Who could have thought that something called a “digital currency” that first appeared in 2009 and was widely available for 1 cent (and no one cared!) eight years later would be going for $20,000 a pop? It’s the wildest financial craze of our time. Wait, scratch that — it’s the wildest financial craze ever, because Bitcoin is up not 100%, not 1,000%, not even 10,000%. Since inception, Bitcoin is up 32,000,000%. Yes, thirty-two MILLION percent.
Stocks Can’t Keep Going Up Forever… Or Can They?
January 22, 2018 by Leave a Comment
Wall Street traders love to live by “truisms”, “clichés”, and/or “maxims”. One such refrain that we constantly hear is that “Stocks can’t keep going up forever” but then there is “the trend is your friend” and “the market climbs a wall of worry”. When you put them all together what do you get? Should you worry about a top or should you be happy that others are still worried… because that means the top isn’t here yet? After-all, the market continues to climb until everyone has bought. If there are still bears out there, they are still potential buyers. On our NYSE Rate of Change page we published a couple of charts by “Chart of the Day” which showed the average length of rallies before a 15% and 20% decline. But if you take a longer term view, even a 15-20% correction could be inside a longer term bull market.
In today’s post, Chris Ciovacco of Ciovacco Capital Management takes a look at the historical precedent for the current market.
New Long-Term Equity Breakout
January 10, 2018 by Leave a Comment
On Tuesday, CME and CBOE TV financial commentator Alan Knuckman said on Fox Business, “Trump’s historic tax cuts will boost most American corporate earnings lines by at least 20% in 2018 — sending stocks soaring still from their current levels.” He is predicting that the Dow will reach 30,000. He said, “The Dow Jones Industrial Index is now within 21% of the 30,000 milestone which is very achievable after returning 25% in 2017.”
But after being up so much in 2017 isn’t it “overvalued”? You might ask. One reason for optimism is that even after being up so much earnings are up about the same amount. So the P/E ratio is roughly where it was a year ago, i.e. slightly above 21%. That is just slightly above the average level and well below peak levels. With corporate earnings up another 20% due to tax reform this year, prices could go up that much as well and the market still wouldn’t be overvalued.
Silver Chart of the Day
September 26, 2017 by Leave a Comment
Silver has had several major peaks over the last year. But interestingly sentiment has been an excellent indicator of peaks. In this video we will look at the correlation between Silver’s price and market sentiment.
Gold: Often, Simple Forecasting Tools Are All You Need
September 21, 2017 by Leave a Comment
In the following video by Elliott Wave International we will look at the gold price and “Commitment of Traders” In 2017, Gold ‘s rally has stalled three times in April, June and August. With April and June’s price stalling at the same overhead resistance level. Back in August Elliott Wave TV said, When analyzing charts […]
Skeptical Bias Toward Stocks Aligns With Bullish Charts
August 31, 2017 by Leave a Comment
If someone told us in 1981 the S&P 500 would post a 1,367% gain over the next 18 years, it would have been very difficult to believe after seeing an all-time high in the misery index in June 1980. From miseryindex.us:
“The misery index is simply the unemployment rate added to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation both create economic and social costs for a country. A combination of rising inflation and more people out of work implies a deterioration in economic performance and a rise in the misery index.”
How Concerning Are Predictions Of A Stock Market Crash?
June 13, 2017 by Leave a Comment
Since markets are an extremely difficult and complex animal, our purpose here is not to criticize anyone, but rather to highlight the “grain of salt” nature of any stock market forecast. The dated headlines below featured similar gloom and doom calls, and yet, global markets remain near all-time highs.
The Silver/Gold Ratio, Inflation/Deflation and The Yield Curve
May 17, 2017 by Leave a Comment
The following article was written by Gary Tanashian editor of Notes From The Rabbit Hole (NFTRH) and originally appeared here. In it Gary looks at the current “Dysfunctional Market” the FED manipulation called “Operation Twist” that caused it along with Gold, Silver, plus inflation and deflation. I like his quote about the effects of inflation, “Funny money on the run… is not discriminating money. It seeks assets… period.” and he holds that that is the primary reason why the stock market has risen since 2011.
Are Defensive Assets Waving Red Flags For Stocks?
May 3, 2017 by Leave a Comment
In good times for the market “growth” stocks, the NASDAQ and higher risk assets outperform “safe” stocks like the S&P 500. This is commonly referred to as “Risk-On”. But as the market becomes more cautious and participants are more concerned about the return OF their assets vs. the return ON their assets, they shift away from risky assets and towards Bonds, Utilities, and Gold.
In the series of charts below Chris Ciovacco of Ciovacco Capital Management looks at how defensive assets are faring in the current market compared to how it performed in 2007-2009.
This indicator had a divergence in both 2000 and 2007; a divergence is also present in 2017
April 27, 2017 by Leave a Comment
Market breadth speaks to the number of stocks participating in an advance. Strong market breadth means a high percentage of stocks are making new highs as the major indexes make new highs. Strong breadth also aligns with widespread confidence in stocks and the economy.
