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
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
SPX Stocks Bull Market Update - 14th Jan 17
President Trump vs the Deep State that Hides in Plain Sight - 14th Jan 17
The Impact of Sir Alex Ferguson's Retirement on Man United's Share Price - 14th Jan 17
What Can Stock Market Tell You About Politics? - 13th Jan 17
Big Gold Buying Coming 2017 - 13th Jan 17
A Bullish Case for Gold 2017 - 13th Jan 17
Will Stocks Bull Market Continue to Charge or is it Time to Sell the News - 13th Jan 17
Gold and Silver Off To Shining Start to 2017 - 13th Jan 17
Gold’s Fundamental Outlook for 2017 - 13th Jan 17
Is trading stocks and shares just as luck-based as roulette? - 13th Jan 17
Trump CIA Like Nazi Germany - Fake MI6 Intelligence leaked to Fake News Mainstream Media - 13th Jan 17
USD in Decline. SPX and TNX May Follow - 12th Jan 17
CIA War On Trump - Leaks Fake MI6 Intelligence to Fake News Broadcast Media - 12th Jan 17
Registered Address.co.uk London Business Registered Office Address Mail Forwarding Review - 11th Jan 17
13 Contrarian Economic Predictions For 2017 - 11th Jan 17
10 Potential Black Swans and Opportunities for the US Economy in 2017 - 11th Jan 17
How to Get a Bird of Paradise Plant to Flower - UK Growing Video - 11th Jan 17
The No.1 Energy Stock To Buy Right Now - 10th Jan 17
Frank Holmes: Gold Rally Extremely Likely in January and February - 9th Jan 17
Test Your Markets Trading Knowledge: Find the Clear Wave Pattern on this Chart - 9th Jan 17
Markets 2016 Past is 2017 Prologue - 9th Jan 17
Stock Market Major Indexes Reached New Record Highs - But Will They Continue Higher? - 9th Jan 17
Agri-Stocks and Agri-Food Prices: Both Strong - 9th Jan 17
The Two Hottest Commodities For Investors In 2017 - 9th Jan 17
Gold Price US$700? OR US$7000? - 9th Jan 17
Stock Market Tad More Distribution Needed - 9th Jan 17
In a Lawless World, Rules STILL Matter - 8th Jan 17
The Trump Reset War With China: 2. The Putin Doctrine - 8th Jan 17
China Potentially Threatens a Near Term Us Treasury Bond Market Short Squeeze! - 8th Jan 17
Government Bail-ins, Asset Confiscations and the Gold Sword of Self Defense - 8th Jan 17
Soft Commodities and the SPX Stocks Bull Market - 8th Jan 17

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

What Can Stock Market Tell You About Politics?

Fantasy Stock Market: “NIFTY NINE” FINALLY BECAME JUST “FANTAsy”!

Stock-Markets / Stock Markets 2016 Jan 21, 2016 - 02:03 PM GMT

By: Gordon_T_Long

Stock-Markets

In the November Issue of Triggers we discussed “FANG & NOSH”. In December we further discussed the mutation of this group to the “NIFTY9”. This month as markets fall we need to discuss how the “NIFTY9” finally became just “FANTAsy” and the potential $1T seriousness of what this means.


The rise of index ETFs and mutual funds which all depend on these FANTAsy stocks, has never accounted for this much of the market before.  The rapid emergence of Index ETFs accounted for nearly 30 percent of the trading in the U.S. equities market last summer.  FANTAsy weakness will magnify, or even potentially cause flash crashes if they break critical support levels. This is an untested $1 trillion stock bubble problem! Let’s examine the problems and where FANTAsy may be headed.

 

FANG & NOSH

As we entered Q4 earnings season and the economic news continued to deteriorate, it was clearly evident that we had eight stocks called “FANG & NOSH” holding up the US equity markets. Market breadth had collapsed but not the indexes – yet!

 

“FANG” STOCKS

  • Facebook,
  • Amazon,
  • Netflix and
  • Google

 

 

THESE EIGHT BECAME THE “NIFTY NINE”

While the S&P languishes unchanged in 2015, these small groups of overwhelmingly propagandized stocks were up on average over 60%, but with a collective P/E of 45, they were not cheap.

Ned Davis Research identified the NIFTY NINE in December, which added the following to the four FANGs:

 

  • Priceline,
  • Ebay,
  • Starbucks,
  • Microsoft and
  • Salesforce. (Note that Apple appears on neither list which until recently was THE MARKET and accounted for 20% of the underlying Margin Expansion since 2010.)

WE HAD FALSE EUPHORIA CENTERED ON 9 STOCKS

This was very similar to what we have witnessed at all bubble tops.

Only the names change (the 4 Horsemen in the Dotcom Bubble run-up: Cisco, Intel, Microsoft & Qualcomm) and the rationalization hype (2000: “new economic paradigm”)


“NIFTY9” HID THE FACT THAT INSTITUTIONS HAD LEFT THE PARTY

Institutions were seeing the following

  • Sales Growth was no longer there,
  • Earnings were steadily falling,
  • Companies were spending more on Buybacks and Dividends than they were actaully earning:
  • Almost 60 percent of the 3,297 publicly traded non-financial U.S. have bought back their shares since 2010.
  • In fiscal 2014, spending on buybacks and dividends surpassed the companies’ combined net income for the first time outside of a recessionary period, and continued to climb for the 613 companies that have already reported for fiscal 2015.
  • In the most recent reporting year, share purchases reached a record $520 billion. Throw in the most recent year’s $365 billion in dividends, and the total amount returned to shareholders reaches $885 billion, more than the companies’ combined net income of $847 billion.
  • Spending on buybacks and dividends has surged relative to investment in the business. Among the 1,900 companies that have repurchased their shares since 2010, buybacks and dividends amounted to 113 percent of their capital spending, compared with 60 percent in 2000 and 38 percent in 1990.
  • Among approximately 1,000 firms that buy back shares and report R&D spending, the proportion of net income spent on innovation has averaged less than 50 percent since 2009, increasing to 56 percent only in the most recent year as net income fell. It had been over 60 percent during the 1990s.

FANTAsy – FAN + Tesla + Alphabet

At the end just before the markets began collapsing at year beginning 2016, we had the FANTAsy stocks. This included the core FAN plus Tesla and Alphabet (Google).

By considering an Equal-Weighted Stock Index which removes the FANTAsy distortions from the market many technicians  were able to identify clearly what was occurring.

“FAN” HAS BROKEN DOWN – Possible Near Term Support and Then Another Drop??

 

CONCLUSIONS

 

A technical view of the equal-weighted US stock index may help resolve the support question.

 

It appears to suggest the market has further to fall in Q1 2016!

 

 

Caution is advised, as it has been since we first identified the FANGs in the market,

which could really bite the unsuspecting!

 

Gordon T. Long
Publisher - LONGWave

Signup for notification of the next MACRO INSIGHTS

Request your FREE TWO MONTH TRIAL subscription of the Market Analytics and Technical Analysis (MATA) Report. No Obligations. No Credit Card.

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that you are encouraged to confirm the facts on your own before making important investment commitments. © Copyright 2013 Gordon T Long. The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or suggestions you receive from him.

Copyright © 2010-2016 Gordon T. Long

Gordon T Long Archive

© 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