Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Is an Accommodative Fed Bullish for the Stock Market? - 28th Jan 20
Trillion-Dollar Stock Market Cap Club - 28th Jan 20
Corona Virus Wuhan Global Pandemic 2020 Deaths Forecast and Market Consequences - 28th Jan 20
Palladium Surges above $2,400. Is It Sustainable? - 27th Jan 20
THIS ONE THING Will Tell Us When the Bubble Economy Is Bursting… - 27th Jan 20
Stock Market, Gold Black Swan Event Begins - 27th Jan 20
This Will Signal A Massive Gold Stocks Rally - 27th Jan 20
US Presidential Cycle Stock Market Trend Forecast 2020 - 27th Jan 20
Stock Market Correction Review - 26th Jan 20
The Wuhan Wipeout – Could It Happen? - 26th Jan 20
JOHNSON & JOHNSON (JNJ) Big Pharama AI Mega-trend Investing 2020 - 25th Jan 20
Experts See Opportunity in Ratios of Gold to Silver and Platinum - 25th Jan 20
Gold/Silver Ratio, SPX, Yield Curve and a Story to Tell - 25th Jan 20
Germany Starts War on Gold  - 25th Jan 20
Gold Mining Stocks Valuations - 25th Jan 20
Three Upside and One Downside Risk for Gold - 25th Jan 20
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Turkey Is Simply Noise As The U.S. Market Pulls Back Before Rallying To New Highs

Stock-Markets / Stock Markets 2018 Aug 13, 2018 - 12:47 PM GMT

By: Avi_Gilburt

Stock-Markets

Every week the market provides us another example of the intellectual dishonesty in believing the substance of any news event was the “cause” of a market move. And, if you cannot yet see that on your own, I will explain it a bit further below.

While everyone has been so concerned about the evil trade wars that were supposedly going to topple the US markets, we have been rallying in the face of this latest evil. In doing so, the market provided us with yet another reason it was supposed to have tanked, but, instead, continued to rally. We can add this to Brexit, Grexit, terrorist attacks, rising interest rates, North Korea, Trump, cessation of quantitative easing, and the myriad of other reasons the market was supposed to crash and burn over the last 3 years as we have rallied strongly.


But, let’s just ignore all of that, and do what all the other investors and pundits do. Let’s just ignore all these instances of failed attempts to glean market direction based upon the geopolitics or fundamentals, and move onto the next news item which will “certainly” cause the market to decline precipitously. Yes, my friends, it is time to talk about how the events in Turkey are certainly going to cause our next crash. Sigh.

I am simply amazed when I read analysis that claims, with absolute certainty, that Turkey caused the 20-point pullback we experienced in the S&P500 on Friday. In fact, I just read an article by another author who spent several paragraphs patting himself on the back after being bearish the US markets for the last 3 years. Who needs fiction when reality is this surreal.

So, allow me to put this as simply as possible so everyone can understand how foolish this situation is.

First, you need to learn that correlation is not the same as causation. Just because there was a negative Turkish event on Friday which coincided with a 20-point drop in the SPX does not mean it was the cause of the drop in SPX. In fact, I prepared the members of my service for this pullback, and I clearly did not know what the news was going to be. Nor did it really matter to me.

Second, not only do you need to understand correlation is not akin to causation, has anyone ever considered looking at what happened the last time we had a serious negative event in Turkey? Do you know what the S&P500 did at that time?

Well, the last time we experienced a negative Turkish event was back in July 2016 when there was an attempted overthrow of the Turkish government. Arguably, that was a significantly more serious geopolitical event than what was experienced on Friday. Yet, the S&P500 rallied over 20 points upon news of that event in 2016. Yup, you heard me right. The S&P500 rallied over 20 points on that news. So, should we have said that negative Turkish geopolitical news was good for US markets then?

If you are being intellectually honest with yourself then you must come to the conclusion that trying to glean market movements from these types of geopolitical events is nothing better than a coin toss. And, if you have not learned that lesson from the last three years already, then you are clearly not paying attention.

Third, the S&P500 dropped 20 points on Friday. I mean, really? We are barely over 1% off the all-time highs in the S&P500 and these authors are writing obituaries for the US markets. You would think we are in the middle of a 30% correction already the way many of them are going on and on.

So, allow me to give you my general guideposts for the coming weeks in the SPX. First, main support resides between 2730-2750SPX. As long as we hold over that support, this market is heading to 2935-2965SPX in the coming month or two. Ultimately, I still see nothing that would make me reconsider my expectation that this market is heading over 3000 before a major correction begins.

Second, I still think this market is heading to at least the 3011 region before we begin the 20-30% correction I expect for 2019. If we were to see a meaningful break below 2730SPX, I may have to reconsider if we have begun that correction sooner rather than later.

Since I recognize that markets are non-linear in nature, I have provided you the guideposts I use (along with my targets), as generated by my non-linear analysis methodology. If you need further details, you can always join my service. And, if you want certainty, I suggest you take all your money out of the market, as it does not exist. Rather, you need to approach the market from a perspective of probabilities, while knowing what information matters and what does not. And, geopolitical events have clearly been information that does NOT matter if your goal is to understand the direction of our financial markets.

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

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.

© 2018 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