Posted by: stockscooter | November 13, 2012

Review

This is a review of my last post, for those of you that want to see my work “live” and in progress.  I am copying this excerpt of my September 18th post.  My calculation was for a high of 1484, per wave theory.  What we got was a high of 1474, per the markets.  If you review everything I wrote, you will see everything is performing accordingly.

Sept 18, 2012

This next chart has added indicators.  The bottom frame with the black circle has a light blue oscillator peaking.  However, when it peaks simultaneously with the green trend line, AND the green trend line is lifting upward in the overbought area, this indicates a massive upside blow-off top.  Again, these are monthly charts, ergo the top may come over the next 6-8 weeks, prior to the election.   Also of note, the last C wave is finishing it’s last 5th wave.  According to Elliott wave theory, 1484 is the top of the preferred count for this entire correction since March 2009.

The green arrow below marks the point of my previous post, prior to the correction.

Advertisements
Posted by: stockscooter | September 18, 2012

Prepare for the Worst, Hope for the Best

Here is an article quoting John Hussman, a very trustworthy analyst and money manager.  Afterward, I have a chart of the S&P 500 with a few comments of my own. 

 

Hussman:  Stock Market Risk/Reward Worst in 100 Years

Tuesday, 18 Sep 2012 07:53 AM

By Dan Weil

The return/risk profile of the Standard & Poor’s 500 Index has dropped to its lowest point of the last 100 years, according to mutual fund manager John Hussman.That certainly points to an overvalued, over-bullish market, he writes in his weekly commentary.“All of this should make bells go off for anyone familiar with market history. Of all the investment adages that are being embraced as reasons to accept market risk, somehow the phrase ‘buy low, sell high’ is conspicuously absent.”And that will almost certainly mean trouble for investors, Hussman says.“In all of the present ebullience about quantitative easing with no ex-ante amount, . . . the market conditions we observe at present have been consistently associated with negative outcomes throughout history.”

To be sure, nothing new has happened, Hussman says.

“This is an extreme data point, but there has been no abrupt change; no sudden event; no major catalyst. We are no more defensive today than we were a week ago, because conditions have been in the most negative 0.5 percent of the data for months.”

One could argue that the Federal Reserve’s massive easing campaign is simply blowing a bubble in risk assets that will burst with grave consequences for the financial system.

And investors are embracing risk to attain income.

“The search for yield . . . may grow more intense,” Rebecca Patterson, chief investment officer of Bessemer Trust, tells The Wall Street Journal.

Read more on Newsmax.com: Hussman: Stock Market’s Risk/Reward Profile Worst in 100 Years

This Elliott Wave interpretation supports Hussman’s belief of an imminent correction.  I question whether or not the market can hold on until after the election.  It’s in bad shape in this humble analyst’s view.  2007 is the top of the market. The financial problems started there ending in 2009 in wave 1 of the new bear market.  Everything since has been a correction upwards. I have this correction labeled ABC.  This ABC has a 5-3-5 wave structure, known as a zig zag correction, which are often noted in wave 2’s.  I don’t believe new highs will be seen.  Wave 2’s often make the investor feel comfortable that a new bull market has begun and times are better.  Fundamental problems are often worse than at the previous peak (2007).  Do you believe financial matters have gotten better?  John Hussman doesn’t.

My contention, for some time now, has been that we may see something that has never happened before–Deflation with rising interest rates.  The deflation stems from the continued credit contraction and derivatives melt-down.  Rising rates will not come form rising food costs through the commodity markets as some suspect. But it will come from the downgrading of the U.S. Treasury Bond.  We’ve already seen if fall from AAA to AA by the S&P rating agency, over a year ago.  Finances are worse for the U.S. today then back then.  Election year politics have prevented another downgrade.  But mark my words, another one is coming. Our national deficit has grown larger than our annual GDP!  The downgrade in credit worthiness will push rates up as buyers of our debt will demand higher returns for the increased risk.  No one is talking about this, yet it seems obvious to this analyst.

This next chart has added indicators.  The bottom frame with the black circle has a light blue oscillator peaking.  However, when it peaks simultaneously with the green trend line, AND the green trend line is lifting upward in the overbought area, this indicates a massive upside blow-off top.  Again, these are monthly charts, ergo the top may come over the next 6-8 weeks, prior to the election.   Also of note, the last C wave is finishing it’s last 5th wave.  According to Elliott wave theory, 1484 is the top of the preferred count for this entire correction since March 2009.

Maybe the powers-that-be will wave a magic wand and make everything better.  If not, I believe we should prepare for the worst and hope for the best.

Posted by: stockscooter | August 16, 2012

The California Bear Has It’s Claws Out

My previous post was calling the top for the municipal bond market nationally, which is including all states.  This post will show you the leader in the municipal market and give support for my previous post of a bear market coming to a state municipality near you.

