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Market Oracle FREE Newsletter

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

Stock Markets Implode as China Literally Explodes

Stock-Markets / Stock Markets 2015 Aug 23, 2015 - 10:36 PM GMT

By: Nadeem_Walayat

Stock-Markets

The smouldering stock market correction that started with the Greek debt crisis a couple of months ago has literally exploded with China as one of its major ports is destroyed leaving behind what resembles a nuclear mushroom cloud that shatters the illusion of what China is, namely a rival for the West, when the reality is one of a mere mirage of the West of which all are slowly waking up to the reality of China.


Chinese investors have been busy experiencing what it is like to invest in a manipulated casino as their life savings go up in smoke much a I wrote over a month ago that warned to expect more downside for Chinese stock prices.

13 Jul 2015 - China Crash, Greece Collapse, Harbingers of Stock Market Apocalypse Forecast 2015?

China Stock Market Forecast Conclusion

Pulling all of the threads together implies that the current rally is corrective, following which the SSEC bear market looks set to resume with a vengeance with the SSEC targeting 2,500! Which is quite some distance from its last close of 3877.

As for what happens after SSEC 2,500 is less clear, I am leaning towards probability favouring a dip to 2,500 being a panic spike that soon reverses higher and resolves to base building between 3,000 and 3,500 for the remainder of 2015. However, if the spike low rally fails then that could yet trigger FURTHER panic that plunges the SSEC into a deeper trading range of 2,000 to 2,500 for several years.

So the bottom line is that there is far worse to come for China investors. In fact the china bear markets only about half done!

The chinese stock market has continued to weaken but so far is managing to hold above the 3,400 earlier low, so is this the calm before the storm? Probably yes, for my forecast conclusion was the bear to end in a short lived panic spike down to 2,500 which remains pending. Still recent actual chinese stock market action is nowhere near as bad as that which the doom laden media commentary suggests.

Meanwhile western stock markets have sliced through key supports following China's actions to devalue its currency, that deepens the summer correction to levels not experienced for several years, galvanising the growing number of bears to once more proclaim that the stocks bull market apocalypse is upon us with calls reverberating of a new bear market and imminent crash, though many if not most of these same commentators have been stating the same for the past 6 years!

The Dow on Friday closed at 16459, down 10.3% from its all time high of 18,351.

Whilst the FTSE has experienced a slightly worse trend falling by 13.1% to 6187 from its high of 7,122.

Whilst my forecast for the Dow mapped out the following trend for 2015 against which to measure strength and weakness and thus adjust positions accordingly and undertake further in-depth analysis if necessary following any significant deviation.

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.

The last Dow close of 16,495 is now showing significant deviation from my forecast trend which has now focused my attention towards re-appraising the prospects for the stock market for the remainder of 2015 that I aim to complete over the next few days, so ensure you are subscribed to my always free newsletter to get this directly in your email in box on completion.

However, in the meantime I will make the following quick observations -

1. The stock market anomaly is NOT that the Dow is down about 10%, but rather that it has NOT experienced a 10% correction for over THREE YEARS! Which means a lot of pent up untested bullish sentiment that needs to be unwound hence the volatility.

2. A normal correction is 10%, a deep correction could go all the way towards 20% so the stock market picture could get a lot worse before we find THE bottom, but it's not necessarily the bull market apocalypse that many are proclaiming it to be. Still it won't be pretty at the start of the week at least.

In the meantime check out Robert Prechter's view on the Pandemonium in the Stock Market in his timely FREE Report.

Ensure you are subscribed to my always free newsletter for my next in-depth analysis and concluding detailed trend forecasts that include the following planned newsletters -

  • Stocks Bull Market Over?
  • US Dollar Trend Forecast Update 2015
  • Crude Oil Price Trend Forecast
  • Islam 3.0

Also subscribe to our Youtube channel for notification of video releases and for our new series on the 'The Illusion of Democracy and Freedom', that seeks to answer questions such as 'Did God Create the Universe?' and how to 'Attain Freedom' as well as a stream of mega long term 'Future Trend Forecasts'.

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.


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