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
Can We Lock Up Rachel Maddow Now? - 25th Mar 19
Real US National Debt Might Be $230 Trillion - 25th Mar 19
Friday's Stock Market Sell-Off - New Downtrend or Just Correction? - 25th Mar 19
20 Days Left to Find Buying Opportunities In Gold - 25th Mar 19
Will the Historic Imbalance in Gold Stocks to Gold Price Resolve ? - 25th Mar 19
EasySMX Wireless Games Controllers Review - 25th Mar 19
Stock Market Short-term Top - 25th Mar 19
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
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

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Is a Major Stock Market Top Forming?

Stock-Markets / Stock Markets 2015 Nov 17, 2015 - 03:09 PM GMT

By: Harry_Dent

Stock-Markets I warned in early October that stocks looked like they were setting up for another sharp crash into the height of the “crash season” in mid-October.

Instead, we got rate cuts in China, rumblings of stronger QE in Europe, and a continued rally at home.

In other words – central banks delayed the inevitable. Again.

So let’s look at where the markets are today…


In the revised paperback version of The Demographic Cliff back in the summer, I gave two scenarios for an impending peak in stocks. The chart gave leeway for a potential new high, which is why you see two large “5’s” at the top there:

In both scenarios, we would see a break of the narrow and bubbly channel that had been rising since late 2011.

We got that.

The question was… how high would they bounce after that initial breakthrough?

The first scenario was the S&P 500 would fall toward 1,800 and then have a two-wave rally back toward 2,000.

That still looked likely at the beginning of October... back when oil and China’s Shanghai Composite Index were trading in a narrow range. That suggested another short crash to follow.

Clearly that wasn’t the case. The S&P 500 breached 2,100 and came to within a percent of its peak.

So, scenario two took the cake… wherein the large cap markets would make slight news highs, or at least come close to retesting those highs. The Nasdaq 100 actually did make a very slight new high last week before pulling back.

If the markets outside of that index fail to make new highs – folks, that’s a bearish signal if I ever saw one.

But even if they do make slight new highs… that would very likely set up a number of major divergences as Adam has been pointing out.

Damned if we do, damned if we don’t.

Either way, it doesn’t look good.

And we’re already seeing such divergences. Over 50% of S&P 500 stocks are trading below their 200-day moving average. Investors have grown very selective, favoring only the largest stocks.

And for the Dow Industrials to make a new high without Dow Transports or Utilities – that’s another divergence! A major one, at that.

Then there’s the advance/decline line – showing how many stocks are rising versus those that are falling. And guess what? Another divergence there! This rally has been very selective to large-cap stocks. To point, the Russell 2000 which lists small-cap stocks is 8% off its high. And it’s increasingly doubtful it’ll make a new one even if the S&P finally does.

Here’s the bigger picture…

It looks like a major top is forming.

Rodney just wrote yesterday about the business cycle of mergers, acquisitions, and borrowing that appears to be peaking…

At our Irrational Economic Summit in Vancouver I presented on a series of what looked like major tops forming consecutively in the major world markets…

Junk or high yield bonds peaked in November of 2013. We warned about it right on the day of the top.

Dow Transports clearly peaked in November 2014, with Dow Utilities two months later in January. (Transports especially are very unlikely to make a new high in the coming months.)

Then in April we saw the DAX peak in Germany and the FTSE in England – down 24% and 19% at their worst, respectively, and new highs look very doubtful there as well.

Then the Shanghai peaked in June – which we also called the day of – and has been down as much as 45%.

“But Harry, that index is up over 20% from its recent low.”

It’s still down almost 30%!

And the only reason it’s popped up is because China’s government has poured hundreds of billions of their currency into propping it up!

Trust me ­– that bubble is still in burst mode and has almost zero chance of making a new high!

Finally the Nasdaq peaked in late July. Again, the Nasdaq 100 has been the only index to make a slight new high, but not enough to change the course of the future.

Adam has been warning of at least of a short-term pullback, and that is happening. So keep alert to Adam’s comments in the coming days and weeks.

It’s likely we see a slight new high in the S&P 500 – around 2,135 if not higher ­– by late this month, and possibly a slight new high in the Dow.

But even if that were the case… there would be divergences galore. And that would signal even more strongly a major long-term top – and a 2008-like crash, only stronger in 2016.

If only the largest cap U.S. markets are able to make slight new highs…

At this point, that would be very bearish.

The odds are that the Fed will raise rates a quarter point in December, and that could be bad for stocks and bonds.

I think something will go wrong in the world by then instead.

Stay more defensive in passive portfolios. If you’re in stocks, use a service like Rodney’s which mimics the way he’s been making money for 14 years. But while Wall Street analysts are cheering on a Santa Claus rally across the broad market… I wouldn’t get your hopes up.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2015 Harry Dent- All Rights Reserved 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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent 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