The price breakout in the Dow is not being confirmed
by indicators that should be confirming it's advance.
I have included just one of those indicators here for your observation.
Note the strong downtrend line shown here in the KST Indicator.
Compare that to the continuing uptrend line , and price advance in the Dow
I'm struck by this continuing non confirmation.
Who would want to put substantial new capital into "the market"
right now when the Dow is rising under the guise of meaningful divergence ?
Think about that before you realize first hand the potential substantial loss of investment capital,
because you fell for the high gloss cover of the book, the Dow,
without reading whats inside the book.
IMO ur correct in noting investor risk is high and reward low, from this price could not be more than 5% at most left in it for bulls (from Fri close, 27681 +5% = 29,085).
Fibo extension from 03 Jun low - 26 Jul high for S&P at 1.272 extension is 3109.7 and the 1.612 extension is 3212; the 1.618 extension from 19 Sep high - 03 Oct low - is 3124; I use Sand P as yardstick, as it is statistically more powerful with 505 components. Expect to get to 3110 this week, perhaps even 3124. Each index fluctuates at different rates each day, as the components in it are affected by reports, with only 30 components, DJIA is more subject to randomness of the 30 stocks in it. We saw that with BA and DIS, how much one stock tanking drags on the whole index.
Following a pullback to retest the TL, it should bull again into the new year, reaching the 1.618 extension at 3212 by 03 Feb 2020. A sharp correction is likely to follow the parabolic price action, as it did in Feb 2018.
From the 26 Jul high to 14 Aug low of 25330, 1.272 Fibo extension for DJIA is 27954; we saw 27774 on Thursday 7 Nov, I think one more 200 pip pop is likely, before a pullback. If we get it, a clearly emerging EW 3rd intermediate wave will be in place. DJIA 1.618 extension is 28667. It may well reach this extension in Jan 2020, after which a severe correction is highly likely. At these prices, anything less than rosy perfection in geopolitics will curtail the bull run and trigger a sharp price correction.
You can get 2% on T-bills with NO risk, why take the chance?! Stock market upside: ~5%; downside anybody's guess; 20-40%?! R/R is terrible for bulls now.
I commented on PE below, which is only 23 atm; however, the Buffet Indicator is at all-time highest danger level ever, now 138%!!
NB: Buffett's fund is now over half in cash, a sign he is not optimistic.
Buffet's yardstick is market capitalization vs. US GDP; when over 100% (1:1) R/R is poor; at 138%: "this points to "extremely overvalued stocks" and "huge downside ahead."
Extracted for your convenience:
'Buffett Indicator:' Red Flags Are Rising
(Total U.S. Market Value Relative to GDP)
70% to 80% Safe to put money in stocks
140% Extreme danger
Source: Palisade Research, as reported by MarketWatch.
Well I filled ur page with drivel again my friend, thanks for learning me real good! GLTA!
Please read my latest post completely, it's just up on tradingview this morning,for a response.
Extreme overvaluations of historic proportions can go on
way past expectation.
However, I'm sure you know it will end badly.
Just be prepared and in place, to act on such an event.
Thank you for your continued wise input.
I've been following you for a very long time. You've been calling or indicating a potential crash since the meltdown of December 2018 which stopped at the exact 200 dma. I am with you that this market is rigged but I believe you're forgetting the most powerful force to be reckoned with. Don't fight the fed. Forget all tech indicators. Until the fed can't no more this will continue to grind higher, against all logic I even believe we're just in the beginning. We didn't have euphoria yet in the market where stocks are discussed at coffee tables by persons who never been in the market. That's our clue to sell. Until then I am putting all my capital in the stock market. When to pull I don't know but I don't want to miss the final push into the bubble of everything, since we don't know what will happen to cash, i.e the almighty dollar in the first place afterr the bubble bursts . Strange times we are dealing with. I belong to a generation where things made.sense...you had to work hard for cash and if you did you would be successful. Economics made sense. Now they don't and I believe we are in the innings of the biggest wealth transfer the world has ever seen.
First of all thank you for following my work.
Yes I have been bearish thru most of 2019.
It's one of those things that short term ..
The higher the market goes,the more risky it gets.
Your points raised here are are show very good intelligence.and are valid in interpretation.
I just don't wanna be in the market,when the moment of truth comes,
and the potential house of cards comes tumbling down.
And i like the fact you're tucked up in the mountains of New York, away from all this madness with a keen eye on humanity's biggest stupidity in the making. The stock market's biggest bubble.
I get your short term analysis and posture but then again being bearish since you were or are throughout 2019 you miss out a lot.But i guess every trader is different and exposure to risk is a very personal thing. You mention the "potential" house of cards...believe me it's not potential it's very real.
It just needs a trigger. I think the REPO market bailout by the fed was the canary in the coal mine, nobody took it seriously. Reminds me of the orchestra on the sinking titanic.
On my radar right now is Deutsche Bank. If it pops there is your trigger. And when people who don't even know what Deutsche Bank is and how big they are, and how many trillions they are exposed to in derivatives throughout the market, then tuck and run. Maybe it's too late then, because as Lehman's in 08 everything was really fine and good until the very end.
Let's hope for the best and that this madness continues for a little longer:)
Has to be as debt levels are unsustainable. You can't have a country like the US for instance, whose debt levels are unsustainable and will never be paid back. Government bonds are worthless. The country is worthless if it's annual GDP is sucked up multiple times for debt payback. That does not work for a country, neither for an individual. The difference is an individual doesn't have a cash printing machine in the basement, but the government does.
But when it abuses that button read up what happens throughout history. We're currently there at that exact time frame. The FED is doing what it can to keep this bubble afloat and it will continue doing so until it can't no more. Believe me Powell will go down in history in aiding to create the mother of all bubbles. Although he has no choice at this point.
Remember these wise words from Voltaire in 1729: Paper money will eventually reach its intrinsic value - ZERO!