California is the leader in municipal debt.  The Californians need it, with such a high state tax bracket.  Unfortunately there is a great deal of suffering coming to California municipal bond holders.  As stated last post, Meredith Whitney showed the weakness of these markets back in 2010.  The bankruptcies didn’t occur then, because that was too early in the cycle.  As my chart points out, her comments came at the top of Wave B.  Indeed there were concerns then, but more time was needed (typically about 2 years of falling revenues) before the defaults should and will begin.  That’s where we are now, in this analysts view.  I would expect to hear talks about accelerating municipal defaults between now and the first quarter of 2013.  Perhaps the rhetoric will hit after the elections.

The chart shows the C wave bottom and the last bullish move for California municipal bonds that many of us will ever see again in our lifetime!  The owners of these bonds have just about forgotten the feeling of the adjustment they experienced a couple years ago.  They are about to see more than an adjustment.  My experience tells me even the highest quality California investment grade bonds will lose huge value.  The correction should take California bond prices to multi-decade lows.  That is…the ones that survive.  Many will become absolutely worthless, as this new bear market may last for the next 15-20 years!

The chart shows a great divergence.  Please look closely. The two black lines oppose each other.  Even the blue circles on the price chart climb higher, yet the cirlces on the indicator below fall lower…Divergence!  The numbers on the chart count out an ending 5 wave diagonal triangle.  It’s complete, as is a long run bull market in California Muni Bonds.  Remember, you heard it here first, because I’m just trying to save your hard earned dollars.  So, please, please, please, if you own California municipal bonds and your next statement falls 3, 4, or 5% in market value, consider THAT your warning signal,that losses much greater are coming your way.  You heard it hear first, because I’m just trying to help.

Click on the chart to enlarge

Posted by: stockscooter | August 15, 2012

The Great Municipal Bear Market

Meredith Whitney, one of my favorite analysts of all-time, did a scathing report on the municipal market in September, 2010. I have it marketed for you on the chart.  She has been condemned for it, since the markets did not crater and bankruptcies did not fill the air.  I believe her analysis was spot-on and much too futuristic.  She is such a great analyst, but in my opinion she called it a year and a half early.  There was one last 5 wave advance that needed to be extended and I do believe that has been put into place.  My chart shows the the last advance stopping in February of this year.  If my first-to-turn indicator, which is highlighted with the blue circle, ends this month negatively, it presumes bad things ahead.  Usually a turn-down at the 0-axis means impending bad news.  Since my other trend indicators haven’t crossed, and neither has my reverse-mirror indicator, it would take a serious break-down in price to turn trend downward this month.  We have a couple weeks to watch, but the recent high, ending in July may be the last high for awhile.  The caveat is that this still could be an extended 5th wave, in some form.  For that to be true, and for new highs to materialize, the first-to-turn indicator needs to turn upward, from it’s currently sullen mood.  One would think that the powers-that-be would keep prices elevated, going into the elections.  The heavy weight of looming downgrades and defaults may make that impossible.  Let’s watch to see how this month ends and whether or not we can make a new high.

Posted by: stockscooter | August 15, 2012

Waiting for Better Days?

Calling a turn in the TIPS market, like I did this month is a big deal, because it’s such a low standard deviation and liquid market, large amounts of cash can be deployed.  Could you imagine if you made 2.16% on $1,000,000 in just 10 days?  That’s $21,600, which is more than what C.D. holders make all year long.  That rate of return is twice what venture capitalists look to make on their holdings!  That’s why this market call stands-out, and is a big deal.

For other plays that are more speculative, like dealing in individual stocks, less money should be deployed, depending upon your individual financial means, yet major returns can still be made.  When I posted about the coming icrash in AAPL stock, I also brought to light the end of the advance for Priceline (PCLN).  Let’s take a look at what PCLN did since my analysis of April 10th, 2012, about 4 months ago.

My comments about shorting this stock were mentioned at a price of $772.51.  4 months later on August 10th, 2012 it traded at $555.95.  That’s a drop of over $216 per share.  Let me show you the chart.

So if you shorted 100 shares, you would be $21,656 richer in 4 months.  Or shorting 1000 shares would make you $216,560 richer in just 4 months.

Why do I share this with you?  Well, there are many pundits that say you can’t beat the market.  Well, I am here to prove them wrong.  I’ve nailed Apple,  Priceline and TIPS, right here on this public blog.  There are many more that I haven’t mentioned as well.  I hope this gives you incentive to achieve great levels of returns in your investing, even though the current mass psychology of investors is to run and hide.  Money can be made any day of the week, no matter the economic news of that day. Being able to go “Long” or “Short”, will help you to profit, while others wait for better days.

Posted by: stockscooter | August 15, 2012

Nailed It!

