Analysis Topic: Stock & Financial Markets
The analysis published under this topic are as follows.Thursday, April 01, 2021
How To Spot Market Boom and Bust Cycles / Stock-Markets / Financial Markets 2021
One of the most important aspects of trading is being able to properly identify major market cycles and trends. The markets will typically move between four separate stages: Bottoming/Basing, Rallying, Topping/Distribution, and Bearish Trending. Each of these phases of market trends is often associated with various degrees of market segment trending as well. For example, one of the most telling phrases of when the stock market is nearing an eventual Topping/Distribution phase is when the housing market gets super-heated. Yet, one of the most difficult aspects of this Excess Phase rally trend is that it can last many months or years, and usually longer than many people expect.
Until Gold Really Starts To Rally, Expect A Continued Rally In The Stock Market
When an Excess Phase rally is taking place in the stock market, we expect to see the Lumber vs. Gold ratio moving higher and typically see the RSI indicator stay above 50. Demand for lumber, a commodity necessary for building, remodeling, and other consumer essential spending, translates well as an economic barometer for big-ticket consumer spending. Extreme peaks in this ratio can often warn of a pending shift in consumer spending and how the stock market reacts to an Excess Phase Peak. Let’s take a look at some of the historical reference points on this longer-term Weekly Lumber vs. Gold chart below.
Read full article... Read full article...
Thursday, April 01, 2021
What Could Slay the Stock & Gold Bulls / Stock-Markets / Financial Markets 2021
Put/call ratio didn‘t lie, and the anticipated S&P 500 upswing came on Friday – fireworks till the closing bell. Starting on Thursday, with the rising yields dynamic sending value stocks higher – and this time technology didn‘t stand in the way. What an understatement given the strong Friday sectoral showing, acocmpanied by the defensives swinging higher as well. And that‘s the characterization of the stock market rise – it‘s led by the defensive sectors with value stocks coming in close second now.
Still last week, the market confirmed my early Friday‘s take:
(…) While it‘s far from full steam ahead, it‘s a welcome sight that the reflation trade dynamic has returned, and that technology isn‘t standing in the way. I think we‘re on the doorstep of another upswing establishing itself, which would be apparent latest Monday. Credit markets support such a conclusion, and so does the premarket turn higher in commodities – yes, I am referring also to yesterday‘s renewed uptick in inflation expectation.
Neither running out of control, nor declaring the inflation scare (as some might term it but not me, for I view the markets as transitioning to a higher inflation environment) as over, inflation isn‘t yet strong enough to break the bull run, where both stocks and commodities benefit. It isn‘t yet forcing the Fed‘s hand enough, but look for it to change – we got a slight preview in the recent emergency support withdrawal and taper entertainment talking points, however distant from today‘s situation.
Thursday, April 01, 2021
Fed: “We’re Not Going to Take This Punchbowl Away” / Stock-Markets / Quantitative Easing
Precious metals markets are struggling against the headwind of a rising U.S. dollar this week.
The dollar index broke out to a four-month high on Thursday. Neither a much-awaited fall in bond yields nor dovish remarks from Federal Reserve officials dissuaded currency traders from buying Greenbacks and selling other fiat currencies.
Commodities and precious metals markets also saw some selling.
Despite choppy trading in metals markets so far in 2021, intense demand for coins, bars, and rounds continues to strain supply chains in the bullion market. Some mints and dealers are simply unable to deliver product to their customers in a timely manner.
Read full article... Read full article...
Tuesday, March 30, 2021
Stock Market Bullish Trend Continues / Stock-Markets / Stock Market 2021
Current Position of the Market
SPX Long-term trend: There is some evidence that we are still in the bull market which started in 2009 and which could continue into the first half of 2021 before major cycles take over and it comes to an end.
SPX Intermediate trend: SPX is starting on the next phase of its intermediate uptrend.
Analysis of the short-term trend is done daily with the help of hourly charts. They are important adjuncts to the analysis of daily and weekly charts which determine longer market trends.
Monday, March 29, 2021
Stocks Bear Market / Crash Indicator (CI18) / Stock-Markets / Stock Market 2021
Current Risk is VERY LOW. The Crash Indicator is one of the neural nets I am working on as my AI takes baby steps into understanding how to interpret the stock market. It's task is to state the current risk of a bear market or crash being imminent i.e. within the next week or so. So an independant indicator that acts as a warning to HEDGE stock portfolios ahead of a high probability declines in the market. Where my preferred hedging tool is to go short stock index futures so as to capitalise on any drop delivering fresh funds to buy more AI stocks at deep discounts just as I did during March 2020. The last time this indicator triggered a warning was late February, so it is not a trading indicator but instead a Hedge your portfolio warning indicator.
