Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks Bull Market Correction or Bear Market?

Stock-Markets / Stock Markets 2010 Jul 04, 2010 - 12:34 AM GMT

By: Nadeem_Walayat

Stock-Markets

Best Financial Markets Analysis ArticleMy primary focus at this time remains the UK economy and housing market so as to conclude in a multi-year UK house prices trend forecast and ebook by mid August 2010.

However in response to requests and price action here is an interim analysis of the stock market:


Stocks Last In depth Analysis - 16 May 2010 - Stocks Bull Market Hits Eurozone Debt Crisis Brick Wall, Forecast Into July 2010

Stock Market Road Map for 2010 -02 Feb 2010 - Stocks Stealth Bull Market Trend Forecast For 2010

DOW Stock Market Forecast 2010

Dow support failed at 10,300, the stock market was sucked back towards 9,800 which broke which CHANGED the trend pattern that had been in force as of the Mid May analysis i.e. instead of an ABC into early June, the market is now saying that that was the first leg of a larger ABC pattern.

The trend pattern is undoubtedly bearish, but STILL corrective, i.e. the 15% or so downtrend is correcting the preceding 70% advance off of the March 2009 lows.

Elliot Wave Theory - The Elliott Wave pattern of an ABC off of the 5th peak implies a trend towards 9,100 to complete the larger corrective pattern by late July. The alternative which the bears are playing towards is that April was a B wave peak which at the very least implies Dow revisiting the March 2009 lows, at this point I give this a less than 20% probability. Yes the market has weakened, but the correction is still just that a correction.

MACD - Has the opportunity to set itself up for a higher low, i.e. in line with the ABC correction scenario to show positive divergence against the trend.

Price Patterns - Apparently the stock market has broken its neck as per the Head and Shoulders Pattern that signals a bear market. Yes the break below 9,800 is bearish, however one can not conclude bull or bear markets on the basis of one price pattern that turns out to be false more often then right i.e. Look at May to July 09, where we basically have the same price pattern that at the time was signaling a bear market returning to break the March lows, as media stars such as Nouriel Roubini were publically declaring virtually at the very low of the move. The current pattern equally will probably resolve higher just as the majority conclude that the bull market is over on the basis of price patterns. Remember on its own ANY single pattern or technical tool or theory is no better than a coin toss!

Economic Analysis - My economic analysis whilst yet to be completed, paints a picture of economic consolidation rather then recession, i.e. economies consolidate into low growth regimes as they seek to balance deficits against stimulus measures, employing inflation (via QE) as a stealth tax to achieve this, so NO DEFLATION.

Trend Analysis - The bull market's second up trendline broke in early May which signaled the start of the correction phase. Current trend is borderline within a down sloping channel, currently favouring trend within the lower channel.

The market is currently below the mid channel line at 9,750. The best outcome would be for the Dow to rally above 9,750 and then hold this channel line so as to avoid a deeper low along the bottom channel line (9,300ish). On the upside its going to be tough for the dow to break above the upper channel line which should cap any rally.

Averages - 50 day and 200 day are acting as resistance, and I am sure you have all heard of the death cross i.e. when the averages cross. Whilst this is bearish, it is inline for a multi-month correction that could witness several crosses during a trading range thus negating its importance.

Time - Time wise as originally indicated in mid May the correction needs at least 3 months to work out the preceding 13 month rally, Mid May to Mid July is not enough, implies the market is going to continue correcting into early August i.e. within a low end trading range.

Targets - A break below 9,800 targets just below Dow 9,500, then 9,250, then 9150.

Conclusion - The original forecast correction to 9,800 proved too mild, we are in a more severe points correction, however trend wise and time wise we remain within a trading range that seeks to correct the preceding bull run to Mid April 2010, that's a 13 months advance that requires at least 3 months of down time that extends to late July - Mid August for a down sloping range pattern as illustrated by the below graph. The key to the trend for the next month or so is if the Dow is able to climb back above the mid channel line at 9,750. If it does then the Dow will target the upper channel at about 10,550 and remain stuck in this down sloping channel, failure to retake 9,750 targets a trend in line with the bottom channel line which would target a 9,250 low.

Bottom Line - We remain in a stocks stealth bull market and the action off of the April 2010 high is correcting the preceding 70% advance, which I expect to ultimately resolve to a new bull market highs this year.

Risks to this Analysis - That April was the top and we are now in a bear market that targets new lows i.e. Dow 6470.

My Strategy - I view this sell off as an opportunity to accumulate more, i.e. I did not buy any Brazil exposure when it was cheap last year so that's at the top of my list to add, though EWZ at 63.90, is still not particular cheap so I may have to bite the bullet at this price for long-run exposure.

