Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Investing lessons from the 1987 Stock Market Crash From Who Beat it - 20th Oct 19
Trade Wars: Facts And Fallacies - 20th Oct 19
The Gold Stocks Correction and What Lays Ahead - 19th Oct 19
Gold during Global Monetary Ease - 19th Oct 19
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Markets Are Virtually Risk-Free

Stock-Markets / Stock Market 2017 Aug 01, 2017 - 06:17 PM GMT

By: Avi_Gilburt

Stock-Markets

For the last year, I have been looking for what we classify as a wave (3) to strike the 2500SPX region. And, now, we are getting quite close.

Meanwhile, this rally has brought out two camps of market expectations at this juncture, both of which I believe are wearing blinders. We read about those who believe the markets basically have no limit to their upside, and are "virtually risk-free," and we read those who have "known" that the market will imminently crash during this entire 40% rally since February 2016.


Do you know who Goldilocks is?

Yes, the quote in the title of my article was actually posted by an "analyst" this past Friday. And it seems more and more are taking this view of the market. Why not? The market can't seem to pullback, so they must be right. Right?

I wrote this not too long ago, but allow me to refresh your memory:

As George Santayana wisely said, 'Those who do not remember the past are condemned to repeat it.' And, it seems that Ms. Yellen is forgetting her history.

One of the key factors in signaling a major market top is the expectation by the masses that one cannot happen. And, anyone that knows their history knows this to be true.

For those that know their stock market history, you would know that those 'in the know' were absolutely certain about the impossibility of a market crash right before the market crashed and lead us into the Great Depression. Let me show you a few examples:

'We will not have any more crashes in our time.'

This was said John Maynard Keynes in 1927, two years before the stock market crash which lead to the Great Depression.

'Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as they have predicted. I expect to see the stock market a good deal higher within a few months.'

This was said on Oct. 17, 1929, a few weeks before the Great Crash, by Dr. Irving Fisher, Professor of Economics at Yale University. Dr. Fisher was one of the leading U.S. economists of his time.

'I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future.' -- E. H. H. Simmons, President, New York Stock Exchange, Jan. 12, 1928

'There will be no interruption of our permanent prosperity.' -- Myron E. Forbes, President, Pierce Arrow Motor Car Co., Jan. 12, 1928

And, these are just a few of the popular quotes of their day. And, by the way, has anyone heard of the Pierce Arrow Motor Car Company? You have not? Well, that is because they went bankrupt during the Great Depression. But, I digress.

In 10 years from now, we will likely be adding Janet Yellen to the list of those who lacked the foresight to see what history should have taught them. Yesterday, Fed Chair Janet Yellen said that the banking system is 'very much stronger' due to Fed supervision and higher capital levels. But, she then followed that up with what I believe will be her history-making statement. Yellen also predicted that because of the measures the Fed has taken, another financial crisis is unlikely 'in our lifetime.'
I am sorry to tell you this Ms. Yellen, but history's lesson will be learned the hard way by those who have failed to already learn from the past, as Mr. Santayana has warned. This time is not different.

So, this past week, I read how "markets are virtually risk-free." Does that sound like reasonable advice?

As in the case of the analyst quoted above, along with many of those quoted in the text of this article, when many begin to believe that the market simply cannot provide us with any sustained downside pricing, that is usually the point in time when the market proves otherwise. And, I believe we are on the cusp of the market beginning to prove that in the next few weeks.

Now, clearly, we have to temper my shorter term bearish expectations with all the perma-bears who continually have been calling for a market crash. So, this tells me I should be looking for a market top, but not a long-term market top. I guess we can call it our Goldilocks scenario. In fact, this has been my expectation as to what will occur once we hit our target for wave (3) for well over a year now.

While some are looking for the market to head much, much higher, and others are still looking for a crash, I am looking for the market to be topping out within the next few weeks, but this will not lead to a major top to the U.S. equity markets. Rather, this will only lead to a multi-month consolidation, which can take us back down towards the 2300SPX region. In fact, this is what we have been calling for since we bottomed back in February 2016, and the market has been playing out in an almost textbook fashion ever since.

My minimum downside expectation for this next pullback is the 2360SPX region, whereas my maximum downside expectation is in the 2285SPX region. Moreover, I would also expect that this correction will take a number of months, and can even take us into the Thanksgiving holiday until it completes, which would mean that it could take the shape of a triangle if it were to take that long.

But, as I have noted many times, the impending top I expect will only provide us a top to wave (3), with a wave (4) pullback to follow. That will set us up for wave (5), which can strike the 2611SPX region next, with the outside chance of seeing extensions even beyond that, as high as the 2800SPX region. We will have a much better idea of our target region when waves 1 and 2 of wave (5) have completed much later this year, or even in early 2018, depending upon how long wave (4) takes.

See charts illustrating the wave counts on the S&P 500.

No holdings.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2017 Copyright Avi Gilburt - 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.


© 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