Read full article... Read full article...
Monday, March 29, 2021
Stock Market Risk-off Is Back Again / Stock-Markets / Stock Market 2021
Stocks reversed yesterday, and the close below 3,900 indicates short-term weakness instead of muddling through in a tight range. Especially the sectoral reaction to still retreating yields, is worrying. Yesterday‘s session means a reality check for prior reasonable expectations:
(…) The index is likely to advance, but the engine is going to be tech this time – not value stocks. I view this as a deceptive, fake strength in the bull market leadership passing over to value inevitably next. That‘s why I expect the S&P 500 advance to unfold still, a bit rockier than it could have been otherwise.
Tech faltered yesterday, and neither the other sectors were convincing. Rotation within stocks didn‘t work yesterday or the day before, and that‘s short-term concerning for the stock market bull health – as in, the path ahead would be truly rockier, and accompanied by brief, sharp selloffs such as the one bringing S&P 500 futures to 3,865 moments ago. The bull market isn‘t though over by a long shot – all we‘re going through is a recalibration of the rising inflation – I still stand by my year end call for $SPX at 4200.
It‘s commodities that are under the greatest pressure now, and the copper and oil signals doesn‘t bode well for the immediate future. These are likely starting consolidation of post-Nov 2020 sharp gains – they are no longer frontrunning inflation expectations. This has also consequences for silver, which is more vulnerable here than the yellow metal now.
Sunday, March 28, 2021
How to Stop Being Scared or Shaken Out Of Winning Trades / Stock-Markets / Stock Index Trading
The markets really frightened a lot of people in the last month. We’ve received lots of emails and comments from people wondering what’s happening in the markets and why the deeper downtrend didn’t prompt new trade triggers. Well, the quick answer is “this downtrend did prompt new BAN trade triggers and this pullback is still quite mild compared to historical examples”. Allow me to explain my thinking.
The recent FOMC meeting as well as the expiration of the future contracts usually prompts some broad market concerns. Many professional traders refuse to trade over the 7+ days near an FOMC meeting – the volatility levels are usually much higher and this can throw some trading strategies into chaos. Our BAN Trader Pro strategy handles volatility quite well most of the time.
Read full article... Read full article...
Sunday, March 28, 2021
Investors, Speculators, Gamblers, Instigators / Stock-Markets / Financial Markets 2021
Nowadays, it seems that anyone who owns anything fancies themselves to be an investor. However, does buying a fractional unit of bitcoin in an online trading account qualify someone as an investor?
Are fanciful dreams of striking it rich by running with the social media herd the foundation of fundamental investing? Maybe there is more to it than that. Let’s take a look.
Read full article... Read full article...
Sunday, March 28, 2021
Why Retreating Yields Don‘t Lift All Market Boats / Stock-Markets / Financial Markets 2021
Stocks declined but won‘t they run higher next? Tuesday‘s downswing changed precious little, and the Congressional testimony was a non-event. The key happening was in long-dated Treasuries, which rose yet again – the much awaited rebound is here, and brings consequences to quite a few S&P 500 sectors.
The index is likely to advance, but the engine is going to be tech this time – not value stocks. I view this as a deceptive, fake strength in the bull market leadership passing over to value inevitably next. That‘s why I expect the S&P 500 advance to unfold still, a bit rockier than it could have been otherwise. This will hold true for as long as TLT is at least somewhat rising:
(…) technology would recover some of the lost ground on rates stabilization. ...the $UST10Y move has been a very sharp one, more than tripling from the Aug 2020 lows.
Technology though declined yesterday, and so did value stocks. Many markets went through selloffs yesterday, among commodities most notably oil. While nothing has substantially changed, we got a serious whiff of risk-off environment, pertaining precious metals too.
Friday, March 26, 2021
U.S. Stocks: Here's Evidence of a "Nearly Unprecedented Acceptance of Risk" / Stock-Markets / Stock Market 2021
Penny stocks fever has reached "the highest level since the first three months of 2000"
Penny stocks tend to be highly illiquid. In other words, it's difficult to buy and sell them at favorable prices.
Even so, the lure of low-priced shares is hard for many market participants to resist, especially the novices -- like in 2000, when penny stock trading had reached a fever pitch.
Well, just about the same thing has been going on this year. Here's a Jan. 20 Reuters headline:
Read full article... Read full article...