Your barely scratched the surface analyst on the amount of work needed to be completed to arrive at an accurate multi-year UK house price trend forecast.

Comments and Source: http://www.marketoracle.co.uk/Article20833.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Featured Analysis of the Week

Really Dismal Unemployment Numbers a Central Banker's Nightmare - 3rd July 10 - John_Mauldin
BP Gulf Oil Spill Disaster, An Impossible Well to Cap? - 3rd July 10 - Joshua_S_Burnett
Stock Market May Surprise By Year-End - 2nd July 10 - Chris_Ciovacco

Get Your Free 50-Page Download: The Ultimate Technical Analysis Handbook

Red Flags on the Economy, Stock Market Death Cross Forming - 2nd July 10 - Tony_Sagami
Forget Fiat Currencies, Stabilize Your Investment Portfolio With Gold - 2nd July 10 - Richard C.B. Johnsson
SULTANS OF SWAP: BP Collapse Potentially More Devastating than Lehman! - 1st July 10 - Gordon_T_Long
The U.S. Econonomies Future
Asian Stampede Into Gold Safe Haven Hedge Against Government Debt Devaluations - 1st July 10 - Gary_Dorsch
Six Ways to Invest in Brazil - 1st July 10 - Ron_Rowland
Stock Market Breaks Neckline, Gold Trending to Below $1200 - 1st July 10 - Anthony_Cherniawski
Buy and Sell Gold On-line Securely
Gulf Oil Spill Methane Release and Mass Extinction Events, How Bad Could It Get? - 30th June 10 - Washingtons_Blog
U.S. Housing Bear Market Second Down Leg Closer Look - 29th June 10 - John_Mauldin
Gold Miners and Explorers Face Serious Supply Problems - 29th June 10 - Brent Cook
Stock Market Crash Report - FREE
UK ConLib Government to Use INFLATION Stealth Tax to Erode Value of Public Debt- 29th June 10 - Nadeem_Walayat
Gold Price Manipulation Prior to Options Expiration Exposed - 28th June 10 - Jason_Hamlin
Gold and Crude Oil are Mandatory Investments - 28th June 10 - Larry_Edelson
Get Your Free 50-Page Download: The Ultimate Technical Analysis Handbook
Weekend Market Take, Those Terrible Unions, Greed is not Good and This is Theft - 27th June 10 - PhilStockWorld
Gold Imminent Reversal and Retreat, Stocks Bear Market Pattern Developing - 27th June 10 - Clive_Maund
Deepwater Drilling Gulf Of Mexico Fundamentally Flawed Protocol In Use Of Cement - 27th June 10 - Dr_Stephen_Rinehart

Most Popular Financial Markets Analysis of the Week :

1. Gold Imminent Reversal and Retreat, Stocks Bear Market Pattern Developing

By: Clive_Maund

A great way to make yourself popular is to tell people what they want to hear, and the trick is to make yourself scarce before the wheel comes off, or at least slip quickly into the background when it does. Thus you’ll find no shortage of articles out there telling you what a great investment gold is and the countless reasons for buying it. They are “playing to the gallery” which is normal near a market peak. However, most of the evidence that we are examining points to an imminent reversal and retreat - not a bearmarket though as the bullmarket in gold is thought to have much further to run and will probably end in a spectacular parabolic blow off with prices at dizzying heights compared to today, but this is still a long way ahead of us - over a shorter time horizon we may first have to deal with a significant correction.

Read Article

2. The Surprising Opportunity behind Tesla Motors IPO

By: Andrew Mickey

There are few sectors as volatile, risky, yet as potentially lucrative, than initial public offerings (IPOs).

Every time a company turns to the public markets to raise cash, it’s either a boom or bust. Very rarely are they ever just flat.

Read Article

3. Increasing Risk of Double Dip Recession as Leading Economic Indicators Start to Turn

By: John_Mauldin

We are halfway through the year (where did the time go?) and it is time to make some predictions about the last half of the year. This week we look at what the leading indicators are telling us, size up a new indicator, drop in on banking data, and do a whole lot more.

Read Article

The U.S. Econonomies Future

4. US Money Supply Plunges At 1930's Pace And Housing Index Dives

By: Sol_Palha

"Advice is what we ask for when we already know the answer but wish we didn't." ~ Erica Jong

The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history. The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.