Do you remember when I called the top of the market for Apple stock, to the day?  Well I nailed another market, TIPS.  You heard it here first on August 5th, when I explained how TIPS have lost their luster.  They have already dropped over 2% this month, since my comment.  I didn’t know I was so adept at moving markets!  Next month when investors get their statements, they’re going to wonder where there money went.  When these inexperienced Treasury investors  realize they stand to lose a great deal of their capital, a max exodus could unveil itself.

I hope you have done your own due diligence and made money shorting the TIPS market.  The annualized return from the date of my original post, August 5th, has been 78%.  That’s because the 2.16% drop occurred in an optimally short 10 day period.  And who said bonds were boring!

And here’s what it looks like on the longer-term monthly chart.  The circle indicates the break of the trend line, which I mentioned in the previous post.  Do you think there’s more to come?

There are many sectors and industries that are correlated and very over-valued in this analysts view.  Therefore, this is a good season to be able to short markets to make your payday.  Do your own due diligence and good luck out there!

Posted by: stockscooter | August 5, 2012

Investment TIP

Nobody is saying it, because the entire yield curve looks like rates could go lower and prices higher, however I’ll be the first to call the top for the Treasury Inflation Protected Securities Market.  Why?  It seems that an ending 5th wave diagonal is about finished.  Now, I’m not stating that prices will crash and yields will sky rocket, never to see these levels ever again.  It’s actually more likely to see prices trade in a new sideways range – A range that may be bigger than recent movements, during this past 4 year bull market.  I believe we will see volatility break-out in this market, as investors who think their returns are guaranteed, will come to the realization that the guaranteed Treasury market will take away as much as 20% of their principle, in the near future.  These losses will be devastating to these clients who may have been sold these with high pressure sales tactics.  This often occurs when clients fear the markets and want guarantees.  That’s when sales people take advantage and sell the client on a “line” about guaranteed bonds.  I expect the most down-side in the fourth quarter.

You can see the triangle that I have highlighted on the chart.  The triangle could take more time to resolve, but will run-out before year’s end.  A complete 5 wave structure can be counted here, however, they are also known for extending.  Let’s watch for a break of the lower trend line, as it appears to be entering an exhaustion phase.

Posted by: stockscooter | July 10, 2012

Apple Update

Back in April I said, “The low risk short was hugely successful, but now “low risk” isn’t so much the case.”  You can now see, with 20/20 vision why I made that statement.    My proprietary first-to-turn indicator, shown with a yellow circle, has bottomed and turned the corner upward.  Trend, based upon these other 3  indicators have not broken down.  This indicates that this was only a correction, not the start to the real bear.

Candlestick formations (blue circle) have shown buying pressure based upon the shadows under the real bodies each month.   That why prices pushed higher this month.  Currently, prices indicate upward advancement, so new highs should be expected.  Where this monster tops is anybody’s guess.  But what else is there to buy?  The next thing we need to see for this advancement to be real, is for volume to increase, while my first-to-turn indicator (yellow circle) stays green.  Volume needs to exceed 280 million this month or next.  Since July 4th, the daily volume HAS picked-up. Let’s keep an eye on this increasing volume and see if it can break the $618 overhead resistance simultaneously.

Posted by: stockscooter | June 29, 2012

Why People Distrust Wall Street

Today is a prime example why investors are bearish, and why they can’t trust their money to Wall Street.  The “powers-that-be” can manipulate these markets at their will.  Yesterday, they gapped the market down 100 points on the Dow Industrials.  Today, they gapped it up 150.  Why?  The real answer is because they can.  The next reason is because this is the end of a week AND the end of a month AND the end of the quarter.  Typical window-dressing the last day of the quarter.  Typical election year support, as well.  They’ll probably do it again next quarter, too. I certainly would expect it.  And, don’t expect this to come back down later today.  It’s here or higher to close the day, would be my educated guess.  As long as they don’t make this a 500 or 750 point positive day, my weekly models still have negativity to them going forward.  I’ll update the weekly and monthly charts after this week is over, because who knows where this day will end.

Posted by: stockscooter | June 21, 2012

Flash Crash Time-Update

You heard it here first in my original “Flash Crash Time” post.  And  it has begun.  That’s right, it’s not over.  Now Goldman Sachs must be reading this blog because they too are now calling for a crash.  A little late, wouldn’t you say?  They’re pegging 1285 on the S&P 500.  If the initial momentum continues down on Friday and Monday, the low may exceed Goldman’s prediction.  So far, as the chart shows, it’s been straight down with no significant upside corrections.  Not a good sign, unless you’re shorting.:)

So what is causing this correction?  What news is out?  Nothing of significance from what I see.  However, I also don’t believe news moves markets-Sorry, CNBC watchers!  My forecast is based upon my work with inter-market analysis.  Remember my post, “Time for a Turn?”  That’s what’s causing this correction.  Rates are about to go up and that’s whats stirring the equity markets, in anticipation of the event.  As my Father-In-Law would say,”You just hide and watch!”

« Newer Posts - Older Posts »

Categories