar periods such as the 1930's and 1970's.

The bottom line is that you do not want to see very stable price patterns for the stock or any other speculative market. You want the pattern to be marginal to be near 50/50, because most people tend to opt for what is easiest to perceive, much as everyone experiences gravity that pulls everything down to the ground, but instead what everyone fails to comprehend (including scientists) is that gravity is pushing everything away from everything else which is THE universal mega-trend - INFLATION and not just that but that the Inflation Mega-trend is EXPONENTIAL!

While it could be argued that we will soon find out whether Harry's broadening top actually materialises or not. Unfortunately my response was written on 3rd of Feb 2013 in response to the SAME broadening top mantra! That’s 20 months ago! And as included in the Stocks Stealth Bull Market 2013 and Beyond Ebook of Feb 2013 (FREE DOWNLOAD).

Worse still  the broadening stock top expectation stretches further back in time (see Bloomberg video dated 31st Dec 2011 with the forecast for 2012). "I think the S&P 500 Is going to go down 30% to 50% in 2012 alone and I don't think that will be the bottom. This is going to be a replay of 2008 to early 2009 over the next year or two."

My Last in-depth analysis and concluding trend expectation for Summer 2014 - 05 Jun 2014 - Stock Market Dow Trend Forecast Summer 2014

Stock Market Forecast Conclusion

The final conclusion for the Stock Market is for the Dow's rally to shortly terminate just before reaching 17k, probably at around Dow 16,950, then for the Dow to target a swift downtrend in to the range of 16,200 to 16,000 that may even bottom before the end of June. Which would set the scene for the stock market's next assault on Dow 17k into early August as illustrated by the below forecast graph, a failure of which I imagine would subsequently prompt many perma bears to start screaming DOUBLE TOP at the top of their lungs on the likes of CNBC and regurgitated at length by the blogosfear.

So is the Stocks Bull Market Over?

My next in-depth analysis will answer this question and more which is due to be completed and emailed out within the next 2-4 days so ensure you are subscribed to my always FREE newsletter to get this in your email in box.

Until then, I'll just leave you with this thought that the bears have been wrong for OVER 5.5 years, I know if I had been consistently wrong on the stock market for 5.5 years then I would have bankrupted myself several times over by now!

Source and Comments: http://www.marketoracle.co.uk/Article47597.html

By 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.

Housing Markets Forecast 2014-2018The 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 1000 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.


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