Read Article

5. SULTANS OF SWAP: BP Collapse Potentially More Devastating than Lehman!

By: Gordon_T_Long

As horrific as the gulf environmental catastrophe is, an even more intractable and cataclysmic disaster may be looming. The yet unknowable costs associated with clean-up, litigation and compensation damages due to arguably the world’s worst environmental tragedy, may be in the process of triggering a credit event by British Petroleum (BP) that will be equally devastating to global over-the-counter (OTC) derivatives. The potential contagion may eventually show that Lehman Bros. and Bear Stearns were simply early warning signals of the devastation lurking and continuing to grow unchecked in the $615T OTC Derivatives market.

Read Article

6. Gold Price Manipulation Prior to Options Expiration Exposed

By: Jason_Hamlin

Gold futures expire today, June 28th. If you follow the manipulation theories, it is just prior to expiration time, either in futures or options, that paper shorts increase their net short positions in order to manipulate precious metals (and stocks) downward. This allows the manipulators to profit as the contracts they sold to unwitting investors expire worthless. The sudden drop in price also provides an opportunity for the shorts to cover their positions, profiting via paying back their creditors with lower priced gold or equities.

Read Article

7. UK ConLib Government to Use INFLATION Stealth Tax to Erode Value of Public Debt

By: Nadeem_Walayat

The Chancellor of the Exchequer, George Osborne hit the reset button on the UK economy by delivering the most radical budget of the past 30 years that has sought to cut an extra £40 billion from Britains annual budget deficit by 2014-15 which is on top of ALL of Labours March 2010 budget cuts and tax rises of £73 billion that the coalition left intact. The cuts totaling a withdrawal of £113 billion from the economy will be phased in by 2015-16 and by then total about 7.5% of GDP which is a huge amount that is deemed necessary to divert Britain from its current path towards bankruptcy that Labour had put it firmly upon as a consequence of running an annual budget deficit of 12% of GDP.

Read Article

8. The Black-Art of Predicting Stock Market Dead Cat Bounces: One More for S&P 500?

By: Andrew_Butter

On March 14th 2008 Nouriel Roubini’s made a prognosis about bouncing dead cats "Reflections on the latest dead cat bounce or bear market sucker's rally". I was so inspired that I conducted a very scientific experiment throwing dead cats off buildings to check how high they bounce; based on my findings I built a carefully constructed “algorithm” to prove beyond all scientific doubt that he was wrong.

Read Article

Subscription

How to Subscribe

Click here to register and get our FREE Newsletter

About: The Market Oracle Newsletter

The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication.
(c) 2005-2010 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Ian
04 Jul 10, 12:25
depression indicators

Nadeem, you are immensely brave to go against the growing "Imminent Depression" indicators.

Brave but quite mad (imho)

Cheers!

Ian


Nadeem_Walayat
04 Jul 10, 13:55
depression indicators

The time to get worried will be when the indicators all turn bullish ;)


Samir
06 Jul 10, 01:37
NOBODY is sure

Half of the experts saying buy gold. other half saying its a bubble. one part of analysts say, hey look at the indicators. great bear market is ahead just like 30s. while nadeem and other such saying we're in bull market. so confusing is the picture. only thing i can say is that coming time has major and never seen before surprises for all of the above groups. world economy is in transition cme and this transition is going to hops impact all established rules of economy. i mean economics.


Nadeem_Walayat
06 Jul 10, 03:36
NOBODY is sure ?

NOBODY is sure ?

Not quite correct.

What you mean is people are sure of differing outcomes.

Some are Sure that stocks are in a bear market and deflation, others are sure of inflation / stocks bull market.

At the end of the day you need to come to your own conclusion on the basis of which appears to be the most probable.


Shelby Moore (author of "End Game, Gold Investors Destroyed")
06 Jul 10, 04:51
SURE inflation

I know of no time in world history (including our history since 1934) that a fiat not redeemable at fixed price to gold, ever experienced a period of sustained price deflation.

There will be inflation until the world fiat system is fixed to gold again. Period. 1 million percent sure.

Those who are fooled by deflation nonsense, will lose.


Samir
06 Jul 10, 20:45
Reply

Thanks for your comments NADEEM :) i'm sure that common persons with limited knowledge of stock markets should better stay out of highly volatile markets and accumulate gold on every dip. i'm one of them so i trust gold. at the same time i feel path to gold backed currency won't be easy or within next some years as the giants controlling fiats will try everything . ethical and unethical ways to suppers gold. but i'm sure that in the new world order of economy gold will outperform all other investments.


Simon
07 Jul 10, 08:23
stocks bear market

Nadeem your analysis is totally unconvincing, you are going to end up giving all of your gains in the great bear market.

Robert Prechter is right ! He called the April top, March 09 lows will break, watch out below !


Nadeem_Walayat
07 Jul 10, 10:50
Stocks bull bear debate
Simon

You TOTALLY misunderstand me, I am NOT trying to convince you of anything !

