UPDATE 2015-02-09: This bearish prediction has been invalidated. The S&P500 still seems to have some more up-side potential before the real top. I closed my short positions at a profit, and I am now long the SPX500.
=== Prediction === Bull-Market Top @ 208.88 on 2014-12-08 Bear-Market Bottom @ 106.50 on 2023-02-01 Go Short @ 208.88, Stop Loss @ 227.43, Profit Target @ 106.50 in 8 years.
=== Description === I hope you've made lots of money in the bull market that has been raging since March 2009. Anyone who has been using a trend-following "buy-the-dips" trading strategy is now rich, and everyone (even my Dad!) is talking about how great the stock market is. Well, I have some bad news: this party is about to end. As of today, the SPY will begin a bear market that will last until February 2023, and its price will drop 61.8% to 106.50.
Here is a summary of my thought process (TradingView does not allow me to enter very long descriptions, so I can't go into too much detail. There's a link to my full description at the bottom):
#1 - Perfect Sebelliott "End-of-C" Wave counts on *every* time frame.
#2 - When the market starts to go down, people will worry that the Fed will not be able to maintain its hawkish stance. This causes a positive-feedback selling cycle.
#3 - The Dollar needs to pull back from its recent rally, and since it is currently correlated with the stock market, it will pull the market down too.
#4 - Upcoming bounce in oil will reduce company profits and push stock market down.
#5 - Everyone is Bullish: When my Dad, Wife, and Drinking Buddies all start talking to me about the stock market, and how it keeps going up, up, up... then I know we're getting close a top. When my Dad wants to invest his entire retirement account into GoPro (GPRO), I know we're there. :)
I don't believe we have a top yet but why are these people posting 8 or 7 years of continuous declines. Since 1900 (which is as far back I go) there has not been a 8 year continuous decline. Where are you getting these predictions from?
likebike
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Hi nightcrawler. Yes, that's correct -- there is no way there will be a continuous, "straight-line" decline. The decline will, of course, be wavy. But since I have no real way of estimating the waves, I just drew a straight line to the final target point. Sorry for the confusion.
adammska
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"Upcoming bounce in oil will reduce company profits and push stock market down" - that sounds a bit counter intuitive. Surely for a stock like HAL, which lost half of its value since July, a bounce in oil will come as a welcome news. And if it doesn't come, then surely the retailers stand to benefit...
The market might be entering a bubble state IMO, but it's not anywhere close to popping yet. There are plenty of large cap stocks, whose valuations actually look cheap (AAPL, GOOGL), and the US economy is growing at the fastest rate in a decade.
Ruien
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There are certainly some stocks that will benefit from increased oil, but I think it's generally accepted that cheap oil is net positive for the USA. In the early half of 2008 during the big inflation scare, it was very much "oil up, S&P down" and vice-versa. That inverse relationship broke when falling oil prices were seen as a leading indicator of slowing economic growth. Clearly we're in an inverse correlation period right now, so "oil up, S&P down" makes sense. That can and probably will change again someday.
As for valuations - this is true. We just had one of the best earnings quarters in as long as I can remember. On the other hand, the global economy isn't looking all that hot and these large corporations' profits depend very much on that. Using valuations to predict market tops has a pretty dubious history, as you probably know. This isn't my prediction, but I'm interested to see how the convergence of waves portrayed end up playing out over time.
WolfCOO
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love it. your Dad is actually a great indicator
Algokid
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It's a lot of courage to stand in a room full of Bull. I Don't agree with your forecast, but I respect your analysis. Eventually there will be a correction, how a big and how long ? that I don't know. Good Luck , thumb up :)
pmks1
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hahahahaa ... funny ...
Kumowizard
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Exactly today???? Great! OK, but where is the technical sell signal?