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Where the Markets Are Headed
Latest Activity: Nov 7
Fibonnaci in Nature
Started by Terry H. Last reply by Terry H Sep 25.
Started by Terry H. Last reply by Terry H Sep 23.
Started by Terry H. Last reply by Terry H Nov 5, 2013.
Started by Terry H. Last reply by Terry H May 7, 2013.
Started by Terry H. Last reply by Terry H Apr 18, 2013.
The rally continues to push to new all-time highs in most of the major broad-based indices ($SPX, $OEX, Dow, etc.). The advance has been so straight and fast that it hasn't left any support levels in its wake. The only one was at 2001, so a pullback below 2000 would be negative.
Equity-only put-call ratios are solidly on buy signals, and they don't look like they will be reversing anytime soon. The ratios are dropping steadily on their charts, and as long as they continue to decline, that is bullish for stocks.
Market breadth has stayed positive on the way up, so the breadth oscillators remain on buy signals.
Volatility indices remain calm -- drifting sideways to lower. As long as $VIX remains flat to lower, stocks will continue to rally.
In summary, the indicators remain bullish at this time. Some negatives are beginning to appear, but there are no confirmed sell signals.
Posted in on August 4, 2014 - 11:31am
I want to spend just a moment pointing out how these market tops can unfold. One good example was in 2007. The market had just made new all-time highs in July and everything seemed wonderful. Volatility had been low (except for one hiccup back in February, 2007), but no one seemed worried. Then, $SPX broke down sharply with a 30-point down day (yesterday was a 40-point down day for $SPX), and that unleashed the bears. The accompanying chart (Figure 5) shows the severity of the decline. Figure 6 shows how volatility ($VIX) behaved, and shows the power of volatility protection, for when the market declines that quickly, the volatility of volatility increases dramatically. Also, note that no two markets ever are exactly the same, but this type of scenario could be unfolding now, since it has happened before.
Figure 1 shows the devastation that took place between July 24th and August 16th, 2007. $SPX dropped from 1541 to 1370 at its capitulation low. There were eight severe down days for $SPX in that stretch. Figure 2 shows how $VIX did over the same period. It rose from 16 to 37 (during the capitulation day).
Read more: http://www.optionstrategist.com/blog/2014/08/stock-market-tops-hist...
Here's a log chart of the DJIA from 1918 to 1932.
If you want to understand why the Fed's monetary policy has not been working, read this paper read last year at the San Francisco Fed:
DJIA Inflation Adjusted Chart since 1982 to Oct 23, 2013.
I'm bullish on the market into year end - Gold is looking strong again as well!
A thorough talk on EWI's interpretation of where we are in all markets and the economy and why from a historical perspective with charts, and an explanation of why they didn't think the US stock market would go this high.http://www.elliottwave.com/club/analyst-videos/ewi/steve-hochberg-1...
Same guy who said "The subprime mortgage crisis is contained."
"Bernanke reportedly told a group of bond dealers and investors that, unlike some other Fed officials, he doesn’t see current bond purchases as creating an asset bubble."http://www.marketwatch.com/story/bernanke-may-push-back-against-haw...
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