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Trading Lessons

Fed Interest Rate Hike Stock Market Crash Bear Apocalypse?

Stock-Markets / Stock Markets 2015 Dec 16, 2015 - 10:26 AM GMT

By: Nadeem_Walayat

Stock-Markets

It's D-day for the stock market according to the bears when an Fed interest rate hike of 0.25% is expected to at least confirm a stocks bear market is already underway and even said will herald a stock market apocalypse crash, 'End Times', which has been consistently re-iterated by the consensus and BlogosFear since the August stocks plunge (correction). Though as the below chart illustrates that reality does not match the intensity of bear market rhetoric, that of double and triple tops, head and shoulder patterns, 5th waves and domed houses, all utilised each month as irrefutable proof with religious zeal that the stocks bull market is finally over, that this month has coalesced around today's FOMC meeting decision, with the apocalypse scheduled to occur at 2pm eastern time, 7pm UK.


So the Fed will finally deliver the bear market that some have literally been calling for near 7 years now! Yes it really has been that long, a stocks bull market that will see it's 7th anniversary in March 2016. A bull market that remains hated and missed by most as the financial press (sales industry) has been highly convincing in collectively being WRONG for nearly 7 YEARS, hopping from one reason to another as to why the bull market was never sustainable and thus always imminently expected to end, as I have covered in well over 300 articles over its duration starting with -

15 Mar 2009 - Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470

In Summary - We have in all probability seen THE stocks bear market bottom at 6470, which is evident in the fact that few are taking the current rally seriously instead viewing it as an opportunity to SELL INTO , Which is exactly what the market manipulators and smart money desires. They do not want the small investors carrying heavy losses of the past 18 months to accumulate here, No they want the not so smart money to SELL into the rally so that more can accumulated at near rock bottom prices! Therefore watch for much more continuous commentary of HOW this is BEAR MARKET RALLY THAT IS TO BE SOLD INTO as the Stealth Bull Market gathers steam.

Since which time my strategy has been very, very simple, no special black box to subscribe to for signals but simply this - "the greater the deviation from the bull market peak then the greater the buying opportunity presented".

And so here we are once more, probably for the 10th time this year apparently sitting on the precipice of a stock market crash that according to many is already well underway. So will the bears be right later today at 2pm eastern time (7pm UK), as the expected Fed interest rate hike delivers that which they have been praying for religiously for years? Or will the bears once more receive a hoofed kick in the teeth from a relentless remorseless stocks bull market.

Let's say this time the bear's are finally proven right, so what does that change for the bears? We'll most won't make a single penny on any crash, collapse, stocks armageddon apocalypse for the simple fact that if they had actually traded their calls to date then they would already have bankrupted themselves several times over by now. So all these perma-bears who would so loudly be crowing 'I told you saw', will never actually trade any decline, because it is impossible to have any remaining trading funds if one is only RIGHT 1 time out of 50! That's a success rate of 2% ! Compare this against a coin toss that has a 50/50 probability!

So the question one really needs to ask oneself is do you want to be right 1/50 or 49/50 ?

So what does it take to be right 49/50? For the answer see my Stocks Stealth Bull Market 2013 and Beyond Ebook (FREE DOWNLOAD) for the real secrets for successful trading. and you WILL be surprised by the answer and it is FREE.

My expectations for stocks have remained pretty consistent for 2015 i.e. My last in-depth analysis of Mid Sept 2015 in the midst of over whelming doom and gloom concluded in expectations for a trend higher to between Dow 18,000 to 18,100 before the end of December.

13 Sep 2015 - Stock Market Dow Trend Forecast for September to December 2015

My final conclusion is for continuing weakness that will result in a volatile trading range with a probable re-test of the recent low of 15,370 by Mid October that will set the scene for a strong rally into the end of the year that could see the Dow trade above 18,000 before targeting a gain for a seventh year in a row at above 17,823 as illustrated below:

And more recently:

08 Nov 2015 - Fed December Interest Rate Hike Stock Market Panic Trigger For New All Time High?

Therefore this implies the trend to a new all time high is likely to start AFTER the Mid Dec FOMC meeting. So will 2 weeks be enough time to set a new all time high? That is a very tough call that given the timing of the next Fed meeting that the Dow could JUST miss setting a new all time high before the end of December. The following graph better illustrates what is going through my mind in terms for the probable prospects for the Dow into the end of 2015.

06 Dec 2015 - Stock Market Déjà Vu, Santa Rally New All Time High Forecast After FOMC Meeting

In my opinion the Dow is being coiled like a spring, ready for a santa rally to send stocks into the stratosphere, so whilst there may be volatility in the run up to the Mid December FOMC meeting, however whatever the Fed decision turns out to be (rate hike is most probable) it's just not going to stop santa from delivering a new Dow all time high this month.

With my video analysis prompted many crash is imminent comments that give a taste of the degree of prevailing bearishness, which actually I find quite comforting because for the 5% or so to win then 95% have to be on the losing side of the trade.

07 Dec 2015 - Stock Market Santa Rally 2015 to New All Time Highs - Video

So what will the stock market probably do today?

Will it crash ? I don't think so.

Will it even close lower? I very much doubt it.

So whilst the Dow will probably trade lower into today's meeting, the Dow will probably close higher! Ho Ho Ho Merry Christmas

The bottom line is that I think the problem with most traders and investors is that they have only known markets of the past 15 years or so. So are conditioned to basically see a 15 year trading range, we see this in the widespread commentary of triple tops and domed house patterns etc, and thus are unable to perceive stocks trading outside of this 'range', as if there is a collective mental block at work despite the fact that the Dow already HAS been trading and setting NEW all time highs outside of the trading range for several years now! So it all boils down to psychological blocks as a consequence of lack of experience which is why most will continue to miss this stocks bull market, a bit like how the 99% (religious folk) keep missing the obvious.

Stocks will soon be up for their 7th year. Instead of always looking for an imminent top try this thought - What if this stocks bull market is only half way done. So are you going to at waste another 7 years?

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

  • US House Prices Forecast 2016
  • US Dollar Trend Forecast
  • Stock Market 2016
  • Gold and Silver Price Forecast 2016
  • 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'.

Source and Comments: http://www.marketoracle.co.uk/Article53350.html

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

mydan
28 Dec 15, 03:16
Dollar oil stocks

It seems your stock market was right on target.

Nonetheless it seems the market is about to fall, unable to make new highs.

The dollar also looks weak and unable to go up.

China is in trading range.

It seems things are about to change.

The oil companies seem to be bottoming as you forecasted.

Have a great 2016!!!!

Warm regards

Dan


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