Best of the Week
Most Popular
1.The Trump Reset, US Empire's Coming Economic, Cyber and Military War With China (2/2) - Nadeem_Walayat
2.Now Is the Time to Buy Gold - 5th Jan 17 - John Grandits
3.CIA Planning Rogue President Donald Trump Assassination? Elites "Manchurian Candidate" Plan B - Nadeem_Walayat
4.The Trump Reset - Regime Change, Russia the Over Hyped Fake News SuperPower (Part1) - Nadeem_Walayat
5.Most Popular Financial Markets Analysis of 2016 - Stock Market Crash Postponed Again - Nadeem_Walayat
6.No UK House Prices Brexit Crash 2016 Despite London Weakness, Forecast 2017 - Nadeem_Walayat
7.President Trump Understands the NSA, CIA... LIE, America's Intelligence Agencies Crime Syndicate! -Nadeem_Walayat
8.President Donald Trump's 2017 New Year Message, BBC Fake News, Was 2016 a Dream? - Nadeem_Walayat
9.Major Stocks Bear Market Still Looms - Zeal_LLC
10.Biased 2017 Forecasts - Debt, Housing and Stock Market (1/2) - James_Quinn
Last 7 days
United States Common Sense - 2017 - 23rd Jan 17
Is Dow 20,000 a Bridge Too Far? - 23rd Jan 17
The New Gold Rush Of 2017! - 23rd Jan 17
HBO HOMELAND Bet on HIllary Clinton Winning US Election and LOST - 23rd Jan 17
Stock Market New Highs For 2017? Yes, But When Do I Enter? - 22nd Jan 17
Active vs Passive Investing: And the Winner Is ... - 22nd Jan 17
The Epidemic of Bad Ideas - 22nd Jan 17
Gold Futures Prices Looking Bullish - 22nd Jan 17
Time for Crude Oil Price Drop below $50? - 21st Jan 17
AI and Robotics - We Are All Low-Skilled Workers Now - 21st Jan 17
The Trump RESET Starts on US Presidential Inauguration Day 2017 - What to Expect - 20th Jan 17
Will the CIA Assassinate Rogue President Donald Trump Like JFK? - 19th Jan 17
Bonds, Dollar, Stocks, Gold, Silver Major Markets at Turning Points - 19th Jan 17
Populism; the Danger? What About Debt? - 19th Jan 17
Gold Price 50-DMA Breakout - 19th Jan 17
Turkey, 'Axis of Gold' and End of US Dollar Hegemony - 19th Jan 17
The Most Important Market Chart on the Planet - 19th Jan 17
Trump Deficits Will Be Huge - 19th Jan 17
Stock Market Trading Patience Pays Off with CHK Using Momentum Reversals - 19th Jan 17
Gold - How to "Buy Low and Sell High" Like a Pro - 19th Jan 17
State of the Global Stock, Financial and Commodity Markets Report 2017 - 19th Jan 17
The Hunt for Russia's Next Enemy - 18th Jan 17
Returning Gold Bulls - 18th Jan 17
Biotech Breakthrough Could Create A $11.4 Trillion Opportunity - 18th Jan 17
Bitcoin and Gold - Outlook, Volatility and Safe Haven Diversification - 17th Jan 17
Stock Market Uptrend on Borrowed Time - 17th Jan 17
The One Stock to Retire On - 17th Jan 17
Trump anti-Communist Counter Revolution - 17th Jan 17
US Stock Market Update as the Trump Inauguration Approaches - 17th Jan 17
The American Crisis - Common Sense 2017 - 17th Jan 17
Obama Leaves, Hope Arrives, Will Stupid Stay? - 17th Jan 17
Damage Inflicted by Precious Metals Manipulation Is in the “Multi Billions” - Keith Neumeyer - 17th Jan 17
Gold Price Forecast 2017 Update - Video - 17th Jan 17
The Story of the U.S. Regime Change Plan in the Philippines - 16th Jan 17
Gold Price 2017 Trending Towards $1375 as Forecast - 16th Jan 17
'Deep State' CIA Director States We are Not NAZI's, Warns Trump Does Not Understand Russian Threat - 15th Jan 17
UK House Prices Forecast 2017 - Crash or Bull Market? - Video - 15th Jan 17

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

Making Heads or Tails of This Stock Market

Stock-Markets / Stock Markets 2016 Jan 07, 2016 - 06:04 PM GMT

By: EWI

Stock-Markets

We don't have all the answers. But we do have 30-plus years of market experience on our side.

As the books were closed on 2015, the Chicago Tribune reported:

"After a dismal stock finish to 2015, your natural conclusion might be: Why did I bother?


"The Standard & Poor's 500 finished the year down 0.73%... The DJIA suffered its worst year since the 2008 financial crisis, declining 2.2%... Only the Nasdaq ended the year up... 5.7%...

"...energy stocks as a group plunged 24%, and individually, many fell 30 or 40%. The energy plunge hurt unsuspecting retirees as master limited partnerships, or MLPs, dropped 36% -- a shock since analysts previously claimed that pipelines and other infrastructure in MLPs would be immune to an energy crash. Another retiree favorite for dividends -- utility funds -- lost 9% in 2015, according to Morningstar.

"Bond funds weren't comforting either. The average bond fund investing in a broad mix declined about 2% … …junk bond funds have declined 4% on average, according to Morningstar."

We're only a few trading days into 2016 -- yet, so far, the new year isn't looking any more promising. Right now, you may be scrambling to make sense of the DJIA's huge tumble on Monday. (It was, in fact, the Dow's worst intraday start to the year since 1932 and worst full first day start since 2008.) This excerpt from our December Elliott Wave Financial Forecast (published Dec. 4) may help:

"According to the consensus view, the thinking inside the Fed is that the economy is finally healthy enough to return borrowing costs to 'more ‘normal’ levels.' Such a move would actually be consistent with many of the most important market peaks in history, such as September 1929 and January 2000 when the Fed famously 'pulled the punch bowl' by increasing the Federal Funds rate as stocks reached the extremes of major advances. China did something similar in 2007, raising borrowing costs several times. The Shanghai Composite Index made its all-time high in October 2007.

"Of course there is one big difference: On each of those occasions, the central bank rate hike was part of a series that pushed rates through 6%. This time, the rise will be the first in more than six years, and it will come from a virtually non-existent level of 0.25%. With the economy so much weaker, some will view it as the straw that broke the back of the global economy.

"The truth is that the Fed is succumbing to the feel-good sentiment of a peak in positive social mood by doing what it has always done in the past; confidently raising interest rates just before the start of a major bear market."

In the days to come, you may hear opinions that the stock market turmoil is the fault of the Fed. Note that the argument we make is more nuanced. We track and forecast Elliott waves, or waves of social mood, and there is a history of central banks acting confidently by raising rates just as the mood (as reflected by the stock market) hits a peak.

So, where does that leave us?

We don't have all the answers. We do what we've done for more than three decades: Study the wave patterns, look at key sentiment indicators, compare them to previous tops and bottoms -- and put it all together to give you a forecast and a unique perspective on how markets behave.

Read our new report, Risk ON? Risk OFF? Find Out Where Your Money Lies. The editors of our Financial Forecast Service, Steve Hochberg and Pete Kendall, have been tracking a "steady global shift to greater financial conservatism over the last 18 months." They have just published this new report detailing all of their findings. Read Their Complete Report >>


This article was syndicated by Elliott Wave International and was originally published under the headline Making Heads or Tails of This Market. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2016 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

Catching a Falling Financial Knife