Posts Tagged ‘correction’

A BEAR MARKET OR JUST A CORRECTION?

A BEAR MARKET OR JUST A CORRECTION?

Courtesy of The Pragmatic Capitalist 

Bull in bear costume

Readers have likely noted my decidedly more bearish tone of late.  Coming into 2010 I was fairly optimistic about the equity markets and the economy in the first half of the year with expectations of a second half slow-down.   The market appeared likely to unfold in exactly that manner, but the developments in China and Greece looked like game changers to me as the global turmoil unfolded a bit faster than I expected.  So much so that I initiated my first net short position in over two years as the S&P surged to 1200.  Just a few short weeks later the market was literally crashing.

But as the market continues to decline we have to ask ourselves if fear isn’t getting a bit ahead of fundamentals?  Are investors too bearish and pricing in too much negativity or are they not bearish enough?  In other words, is this a new bear market or this just a correction? This was the question David Rosenberg asked himself in last Thursday’s missive:

“Well, so far the S&P 500 is down nearly 10% from the highs, so this is indeed a correction thus far but more often than not, declines like these morph into something more severe — even when we are in durable economic expansion phases like 1987 and 1998. This recovery is tentative, at best. But the numbers we are looking at is a 50% retracement of the March 2009-April 2010 runup, which means 943 on the S&P 500 and the reality that lows in the market, whether they be interim or more fundamental, tend to occur with the index 20% below the 200-day moving average, which at this stage would be 879. So at least we have a defined range of when to begin to put money to work. A break below that range would indicate that Mr. Market is sniffing out a double-dip recession, not just a visible slowing.

The ECRI leading index is down to a 47-week low, which is pointing towards much softer growth ahead and the Shanghai equity index is off nearly 30% and perhaps giving us a reading on global growth prospects. The one thing we do know is that the last time China was down 30%, this was a train hardly worth boarding in terms of how to be positioned


continue reading


Tags: , , , , , ,




Did you expect anything different?

Did you expect anything different?

Courtesy of Nicholas Santiago at InTheMoneyStocks.com

Ending of a Birthday Party

The rally from the March 2009 lows was one of the largest rallies we have ever witnessed in stock market history. While the ninth year of a decade is usually a bullish trading year there a very few people who expected an advance over fifty percent off the lows. Many traders and investors including myself would have expected at least one 10 percent correction during that rally; as we all know that did happen. The closest that we did come to a ten percent correction in the major indexes was in June through early July 2009, when the market pulled back nearly eight percent. That was really the extent of it for the year of 2009 as far as pullbacks and corrections are concerned.

Why is 2010 a completely different picture for the stock market? When the SPDR TRUST (NYSE:SPY), Power Shares QQQ(Nasdaq:QQQQ), and Diamonds trust Series 1 ETF (NYSE:DIA) found a low in March 2009 the public was in despair. People believed that the next great depression was underway. Massive liquidity was put into the market by every central bank in the world. Cash literally poured into every toxic asset that was ever designed. Since that time the markets have responded by moving over 50 percent off their lows. Now what? Are we back to normal yet?

Today the markets want to know what is next from Mr. Bernanke and company (other central banks). Like the Janet Jackson song says, “what have you done for me lately”? What is next for an encore? The general problems such as the severe housing crisis still remains, the high unemployment picture has not changed, banks have cut credit lines are still not lending or making significant loans, and spending by the consumer continues to remain near extremely low levels. While the Federal government can create tax breaks and incentive programs for hurting citizens and residents to make them feel like they are getting something, however, can that really fix the problem?

Where are we now? Currently we are in the middle of a correction. If you have ever gone to a party, you know the party must come to end eventually. Well, the market is telling you that the 2009 party is over for now. Yes, someone will have another party along the…
continue reading


Tags: , , , , , , , ,




Don’t Let The Correction Take Away Your Profits

Don’t Let The Correction Take Away Your Profits

Courtesy of David Grandey
All About Trends

After one of the strongest rallies in the history of the U.S. Stock Market, the market may finally be in the early stages of its first meaningful correction since the rally began last March.
 
Don’t let the correction take away your hard-earned profits again! 
 
If YOU continue to think the way YOU’VE always thought, YOU’LL continue to get the results YOU’VE always got.
If YOU are getting the results YOU want then continue to think the way YOU’VE always thought.
If YOU are not getting the results you want, Then YOU YOU YOU need to change YOUR thinking.

