How Fast Will The Market Collapse If Everyone Agrees We Are In A Massive Bubble

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I have been arguing that the stock market is incredibly overvalued for quite some time now. This conclusion can be very easily ascertained from studying Shiller's Adjusted S&P P/E chart below. To very quickly summarized, today's valuation levels are the highest in history. Higher than 1929 and higher than 2000 if we adjust for tech earnings distortions.But wait a second, it gets a lot worse...... 

With that in mind quite a few bulls are beginning to acknowledge the fact of overvaluation while admiring they are playing the game of musical chairs. For instance...

Two-thirds of U.S. investors think stocks are overvalued

Nearly two-thirds of investors—65%—say the U.S. equity market is overvalued, the highest percentage on record.

All of the above brings out an important question......

If most investors believe the stock market is overvalued, as they consciously continue to play on the long side, how fast/powerful will the upcoming decline be? 

Well, Murphy's Law and the stock market history suggests the door will be slammed with incredible speed. Yes, I am talking about a powerful crash that will wipe up years of gains in a matter of days. If not hours.

In other words, those who think they will be able to exit in an orderly fashion once the market confirms breakdown are kidding themselves. All exit doors will be shut close in an instance. The market suggests this is the only possible outcome at this point.

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

Trade Of The Century???

As the chart above suggests, VIX is tracing out a beautiful long-term compressing triangle/wedge. Technical analysis tells us that when it completes, VIX should surge and/or stage a massive move higher. Possibly in a very violent fashion.

If you would like to find out exactly when that happens and what that means for the stock market, please CLICK HERE. 

Daily Stock Market Update & Forecast – August 15th, 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.

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.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.


Looking At The Glass Half Empty – Why A Substantial Market Correction Might Be Unavoidable

By now most bears are a laughing stock of the investment community. After all, nothing can possibly stop this stock market advance. Even though valuations find themselves at historic all time highs.

I mean, seriously, even President Trump himself has acknowledged that this market is one directional by taking complete ownership of it. What can possibly go wrong - right?

Well, here are a few reasons you might want to consider.

3 reasons a stock-market correction is coming in late summer or early fall

1. The Transports are diverging from the Industrials. (Chart Above)

The Dow Jones Transportation Average DJT, +0.30%  is down almost 6% from its mid-July all-time high through Wednesday. That’s no catastrophe, but it’s a striking divergence from the records being clocked by the other major averages. It’s also a warning flag, since Dow Theory holds that the Transports must confirm the Dow Industrials’ move to all-time highs for the bull to continue.

Known as the Dow Theory non-confirmation. Take a look at the chart above. Not only are the Transports not confirming, they have put in a long-term double top formation. Unable to breakout above 2014 highs. This is a very weak formation and something definitely doesn't smell right here.

2. Earnings aren’t giving stocks the pop they used to. 

So far, the second-quarter earnings season has been very good. As of last Friday, 73% of the companies in the S&P 500 that have reported earnings beat Wall Street’s earnings and revenue estimates, according to FactSet. Blended earnings growth is a solid 9.1%.

Fair enough. However,  Shiller Adjusted S&P P/E Ratio is at 30. The highest in history if we adjust for 2000 distortions. Even higher than 1929 top. If anyone wants to pay that much for liquidity/speculative driven earnings - be my guest.

3. Washington faces big gridlock. 

Anyone who thought that Republican control of the White House and both houses of Congress would end Washington gridlock and make the federal government function smoothly must have been smoking something. After the health-care fiasco, how can anyone expect this fractured Congress to do anything big?

We have been discussing this for some time now. It can be argued that the stock market is pricing in a massive tax cut and deregulation. Hence the rally we saw off of November 2016 lows. Yet, and as we have seen thus far, all of that might be nothing but a big pipe dream as President Trump has been unable to get anything of significance passed.

Tax cuts? To be honest I would be surprised if they can get the debt ceiling raised. A major bloodbath associated with Washington's gridlock might indeed be on the way.Invest accordingly.

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

Daily Stock Market Update & Forecast – August 3rd, 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.

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.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.


Daily Stock Market Update & Forecast – August 1st, 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.

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.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.


Weekly Stock Market Update & Forecast – July 8th, 2017


State of the Market Address:

  • The Dow remains well above 21,000.
  • Shiller's Adjusted S&P P/E ratio is now at 29.68.  Arguably the highest level in history (if we adjust for 2000 distortions) and now above 1929 top of 29.55.
  • Weekly RSI at 71.12 - overbought. Daily RSI is at 55.76 - neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 17,700 today (on weekly).
  • Weekly Stochastics at 86.42 - overbought. Daily at 56.64-neutral.
  • NYSE McClellan Oscillator is at -12. Neutral.
  • Volatility measures VIX/VXX are once again sitting at or near their historic lows. Commercial VIX long interest remains the same. Now at 70K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning to net short. Short interest has decreased slightly during the week. For now, the Dow is 6X, the S&P is at 3X, Russell 2000 is at 2X and the Nasdaq is at 3X short. That is a substantial short position against the market.

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.

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.

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.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.


Daily Stock Market Update & Forecast – July 5th, 2017

State of the Market Address:

  • The Dow remains well above 21,000.
  • Shiller's Adjusted S&P P/E ratio is now at 29.66.  Arguably the highest level in history (if we adjust for 2000 distortions) and now above 1929 top of 29.55.
  • Weekly RSI at 73.08 - overbought. Daily RSI is at 60.78 - neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 17,700 today (on weekly).
  • Weekly Stochastics at 88.25 - overbought. Daily at 50-neutral.
  • NYSE McClellan Oscillator is at 0. Neutral.
  • Volatility measures VIX/VXX are once again sitting at or near their historic lows. Commercial VIX long interest has declined. Now at 70K contracts net long Vs 90K contracts last week. 
  • Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning to net short. Short interest has decreased slightly during the week. For now, the Dow is 6X, the S&P is at 3X, Russell 2000 is at 2X and the Nasdaq is at 6X short. That is a substantial short position against the market.

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.