Stock Market Weekly Update. March 15th, 2014. InvestWithAlex.com

Weekly Update & Summary: March 15th, 2014

The market sold off throughout the week with the Dow Jones being down -387 points (-2.35%) and the Nasdaq being down -91 points (-2.09%) for the week. Structurally, the market closed a giant gap that was left behind on March 4th, which could be considered as bullish. At the same time, it left no holes on the upside, which is bearish.

FUNDAMENTAL & MARKET ANALYSIS:

As per our timing and mathematical work below, the market will continue to shift gears from bull market to bear market throughout 2014. Longer term, this bear market will last between 2014-2017 as I have indicated many times before. While it’s internal structure will not be as violent and as steep as the 2007-2009 bear market leg, investors should anticipate the market to lose 35-40% when it’s all said and done.

(If you would be interested in learning exactly when this bear market will start and its internal structure, please Click Here)

In today’s report I would like to concentrate on the best way to approaching this bear market and what you can and should be doing. Based on my calculations, the upcoming bear market will last approximately 625 trading days. At the present “Market Energy Level” the market oscillates at approximately 20 points per day. Further, based on my bear market terminal point calculation, at this energy level the market will reach it’s terminal point within 275 days.

If you are confused, don’t be. This simply means the upcoming bear market will not be directional. It will be volatile with lots of ups and downs. As such, you have a number of options if you would like to make money in this market.

Option #1: Just get out and stay in cash or short-term treasury. You won’t make much money, but you won’t lose any either. When the bear market completes, you will be able to come in at the market bottom and buy some great businesses at cheap prices. Plus, you will get a side benefit of sleeping well for over two years.

Option #2: Go short and forget about it. Again, this is not for the faint of heart. The market will be very volatile. Yet, if you can hold on to your position you will be able to walk away with a 30% or so gain when it’s all said and done.

Option #3: Based on my calculations the market will offer up a total of 10,000-12,000 points over the next 2.5-3 years. That includes both, bull and bear legs. Theoretically, if one trades in and out of the market at the right spots (what we are trying to do here) one should be able to walk away with a 50-75% return. Yet, this requires a certain skill set and nerves of steel. It is next to impossible to do. With mistakes, I believe a 40% return here is the best case scenario.

Which option is the best one for you? That should depend on your personal investment style and risk profile. If I wasn’t in an active money management and advisory service business, I would most definitely go with option #1 or #2. Yet, since I am doing what I am doing, I will be concentrating on option #3.

Next week, we will take a look at the best stocks to short in order to maximize returns even more. Plus, some actual short picks. I call them force multipliers.

MACROECONOMIC ANALYSIS:

Ukraine continues to dominate the news.

It is very difficult to ascertain if the situation is dying down or about to blow up into a full on military conflict between Russia, Ukraine and possibly NATO. There are two possible outcomes here.

Outcome #1: Crimea will vote to join Russia over the weekend. That is a given and already priced into the market. At this juncture the West huffs, puffs, pounds the table and maybe even implement sanctions. Russia calms down and things will die off over the next couple of weeks.

Outcome #2: Outcome #1, but Russia decides to continue fighting by “invading” east Ukraine. This opens up a whole another dimension between Russia and the West. Sanctions against Russia at that juncture are almost a guarantee. While the West will not go in, it would be interesting to see if Russia decides to retaliate against the West and where that would lead us thereafter. This scenario is too unpredictable at this stage.

If I had to guess, Russia will walk away with Crimea and call it a day. No sanctions will be implemented. At that juncture, Ukraine will become a proxy playground for the West Vs. Russia where east and west Ukraine continue to clash, possibly escalating into a civil war. Too bad for the people there.

TECHNICAL ANALYSIS:

Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market.

Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.

Short-Term: While the short-term remains bullish as of right now, it might turn bearish if the point discussed in the mathematical & timing section is breached.

Again, with all 3 trends being bullish for the time being, this might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.

MATHEMATICAL & TIMING ANALYSIS:

(*** Please Note: This time around about 95% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public. As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).

XXXX

Hence, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).

If You Are A Trader: XXXX

If No Position: XXXX

If Long: XXXX

If Short: XXXX

CONCLUSION:

An incredibly important week is coming up. Above, I have described two possible scenarios we are working with. I have also described the point force we are looking at and exactly what you should do in each case. With increased volatility, multiple interference patterns and an incredibly important long-term turning point we must be very careful and risk averse here. Those anticipating the moves and those who can time them properly will be rewarded appropriately.

Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start.

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