• 287 days Will The ECB Continue To Hike Rates?
  • 287 days Forbes: Aramco Remains Largest Company In The Middle East
  • 289 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 689 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 699 days Big Tech Disappoints Investors on Earnings Calls
  • 700 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 702 days China Is Quietly Trying To Distance Itself From Russia
  • 702 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 706 days Crypto Investors Won Big In 2021
  • 706 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 707 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 709 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 713 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 716 days Are NFTs About To Take Over Gaming?
Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

  1. Home
  2. Markets
  3. Other

Death Knell for the Bull Market?

When will the bull market end? With money velocity collapsing and ominous divergences developing in both the NYSE Advance/Decline line and the New Highs/New Lows summation, U.S. stocks closed at an all-time high last week. If this were not disconcerting enough, the Hindenburg Omen, which signals an increased probability of a stock market crash, flashed red on Friday. There was also this unequivocal pronouncement from the Elliott Wave Theorist after the Dow Industrials came within a single point last week of fulfilling their long-term rally target at 17280: "Next week, the U.S. stock averages should begin their biggest decline ever." As for your editor, Rick's Picks has been drum-rolling a key "Hidden Pivot" target at 2028 in the S&P 500 Index that has been 27 years in coming. On Friday, the index hit a record 2019.

The worst chart I've ever seen

Is a major top at hand? It is often said that bells do not ring to signal the end of a bull market. But if the broad averages were in fact to plummet in the weeks ahead, never forget that bells did indeed ring. Of course, permabulls and Wall Street managers charged with throwing Other People's Money at stocks will not likely have noticed, so intent have they been on headlines proclaiming the soundness of America's alleged economic recovery. Over the weekend, one such story that would have goosed their confidence to giddy new heights concerned the recovery of home prices in the exurbs. To the OPM bozos, nothing says "recovery" like renewed growth in subprime mortgage debt.


Flashing Red

For those trying to decide the bullish/bearish case for themselves, let me add the opinions of three heavyweights in the guru world with whom I've corresponded over the years: Peter Eliades, Alan Newman and Bob Hoye. Hoye's latest Pivotal Events insightfully answers the question of how the stock market could be going bonkers while the U.S. economy continues to languish: "At the moment, cash hoarding is being used to explain another failure of interventionist theories that easy money forces GDP growth. Not when the public wants to speculate in financial assets such as now." Eliades -- like Hoye, an analyst whose perspective on the markets stretches back not just decades, but centuries - notes in the latest issue of Stockmarket Cycles that the NYSE Advance-Decline line has failed since June to follow the broad averages higher - has in fact been falling since the beginning of August. This, he says, is "one of the fingerprints that accompanies important market highs that has been missing over the past year and longer."

As for Newman, market watchers may recall that for years his Crosscurrents newsletter diligently tracked the dollar volume of all NYSE transactions versus the total dollar value of U.S. GDP. Over decades, the former has grown to several times the size of the latter, supporting Newman's contention that the main business of America is no longer selling goods and services, but trading stocks. Now he sees a looming train wreck in the chart above, which shows 10-Day New Highs - New Lows for the combined NYSE, Nasdaq and S&P indices. "This could be the worst chart we've ever seen," notes Newman in a bulletin sent out to subscribers over the weekend. "All the major indexes made new highs on Friday. For the S&P 500 and Dow Industrials, all-time records. For Nasdaq, the same level reached only two weeks before the final tech mania peak. Yet, when you measure new highs minus new lows for the last ten day period, the sum is barely positive. Fewer stocks are participating in this madness. Frankly, we do not understand how anyone in their right mind could be bullish on the prospects for stocks. As far as we are concerned, this is a dreadful technical condition and we believe stocks are extremely vulnerable at this juncture."

Odds of calling the exact top of a bull market that has been snaking its way higher for five-and-a-half years will never be great or even good no matter how savvy the forecaster. Even so, investors who ignore the observations above do so at their great peril.

**The Bull Market's End 2014**

 

Back to homepage

Leave a comment

Leave a comment