Friday, March 26, 2021
After Fed Week – Stock Market What’s Next? / Stock-Markets / Stock Market 2021
In the first part of this research article, we shared more detail related to the Excess Phase Peak technical pattern that is setting up in the NASDAQ and to highlight the validity of our Gann/Fibonacci Technical research which suggested a peak in the markets may set up sometime after April 1, 2021. We’ve received many questions and comments from our readers and followers related to these articles. Many people seem to believe we are calling for an April 1 market peak based on this research, yet the technical patterns we are highlighting suggest a longer-term market peak may already be setting up.
In this second part of our more detailed “what next” article, my research team and I will highlight exactly why we believe traders and investors need to be prepared for an extended technical topping pattern and how it will likely set up over the next 60 to 90+ days. Let’s continue our research from Part I and go into more detail related to this technical setup.
Read full article... Read full article...
Thursday, March 25, 2021
Tide Is Turning in Stocks and Gold / Stock-Markets / Financial Markets 2021
Friday‘s session ended in a tie, but it‘s the bears who missed an opportunity to win. Markets however dialed back their doubting of the Fed, which has been apparent in the long-term Treasuries the most. One daily move doesn‘t make a trend change likely though, especially since the Mar pace of TLT decline is on par with Feb‘s and higher than in Jan. While Treasuries paused in early Mar, they‘re now once again as extended vs. their 50-day moving average as before.
And that poses a challenge for interest rate sensitive stocks and to some degree also for tech - while I expect value to continue to lead over growth, technology would recover some of the lost ground on rates stabilization. And it‘s true that the $UST10Y move has been a very sharp one, more than tripling from the Aug 2020 lows.
Inflation expectations are rising, and so is inflation – PPI under the hood thus far only. Financial assets are rising, perfectly reflected in (this month consolidating) commodity prices. Cost-driven inflation is in our immediate future, not one joined at the hip with job market pressures – that‘s waiting for 2022-3. The story of coming weeks and months is the stimulus avalanche hitting while the Fed still merrily ignores the bond market pressures.
Thursday, March 25, 2021
Market Timing For The Next Two Weeks / Stock-Markets / Stock Market 2021
Every time I branch out to read articles being presented throughout the internet each week, it simply makes me shake or scratch my head. Moreover, I stand in amazement at anyone who attempts to base their investment portfolio upon such information.
As I have said many times, after many years of market study, I have found no better analysis methodology that provides market context better than Elliott Wave analysis. It provides forewarning as to melt-up set-ups in the market, as well as periods of market volatility.
Last week, I warned our members that we were entering a period of time which will present a choppy and difficult market to navigate. And, the market certainly delivered within our expectations. And, did interest rates or exogenous events tell me this was going to happen?
Read full article... Read full article...
Tuesday, March 23, 2021
Stock Market Pause in an Uptrend / Stock-Markets / Stock Market 2021
Current Position of the Market
SPX Long-term trend: There is some evidence that we are still in the bull market which started in 2009 and which could continue into the first half of 2021 before major cycles take over and it comes to an end.
SPX Intermediate trend: SPX may have completed a phase of its intermediate uptrend and is consolidating.
Analysis of the short-term trend is done daily with the help of hourly charts. They are important adjuncts to the analysis of daily and weekly charts which determine longer market trends.
Monday, March 22, 2021
Stock Market After The FOMC – What’s Next? / Stock-Markets / Stock Market 2021
I have received numerous emails and questions regarding the market’s set up and what to expect after the Triple-Witching event (FOMC, Futures/Options expiration) last week. It appears many traders/investors are seeking some clarity related to price trends and the potential opportunities that are setting up in the US markets right now. In this research article, my research team and I provide some greater detail related to what we believe is likely to happen over the next 5 to 8+ weeks.
Our recent Gann/Fibonacci research article drew quite a bit of attention from readers. Their biggest concern was that we were suggesting a major peak in the markets could setup in early April 2021. We want to be clear about this longer term market setup to make sure our readers and followers fully understand the implications of this technical pattern.
A peak/top could start to setup anytime after April 1, 2021, based on the Gann/Fibonacci research we’ve completed. But, that peak/top setup could also happen anytime between April 2021 and August 2021 (or slightly later). Timing this pattern is not something we can accomplish very easily as the range of dates where this Gann/Fibonacci inflection level exists consists of about 5+ months. The one key factor we continued to stress in that article was to “watch for a technical breakdown in price above the $379 to $380 price level on the SPY”. Many readers may be able to comprehend what we are trying to say by this statement, but we’ll try to help clarify it by showing what it would look like on a price chart.