That all being said, welcome to the brave new world, the world where it’s ALL ABOUT YOU and taking control of YOUR future!

Its no secret that the markets have been vicious, especially to the conventional Wall St. Type of accounts. You know the ones we are talking about right? The ones where the battle cry/motto is:

Buy and hold. You can’t time the market. Invest for the long haul. Put your money in mutual funds where everyone gets paid except for YOU!
 

 

If you continue to do what you’ve done then you have no choice but to grin and bear it.

Managing or having your account managed in a Buy and Hope as the market goes so goes your account format IS NOT an option. Better learn how to trade, better learn how to hit and run. Better learn how to short stocks as you need to be able to make money when the market moves in either direction.  Trade your plan and plan your trades.

One of the common denominators with past bear market rallies is that near the end of them the talking heads started parading around saying the worst is over, that was the bottom, you gotta buy stocks, etc. Sound familiar?

Speaking of plans: Let’s say your portfolio is $50,000 and let’s say that your whole strategy is hit and run get your $500 a week and go. Now let’s say that you do two trades a month only using 50% of your acct. That’s 1,000.00 per month times 12 months equals $12,000 per year. Divided by $50,000 equals 24% after one year. Think the indexes…
continue reading


Tags: , ,




The Double Dippers Are Out In Force This Weekend

The Double Dippers Are Out In Force This Weekend

Posted by Joshua M Brown, The Reformed Broker

Three syringes, close-up

The Double Dippers got a shot of B12 last week right into the puffed out vein in their foreheads.

Even the bulls gotta admit, their case has begun to look better based on this week’s nasty surprise on consumer delinquencies from Capital One ($COF) as well as the continuing jobless claims number.

Charts and Coffee is reminding us that:

  • The IBD 100 has fallen about 3.5% since the beginning of the year and is trading below its 50-day moving average.
  • Half the 100 stocks in the IBD 100 Index are under their 50-day moving averages (as of Friday).

Elsewhere, Morgan Stanley’s Stephen Roach was talking double dip with Marc Faber on CNBC, The Pragmatic Capitalist has the video here.

The most comprehensive summation of the bearish economic case can be found on the Dow Jones Market Talk blog via Paul Vigna‘s discussion about how in the early 30′s, they thought the worst was over too.  Vigna quotes a recent McKinsey piece on deleveraging:

“Deleveraging episodes are painful, lasting six to seven years on average and reducing the ratio of debt to GDP by 25 percent.  GDP typically contracts during the first several years and then recovers. If history is a guide, many years of debt reduction are expected in specific sectors of some of the world’s largest economies, and this process will exert a significant drag on GDP growth.”

We’ll see if tomorrow is another Merger/ Mutual Fund Monday or if there will be a continuation of last week’s 400 point Dow sell-off.

Oh yeah, I should mention that the Bank of China just got clearance for a 20% secondary sale of common stock, equating to roughly $30 billion worth at today’s valuations. CORRECTED: 40 Billion Yuan worth (roughly $6 billion USD) – thx to Patty Edwards.  Yuck.

 


Tags: , , , , ,




Multi-Year Stock Market Top Could Be In

Mish thinks the top is either in or should be, if fundamentals matter anymore.  He’s made a lot of good calls in the past. – Ilene

Multi-Year Stock Market Top Could Be In

Courtesy of Mish

Professor David Waggoner posted the following chart yesterday on Minyanville that I think is worth noting.

click on chart for sharper image

Professor Waggoner commented "The next intermediate level pivot down is around 882. It is a 50% retrace of the entire move up from the low and is a possible pivot for an extension of the entire A-B-C pattern off the low. It is also a natural support level as shown on the chart.

These intermediate level targets are based on the interpretation that the move up from the March low is a corrective retrace of a 5 wave set down from October 2007.

I concur with Professor Waggoner’s analysis.

The important point in above chart is that the move up from the March low is likely a correction, not the start of a new bull market. That information alone is worth far more than any details as to how the market may decline from here. Many patterns are still in play.

Depending on the index, you can count these moves off the bottom as a simple A-B-C correction as shown, or as an A-B-C-D-E wedge. We’ll know which one was correct in hindsight, but both suggest stocks will eventually make new lows – either sooner (in 2010) or later. A multi-year top could be in. Fundamentally, it should be in.

