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Trading Lessons

Stock Market Continues Defying Gravity, Dow New All Time High

Stock-Markets / Stock Markets 2015 May 19, 2015 - 03:09 AM GMT

By: Nadeem_Walayat

Stock-Markets

The stock market continues to confound the doom merchants who have long since convinced themselves that another crash, collapse or bear market was always imminent. Which in many cases is not just for the whole of this year but for the whole of the past 6 years of this stocks bull market that tends to relentlessly grind each supposed new bear market into dust every few couple of months or so as illustrated by the Dow's latest gravity defying new all time high close of 18,298 that marginally beats its early March record high of 18,288.



Stock Market Forecast 2015

In terms of the prospects for the stock market for 2015, I turn to my in-depth analysis of 3rd February that concluded in a detailed trend forecast expectations for a volatile trading range for the first half of the year, that in the first instance targeted a new all time high before the end of March which was achieved early March. Followed by a volatile trend to culminate in a Mid June low before the Dow resumes its bull market trend to a series of new all time highs into the end of the year.

03 Feb 2015 - Dow Stock Market Trend Forecast 2015 by Nadeem Walayat

The Dow resolves to a bullish Elliott Wave pattern i.e. implies that the Dow should now embark on a trend to a new all time high, probably before the end of March! So contrary to much of the building picture so far. Thereafter suggests a summer ABC correction back down to around 17,500 to coincide with "Sell in May and Go Away".

Dow Stock Market Forecast 2015 Conclusion

My final conclusion is for the Dow to spend the first half of 2015 in a wide volatile trading range as it continues to unwind the 2014 bull run and sets the scene for the next series of bull runs to new all time highs. I expect the Dow to have started its bull run by early August off of an summer low and then continue into the end of the year, punctuated by an October correction low. I further expect the Dow to be trading well above 19,000 during December 2015 and probably above 19,500, before closing at around Dow 19,150 for a 7.5% gain for the year as illustrated by the following trend forecast graph for 2015.

Dow Stock Market Trend Forecast 2015

The bottom line is don't be frightened by first half weakness, yes it may look grim if we see the Dow trading under 16k, but all it would represent is a deeper buying opportunity before the market resolves to above Dow 19k.

Stock Market Mid May New All Time High

I refer to my last analysis of a month ago that forecast that the Dow would target a trend towards new all time highs by this time -

20 Apr 2015 - Stock Market Bears Get Slaughtered Despite Greece Counting Down to Grexit Financial Armageddon

To once more refer to my 3rd Feb outlook for the Dow's first half trading range:

The Dow resolves to a bullish Elliott Wave pattern i.e. implies that the Dow should now embark on a trend to a new all time high, probably before the end of March! So contrary to much of the building picture so far. Thereafter suggests a summer ABC correction back down to around 17,500 to coincide with "Sell in May and Go Away".

The Dow chart clearly shows that the stock market made a new all time high early March and has subsequently made an ABC correction to a low near the 17,500 target and is implying that the Dow has now fulfilled this aspect of the forecast and should embark on its bull run much earlier than envisaged. However, I expect the Dow to remain in its volatile trading range until at least we get the 'Sell in May and Go Away' seasonal influence out of the way, so at least another month of volatility even if we have seen the actual low in the Dow for the remainder of 2015.

Stock Market - What's Next?

Briefly and relying on my original analysis of 3rd Feb then whilst the Dow has made a new all time high that has confounded the expectations of many market participants, instead I just see this as being the WEAK half of the year, with the Dow now just a month away from entering the stronger trend period of the year that I expect to see the Dow propelled towards 20k, which means those who have now become conditioned to expect a continuation of trading range are going get badly burned as the Dow relentlessly starts to grind ever higher in its supposed death defying anti-gravity act.

In terms of my forecast and current technical state then the stock market is due a correction for which it has a month or so to get out of the way. However, stock market corrections are just that stock market corrections and should be viewed as BUY OPPORTUNITIES and not the start of bear markets as I have often reminded the readers of my articles over the past 6 years -

03 Oct 2013 - Stocks Bull Market, Bears Will be Crucified Again

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

I have to reiterate what I have voiced for the duration of the stocks stealth bull market in over 200 articles (Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470 ), my strategy has been very, very simple, no black box voodoo to sell garbage to the unsuspecting masses but simply this - " The Greater the deviation from the stock market high then the Greater the Buying Opportunity Presented". And, you can't get any simpler than that !

However, remember this is my quick brief view based on analysis of near 4 months ago, as since I have been occupied by the UK general election, the conclusion of which now frees me to wholly focus on stocks, housing, gold, dollar and other financial markets, so DO subscribe to my ALWAYS FREE Newsletter to get this analysis and detailed trend forecasts in your email in box.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 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.


Comments

zahlen2k
19 May 15, 12:06
Execution

Hi Nadeem

thanks for the great analysis. No doubt you will be proved right on the dow again haha. Just a question on how you advise executing on this? How will you be doing it? Over the next few months wil you be averaging in everytime there's a 5% dip? Or is it easier to say buy £1 a point every week and do it that way?

On another note do you still see a post election 5% dip in the SE for property prices?

Thanks

Zahir


biju.joseph
19 May 15, 17:55
keep it coming

Hello Nadeem,

Iam your long term follower. Iam going to continue buying in US stocks based on your analysis.

- please update your US Housing market analysis.

- Also on Gold.

Thank you


mydan
25 May 15, 01:08
SPX

Hi,

The spx had a negative crossover on the monthly macd and while the stock market makes new highs there are less participating stocks in the movement.

How do you reconcile this with the bullish forecast proposed here?

Thanks!

D


Nadeem_Walayat
25 May 15, 14:19
MACD

Hi

The same could have been said at least a dozen times over the past 6 years. Individual indicators on their own tend to be less reliable than a coin toss.

Best

NW


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