Stocks Stealth Bull Market Carpet Bombs the Bears
Stock-Markets / Stocks Bull Market Mar 24, 2009 - 01:09 AMBy: Nadeem_Walayat
Stocks Stealth Bull Market Update 2- The stealth bull market in a not quite as stealthy manner as I would have liked decided to carpet bomb the bears with a powerful 500 point up thrust that has left many speculators and analysts that are not participating in the rally stunned into inaction as the smart investors continued to accumulate in the face of overwhelming majority of frightened investors to scared to participate in the face of continuing overwhelming bearish data and mis-information most notably evident in the consensus that stock prices will revert to below the mean in terms of corporate earnings.
The mass media jumped on the rally as being as a consequence of the program to remove $1 trillion of bad assets from bank books, however had stocks fallen then the same headlines would have been used to explain the decline. This again reinforces the view to Ignore the Fundamentals ! The News ! The Media ! Just go with the Price !
MSNBC States - "Analysts who have seen the market's recent false starts are still hesitant to say Wall Street is indeed recovering from the collapse that began last fall." - Yes because this IS a Stealth Stocks Bull Market and that is HOW Wall Street analysts and small investors are expected to behave so that they MISS the first 20%, 30%, 40% perhaps 50% and then are left waiting for the second coming... The Retest!
The Dow's close at 7776 now puts the Dow up by 20% from its bear market bottom of 6470, a brief recap of analysis to date:
1. Stocks Bear market Bottom forecast - 20th Jan 2009 - Target 6,600. Warning that the bear market bottom WILL be accompanied by overwhelming and highly convincing bearish fundamentals that speculators / investors will need to ignore to prevent themselves from missing out on the BOTTOM.
2. Stocks Bear Market Target Fulfilled - 8th March 2009 - Dow 6526. Preparing for a spike higher that was expected to trigger the first of a series of buy triggers to start accumulating - As you MUST WAIT for Entry Triggers, so as to give the trades a greater probability of success, and again the message to IGNORE the media / fundamentals.
3. Stocks Stealth Bull Market Born - 15th March 2009 - Dow Bear Market Bottom confirmed on multiple buy triggers during the week - Warning to ignore the fundamentals or should I say fundamentalism, bearish commentary and in many cases double speak in favour to reacting to the ACTUAL PRICE movements.
I have received many emails comments regarding buy / sell triggers, however it is pointless having triggers to act on if one does not have the confidence to pull them AT THE TIME, you are only going to get the confidence to act on triggers IF YOU GENERATE THEM YOURSELVES ! Therefore it is no good for readers to feed off such triggers, as everything can be second guessed AFTER the fact, AS there should be NO second guessing at the TIME the PRICE HITS the Triggers, the whole point if having triggers is for Black or White decisions not shades of gray, which requires the trader to be in a state of mind where at the point in time that price hits the triggers one is 100% confident and committed to executing the trades WITHOUT thought. In this respect I do intend to write a book that will lay out my methodology and eventually at walayatstreet.com, readers can learn by example and PRACTICE, the importance of training yourself to trust in the process of initiating market positions based on self generated prices triggers and then rely on the price action to either reinforce (accumulate) market positions or distribute (liquidate) market positions. Which basically means the reason why you entered is not nearly as important as how you act once the position is on! Instead, I would guess that many reading this tend to be consumed by second guessing a position AFTER it has been initiated. Click here to post / view comments on the Stealth Bull Market.
Stock Market Retest of the Lows ?
Yes off course there will be correction against this powerful up-thrust, in fact if I think about it, I am generating tighter sell triggers than earlier in the rally which gave the positions room to breath, which implies that the correction IS IMMINENT. The decline should be just enough to convince of the mass of prevailing bearish commentaries that the retest of the low is actually going to happen, which therefore suggests a correction of as much as 33% of the RALLY (i.e. move from 6470), just enough, just enough to get the shorts in before the Stealth Bull market lets rip with the next powerful shock and awe rally.
Bull Market Year End Target
My original analysis suggested 30% gain off the low by year end, though last week I did state that a rally of 50% by year end would not surprise me. However this early in the trend and without actually witnessing a significant correction so far, it is not easy to extrapolate an year end target other than the 20% break higher in less than 3 weeks is suggestive of an eventual rally that is nearer 50% by year end. Robert Pretcher gave his take on the prospects for a Bear Market Bottom or not in a 30 minute video that can be freely viewed.
U.S. Dollar Imminent Collapse.. Again? - Update 5
The fall in the U.S. Dollar in the wake of the "Quantitative Easing" headlines has brought the Dollar collapse proponents back out of hibernation. However the actual dollar trend has shown little if any deviation from the road map of 20th Jan 09 as illustrated by the below original price chart which therefore at this point in time does not warrant an indepth update.
The USD continuous to target a move to USD 81, my own view is that there will be some overshoot to the downside to perhaps 79 in advance of the next leg higher. Again, I say at this point in time contrary to the dollar doom calls there is little evidence on the charts that the USD Bull Market has ended as the Dollar continues to consolidate during the first half of 2009 as originally envisaged, and therefore my expectations remain for the Dollar to bounce off of the low in the region of USD 79-80. So Dollar Collapse Hunters BEWARE!
More analysis on the USD
1. March 2008 - Dollar Bear Market Bottom called, initial target of 80. ( DELEVERAGING- Gold and Commodities Teetering on the Brink of a Bear Market?)
2. August 2008 - Dollar Base building complete - breakout targeting USD 80 ( The US Dollar Bull Market )
3. October 2008 - Expecting USD to correct after rallying to between 87and 90, targeting support at 80, to be followed by a resumption of the up trend targeting USD 92. ( U.S. Dollar Bull Market Update )
4. January 2009 - USD Sideways consolidation with an upward bias for the first half of 2009 (US Dollar Bull Market 2009 Update 4)
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By Nadeem Walayat
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Nadeem Walayat has over 20 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 specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 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
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