In the short-term, if we have in fact seen the end of the rally, the SPX will likely decline to the 200 day moving average, currently at 916. By the time we get there, it could be in the neighborhood of the 38% retrace line near 933. If things go quickly, it could be down there by the end of the year.

This is not a recommendation to short; this is a notice that risk is tremendously high and a top could be (and in my opinion should be) in. The market may have other ideas.

Mike "Mish" Shedlock

 


Tags: , , , , ,




LET’S GET TECHNICAL: EXPECTING MORE DECLINES

LET’S GET TECHNICAL: EXPECTING MORE DECLINES

Courtesy of The Pragmatic Capitalist

From Decision Point:

The stock market continues to frustrate those who are expecting a decent correction, and I am among that impatient throng. It is possible that the correction has actually begun, but, after a choppy week, the S&P 500 found momentary support on the 20-EMA. As you can see on the chart, the 20-EMA has been a fairly consistent support level since the rally began.

dp1

Short-term indicators are slightly oversold, but medium-term indicators, like those below are in the neutral zone and showing persistent negative divergences. Also, they are topping near the zero line, which is an indication of greater than normal internal weakness.

dp2

Cycles have not been of much use lately, but it is worth mentioning that the 20-Week Cycle is due to trough at the end of November. Price declines associated with the 20-Week Cycle trough can be quite impressive, sometimes more so than 9-Month Cycle lows.

Look for an upside surprise from the dollar. It is being squeezed into the apex of a descending wedge pattern, and the most likely resolution of this kind of pattern is to the upside. Note also that the weekly PMO (price momentum oscillator) is becoming quite oversold. I do not mean to imply that the long-term trend will be turning up, but sentiment on the dollar is very negative, and bounce could trigger a lot of short-covering.

dp3 - us dollar

Bottom Line: Regarding the stock market, this is one of those weeks where I could have skipped making any comment at all. While I keep looking for a correction, the market shows no significant external weakness. Nevertheless, technical weakness is evident, and an important cycle low is due next month. As for the dollar, it is fundamentally doomed as far out as I can see; however, that does not mean it won’t rally from time to time, and the technicals say we should prepare for a dollar rally soon.

Source: Decision Point

 


Tags: , , ,




LET’S GET TECHNICAL

LET’S GET TECHNICAL

Courtesy of The Pragmatic Capitalist

From Decision Point:

The market has begun another correction, but so far no serious technical damage has been done. The S&P 500 remains within the grasp of an ascending wedge formation, the dominant feature on the daily chart. On Friday prices hit their lowest level of the correction, but they remained above the support of the 50-EMA and the rising trend line. Next major support is at the 200-EMA.

As regular readers know, it is most likely that prices will break down from the rising wedge pattern, and I am inclined to believe that will happen in this case. Internal conditions for the medium-term are neutral to slightly overbought, and I think the market needs to get medium-term oversold before the correction will end. Also, it is October, and a certain amount of ugliness should be expected. I hear that a number of people are expecting a crash, but I see no evidence that would make me anticipate anything more than a normal correction.

dp1 LETS GET TECHNICAL

The following Participation Index (PI) chart shows that the short-term market condition is oversold. This could signal a short-term bounce, or the end of the correction. The latter is unlikely because the market needs to get more oversold medium-term before another up leg begins.

dp2 LETS GET TECHNICAL

Bottom Line: It is very likely that the S&P 500 will break down out of the rising wedge pattern soon. With luck a breakdown will be followed by a healthy correction, but we are in a bull market and I wouldn’t bet on anything worse than that.

Source: Decision Point

 


Tags: , , , ,




Is This the Start of the Big One?

Is This the Start of the Big One?

the big oneBy Yves Smith at Naked Capitalism

I don’t believe in market calls, and trying to time turns is a perilous game. But most savvy people I know have been skeptical of this rally, beyond the initial strong bounce off the bottom. It has not had the characteristics of a bull market. Volumes have been underwhelming, no new leadership group has emerged, and as greybeards like to point out, comparatively short, large amplitude rallies are a bear market speciality.

