The FEDs Have Lost Control And Boy Are They Freaking Out

This is what losing control looks like after nearly 2 years of interest rate hikes.

Even though most investors will argue that is net positive, it is anything but. Just wait until the stock market reverts to its mean. And that is where it gets interesting. Now that Fed President William Dudley is stepping down in Mid 2018, he is actually beginning to make sense.

Fed’s Dudley worried central bank may have to ‘press harder on brakes’ in next few years

The Federal Reserve may have to “press harder on the brakes” at some point over the next few years, increasing the risk of a hard landing for the economy, New York Fed President William Dudley said Thursday.

The risk of economic overheating “seems like an odd issue to focus on when inflation is low, but it strikes me that this is a real risk over the next few years,” Dudley said in a speech to the Securities and Financial Markets Association.

This suggests that the Fed might have to be more aggressive with those rate hikes, the New York Fed president said.

In another words, everyone and their day trading grandma believe the FED will backstop any sort of a significant correction with easing and more QE. BTFD!!!

Weather it will work or not is an entirely different question, but all of the above is best described by the following chart. 

Having said that, this is indeed meaningless because we are already in a historic bubble of massive proportions. Yes, the everything bubble.

There is no way out of this and there are no gradual solutions. At this point it is a matter of perception or waiting for a time window when investors will finally lose faith in the FED. When that threshold is reached the stock market will correct in a spectacular fashion. If you would like to find out when that happens, please Click Here

Daily Stock Market Update & Forecast – January 3rd, 2018

- State of the Market Address:

  • The Dow is fast approaching 25,000
  • Shiller's Adjusted S&P P/E ratio is now at 32.691 Now at arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
  • Weekly RSI at 87 - overbought. Daily RSI is at 73.50 - overbought.
  • Prior years corrections terminated at around 200 day moving average. Located at around 18,500 today (on weekly).
  • Weekly Stochastics at 96 - overbought. Daily at 85 - overbought.
  • NYSE McClellan Oscillator is at +1. Neutral.
  • Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest increased to 75K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) have maintained their positioning.  For now, the Dow is 5.5X, the S&P is at 2.5X net short, Russell 2000 is now at 5X net short and the Nasdaq is net neutral.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.

VIX Is Getting Ready To Blow – Trade Of The Day

I find the chart above to be the most fascinating of them all. Massive long-term VIX compression we have discussed here over the last few months is coming to an end. And with VIX having nowhere to go but up, what the future holds might be unprecedented.

If you would like to find out which way this powerful compression will break and most importantly WHEN, please Click Here.

Weekly Stock Market Update & Forecast – December 8-11th, 2017

- State of the Market Address:

  • The Dow remains above 24,000
  • Shiller's Adjusted S&P P/E ratio is now at 32.17 Now at arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
  • Weekly RSI at 84 - overbought. Daily RSI is at 74 - overbought.
  • Prior years corrections terminated at around 200 day moving average. Located at around 18,500 today (on weekly).
  • Weekly Stochastics at 95 - overbought. Daily at 74 - overbought.
  • NYSE McClellan Oscillator is at -14. Neutral.
  • Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest declined  to 60K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) have maintained their positioning.  For now, the Dow is 6X, the S&P is at 2.5X net short, Russell 2000 is now at 6X net short and the Nasdaq is net neutral.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year. Did it already complete? Click Here

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market. Did it already complete? Click Here

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view itDa

The Curious Case Of All Time High Valuations Sitting On Top Of A Debt Mountain

Most of today's financial commentary suggests that valuations are no longer relevant. That today's market exists in some sort of a low interest rate, low inflation and high growth kind of an environment.

Still, it is refreshing to see a major Wall Street bank call it like it is....

Goldman says highest valuations since 1900 leave investors in for a world of hurt

We have been saying the same for months. Based on today's Shiller's P/E Ratio of 31.86, we are sitting at the highest valuation level in the history of the market. Yes, higher than 1929 and 2000 tops (if we adjust for lack of earnings). And the source of this prosperity is ......

US Gross National Debt Jumps $723 billion in 12 Weeks, Yellen “Very Worried about Sustainability of US Debt Trajectory”

So here you have it. The trajectory of US government debt is “unsustainable,” according to Yellen, Kaplan, and many others. In fact, just about everyone acknowledges this except for the only people that can actually do something about it: the lawmakers in Congress. They don’t even know the meaning of “unsustainable.” It’s not part of their vocabulary. It has been replaced by “fund raising” and “campaign contributions.” And they’re happier than ever to run up the debt, no holds barred.

Understandably,  Mr. Trump has left out the source of his 'miracle stock market run' for the sake of simplicity. The above is equivalent to a junky maxing out his credit cards to go on a heroin binge. And we all know how that ends.

Daily Stock Market Update & Forecast – November 21st, 2017 – Elliott Wave Edition

ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year. Did it already complete? Click Here

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market. Did it already complete? Click Here

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.

Bitcoin Investors Expect To See $10,000 By 2019 – We Ask, Why Not Next Tuesday

As I technician I don't recall seeing a chart similar to the chart above that did not subsequently correct or collapse in a stunning fashion. Let's review the latest on the cryptocurrency.....

Bitcoin passed $8,000 as institutional money inches closer to cryptocurrency markets

One indicator is the increasing popularity of bitcoin futures. Over the weekend, the first year-long contract for the price of bitcoin was agreed by traders on the LedgerX platform, an issuer of derivatives regulated in the US. The contract is an option to buy bitcoin at $10,000 by Dec. 28, 2018.

Great. More leverage and speculation is being added into the mix. What can possibly go wrong.

The Currency Of The Apocalypse’? Doomsday Preppers Flock To Bitcoin As It Surges Past $8000

“Not too long ago, people in the prepper community were actively warning against crypto, and now they’re all investing in it,” said Tom Martin, a truck driver from Washington who runs a social-media website for people interested in learning skills to survive disaster. “As long as the grid stays up, people will keep using bitcoin.”

As Forest Gump used to say "Stupid is as stupid does". You would figure the last place these Doomsday Preppers would want to invest in is Bitcoin. It is hard to imagine that the grid would stay up and the value of Bitcoin doesn't go to zero in case of an EMP on Nuclear strike. Good luck exchanging your digital coins for carrots then.

Jim Rogers says bitcoin ‘looks and smells’ like all other investment bubbles

Bitcoin has performed amazingly well, so it’s tempting to buy. Don’t bother, says Rogers. “It looks and smells like all the bubbles I have seen throughout history.” True, bubbly assets can continue to march higher than any rational person imagines possible. So there could be further gains. But messing around with bubbles is risky. Better to just stay away. “I have missed it, whatever it is,” Rogers says.

Mr.Rogers is dead on, about "whatever it is".  We continue to maintain that Bitcoin has no real value. Yes, we are aware of all the arguments for and against it, yet the currency is only worth what the next person is willing to pay for it. Or in this case, what the next fool is willing to pay for it.

And while this insanity might go on for a few more years, history will not be kind to Bitcoin and its investors.