It is upto YOU to make up YOUR MIND !

Your free to follow Precther. I am NOT ASKING YOU to FOLLOW ME ANYWHERE !!!

The bottom line is this - IT MAKES NO DIFFERENCE IF ANYONE FOLLOWS WHAT I SAY ! Because the PRIMARY purpose of ALL OF MY ANALYSIS is with regards to MY OWN Trading and investing.

Though you may want to check this out regarding the Bear market rally and April 2010 Top -

http://finance.yahoo.com/tech-ticker/article/367008/Bob-Prechter-Bear-Market-Rally-Is-Over-Stocks-Headed-For-New-Lows


Nadeem_Walayat
07 Jul 10, 15:04
Gold / Stocks

Gold is in a bull market so yes it is good to accumulate on the dips

Though stocks are in a bull market as of March 2009 that is outperforming gold by a long way.


Ajay Singhi
07 Jul 10, 17:20
Questions about Gold and Sensex
Many thx for your analysis and updates. I cannot thank you enough for the great work you are doing. You are one of the very best FA and TA I have read and I have read quite a few of them. Had 2 questions. Hope to get some clarification:

1) In your e-book, you had outlined that the broad range for Sensex (Indian Stock Mkt) for this year is 10,000-180000. Despite the fact that SPX has retraced almost 61% of its upmove from the 2009 lows, Sensex has stubbornly refused to follow suite and has remained at the 17,500-18000 area in the last few months (almost a year). The general investor perception is that Sensex will make a new high by October. With US mkts close to their lows and a possible rebound from here to new highs by Sep-Oct (as evident by today's rally), do you foresee any need for any revision to your forecast about the Indian Mkt? As per my analys, during the 2nd half of the year, we would see a role reversal. US mkts will take the leading role and make new highs while Indian mkt will correct from hereon and join the bull party later on. Assuming that we have completed the correction on SPX, I place a similar about 61% correction on Nifty, targeting about 4200 by mid september. I would like to hear your views.

2) From its low in 2008, gold peaked exactly 21 months after its 2008 bottom and has then sold off quite a bit. Would it be fair to say that we can expect a correction, targeting at least 38% correction to the 1030 area?

My mouth is salivating at the prospects of adding more gold to my portfolio in that range. If we get 50% correction to 965 area, there is nothing like it. Thanks, Ajay -- Ajay Singhi
Nadeem_Walayat
07 Jul 10, 17:29
Markets

Hi

S&P retraced 61% ? That does not sound right.

I don't trade Sensex, I invest in India for the long-run, therefore from an portfolio point of view its great the sensex has NOT fallen.

A quick look at the chart is clearly shows a trading range of 18000 to 16000. So as a long-term investor, I would accumulate at 16k (though I already hold enough of the BRIC's - except Brazil).

4,200 ? - 16k's is the support and the pattern appears corrective.

India is showiing relative strength against the forecast which is a positive development, i.e. implies stronger forward trend.

The forecasts are road maps against which to quickly measure market strength or weakness.

Gold - Its just marking time before it breaks higher, chart wise there is support at 1155, which implies a low above this level.

Best

NW


Jas Singh
08 Jul 10, 17:48
Gold in Sterling

But what about Gold buying in £££?

Our ConLib government do have something resembling a plan to cut the deficit.

It appears much more attractive than many other major FX's, the US dollar in particular?

Regards


Nadeem_Walayat
08 Jul 10, 19:17
sterling

They don't want a strong currency, so rally should be temporary.

Though I would prefer to be wrong on sterling falling, because it is part of the inflationary theft of hard earned savings by the government.

People have been brainwashed into thinking devaluton and inflation are good - when they are near evil mechanisms for theft of life time savings.


Jas Singh
09 Jul 10, 05:05
Sterling

Yes, they probably don't want a strong currency.

However, what can they do if the markets decide they want sterling?

As your previous analysis suggests, fiscal policy fundamentals have improved significantly under the ConDem's.

I don't think the majority think that inflation is good. I think the majority lacks the financial IQ to connect the dots of what is happening.


Jas SIngh
12 Jul 10, 03:59
Sterling

Nadeem

I would appreciate your feedback on this. What can, or will the UK government do to ensure a weak Sterling, in relation to other major FX's?

Fiscally speaking, they are actively attempting to reduce the deficit, more so than many other western governments.

Do you think the markets have already priced in a deficit reduction?

Also, do you have any idea how much of the government debt is Sovereign debt?

Best

JS


Post Comment

Only logged in users are allowed to post comments. Register/ Log in