In addition, this one has had some troubling features. Most notable has been the almost insistent media cheerleading, particularly from atypical venues for that sort of thing, like Bloomberg. Investors who are not at all the conspiracy-minded sort wonder if there has been an official hand in the "almost nary a bad word will be said" news posture. Tyler Durden has regularly claimed that major trading desks have been actively squeezing shorts. There have been far too many days with suspicious end of session rallies.

The fall in the markets overnight, particularly the 5.8% drop in Shanghai, seems significant in combination with other factors…  continue here. 

*****

Image from Op-toons Review (funny site, check it out)

 
  

 


Tags: , , , ,




 
 
 

Phil's Favorites

What is at stake in the Strait of Hormuz?

 

What is at stake in the Strait of Hormuz?

Courtesy of Rockford Weitz, Tufts University

Tensions between the United States, Iran and other countries are flaring again in the Strait of Hormuz.

There are competing explanations for what’s going on in the narrow seaway through which 21% of the world’s crude oil currently passes.

Most of the reports of ...



more from Ilene

Zero Hedge

Wall Street Trading Desks Suffer Worst First Half In Over A Decade

Courtesy of ZeroHedge. View original post here.

With Morgan Stanley reporting Q2 results yesterday, the first half earnings of all "big 5" US banks are now public, and when it comes to sales and trading they are nothing short of a disaster.

With the S&P at or near all time highs, institutional traders have, paradoxically, been increasingly moving to the "sidelines" for much of the second quarter as Wall Street trading desks posted their worst first half to a year in a decade, according to ...



more from Tyler

Kimble Charting Solutions

Is Crude Oil Sending a Bearish Message to the Stock Market?

Courtesy of Chris Kimble.

Crude Oil (NYSEARCA: USO) and the S&P 500 Index (INDEXSP: .INX) have peaked and bottomed together several times in the past 9 months. See points (1) and (2) on the chart above.

In summary, the correlation between Oil and the stock market has been quite interesting and demands investors attention.

Crude Oil has been creating lower highs of late and is breaking price support at (3).

If the correlation remains the same, Crude Oil may very well be sending a bearish message to stocks.

Tricky spot for active investors – careful here.

...

more from Kimble C.S.

Insider Scoop

10 Biggest Price Target Changes For Monday

Courtesy of Benzinga.

  • Goldman Sachs boosted the price target for Applied Materials, Inc. (NASDAQ: AMAT) from $48 to $56. Applied Materials shares closed at $47.81 on Friday.
  • Citigroup raised the price target for Intercontinental Exchange Inc (NYSE: ICE) from $92 to $99. Intercontinental Exchange shares closed at $90.77 on Friday.
  • Nomura cut the price target on LyondellBasell Industries NV (NYSE: LYB) from $107 to $93. LyondellBasell shares closed at $85.92 on Friday.
  • ...


http://www.insidercow.com/ more from Insider

Chart School

RTT Plus Chart Book (Sneak Peak)

Courtesy of Read the Ticker.

The magic of support and resistance channel lines and how they direct price. Here are some chart disclosed to members via the RTT Plus service. All charts are a few weeks old. 


XAU bound by parallel channel lines.


Click for popup. Clear your browser cache if image is not showing.



Newmont Mining support from Gann Angles.



Click for popup. Clear your browser cache if image is not showing.



US Dollar index (DXY) dominate cycle ...

more from Chart School

Digital Currencies

Cryptos Suddenly Panic-Bid, Bitcoin Back Above $10k

Courtesy of ZeroHedge. View original post here.

Following further selling pressure overnight, someone (or more than one) has decided to buy-the-dip in cryptos this morning, sending Bitcoin (and most of the altcoins) soaring...

A sea of green...

Source: Coin360

Bitcoin surged back above $10,000...

Ethereum bounced off suppo...



more from Bitcoin

Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



more from Biotech

ValueWalk

Professor Shubha Ghosh On The Current State Of Gene Editing

 

Professor Shubha Ghosh On The Current State Of Gene Editing

Courtesy of Jacob Wolinsky, ValueWalk

ValueWalk’s Q&A session with Professor Shubha Ghosh, a professor of law and the director of the Syracuse Intellectual Property Law Institute. In this interview, Professor Ghosh discusses his background, the Human Genome Project, the current state of gene editing, 3D printing for organ operations, and gene editing regulation.

...

more from ValueWalk

Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



more from Our Members

Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



more from M.T.M.

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>