Read full article... Read full article...
Friday, March 19, 2021
Are We Days Away From Potential Gann/Fibonacci Stock Market Price Peak? / Stock-Markets / Stock Market 2021
We have received many emails from members and readers asking us to follow-up on our December 30, 2020, Gann/Fibonacci research article entitled “Price Amplitude Arcs/Gann Suggest A Major Peak in Early April 2021 – Part II“. In that article, my research team suggested a major price peak may set up in early April 2021. Now we are only a few weeks away from the start of April and we believe the US major indexes have already started to make their move related to the Gann/Fibonacci peak prediction. Let’s review our original research and then take a look at what is happening on the charts right now.
Before we get started, please know that this article talks about the long-term trend and pattern forming. This topping setup may drag out until later this year, possibly August and beyond. As always, we do not trade or invest based on predictions. We simply follow the price. Until the market price confirms a new downtrend, we will remain long stocks.
Read full article... Read full article...
Thursday, March 18, 2021
Dow Stock Market Long-term Trend Analysis / Stock-Markets / Stock Market 2021
FED Balance Sheet
Not to forget the inflation mega-trend courtesy of rampant central bank money printing to monetize government debt coupled with the fake inflation indices. So you really think US inflation is just 1%? it's more like 6%! Anyway the money printing binge now totals $7.4 trillion, up from $4 trillion at the start of 2020.
Read full article... Read full article...
Thursday, March 18, 2021
Stock Bulls Run – Will Gold Ones Too? / Stock-Markets / Stock Market 2021
Resting on Friday, surging on Monday. Feeble downswing attempt defeated right after the open, and then just bullish price action. Retail data today, and another FOMC meeting tomorrow – I view the former as not too likely to spoil today‘s market action. About the latter, remembering the latest reactions to Powell pronouncements, I look for the markets to be affected to a much greater degree.
Don‘t look for material surprises, or be spooked by bets on the Fed tightening through dot plot adjustment or other forward guidance tools.I expect no change from what I wrote yesterday:
(…) Who could be surprised, given the modern monetary theory ruling the economic landscape? The Fed amply accomodative, one $1.9T stimulus bill just in, and a $2T infrastructure one in the making. That‘s after the prior Trump stimulus, and who would have forgotten how it all started in April 2020? The old congressional saying „a billion here, a billion there, and pretty soon you‘re talking real money“, needs updating.
Read full article... Read full article...
Thursday, March 18, 2021
Are The US Stock Markets Sending A Warning Sign? / Stock-Markets / Stock Market 2021
After an incredible rally phase that initiated just one day before the US elections in November 2020, we’ve seen certain sectors rally extensively. Are the markets starting to warn us that this rally phase may be stalling? We noticed very early that some of the strongest sectors appear to be moderately weaker on the first day of trading this week. Is it because of Triple-Witching this week (Friday, March 19, 2021)? Or is it because the Treasury Yields continue to move slowly higher? What’s really happening right now and should traders/investors be cautious?
The following XLF Weekly chart shows how the Financial sector rallied above the upper YELLOW price channel, which was set from the 2018 and pre COVID-19 2020 highs. Early 2021 was very good for the financial sector overall, we saw a 40%+ rally in this over just 6 months on expectations that the US economy would transition into a growth phase as the new COVID vaccines are introduced.
Read full article... Read full article...
Thursday, March 18, 2021
Stock Market March Rally Was Good - April Will Be Even Better / Stock-Markets / Stock Market 2021
Oftentimes, I will peruse the articles being published on Seeking Alpha to gain a perspective as to whether others “in the know” are bearish or bullish, and why. But, the “why” aspect is the most entertaining to me.
When I decide to click on an article discussing the market, I find that the article most often explains what the market has done either yesterday or the week before. Then it goes into a discussion of the reasons the market did what it did. In other words, most articles are primarily concerned with trying to explain the past action of the market. But, here is the kicker. They then attempt to extrapolate the reasons of the past into the action of the future. This is where most fail.
First, one is only assuming they have an understanding as to why a market dropped or rallied in the past week. Simply because there is an event or news item that occurred during that week, they superficially assume that it caused the market move we experienced.
What is truly absurd is when the exact opposite event or news item is reported, and the market continues in the same path as before, they then have the gall to explain to us that this exact opposite event or new item caused the market to continue to rally.
Read full article... Read full article...