Did the Past 7 Weeks of Rally Lull You to Sleep?
Here’s why you SHOULDN’T get too comfortable
Bear markets are cunning beasts.
Don’t get me wrong — we are not in the bear market territory yet. At least, not officially.
An “official” bear market begins when the stocks indexes decline 20%. The DJIA’s decline from the May 2, 2011 high to the September 21 low is about 17%. Close, but no cigar.
Add to that the strong rallies we’ve seen over the past few weeks (Sept. 12-20: +685 points in the Dow, for example) — and lots of people conclude that despite the volatility, things aren’t so bad. Continue reading
Six Straight Weeks of Decline Take DJIA Below 12,000: What Now?
Before blaming falling stocks on the most recent weak economic reports, let’s check some dates.
As of June 10, the Dow has suffered the “longest losing streak since the fall of 2002. The market’s last seven-week stretch of losses began in May 2001, as the dot-com bubble deflated,” reports The Associated Press.
As for why stocks are falling, most observers agree: Blame “weaker hiring, industrial output, and a moribund housing market.” The economic reports from the past two weeks made that clear.
But wait a minute. The DJIA didn’t top in the past two weeks — Continue reading
Head and Shoulders Stock Market Pattern: Still Valid?
A Multi-Year Technical Analysis Pattern “Bears” Watching
By Robert Jay
description of its three main components:Just Your Average 300-Year Bear Market?
Long-Term Trend Forecasting is Actually Easier than Short-Term
By Robert Jay
Most people who analyze the present give too little thought to the past, even when previous decades or centuries offer acutely relevant information. This is particularly true in the financial world, where short attention spans are chronic. A Sept. 9 article in The Economist magazine put it this way:
“The financial world seems to be obsessed with the short term. Fund managers are usually judged on their performance over a three-month period. The television news highlights daily moves in stock markets. Lots of hedge funds think in terms of milliseconds.”
But would you be surprised to learn that long-term stock market trends are generally easier to forecast than short-term ones? EWI’s Robert Prechter says just that, and explains why…
Read the rest of this Entry
3 Reasons Now is Not the Time to Speculate in Stocks
After the investment winter of 2008, in 2009 as stocks began showing some “green shoots” and looked a bit like spring, 2010 has looked a bit like Summer or Autumn with prices flattening out and going nowhere. Does that mean that investment Winter is just around the corner again? Here is Robert Prechter’s take on the situation. ~editor
Sometimes the investment weather forces you to ‘buy a coat,’ says Robert Prechter
By Elliott Wave International
When it’s sunny, you head outside without a thought, but when it’s rainy, you look for your umbrella.
When the markets are trending up, you don’t worry about your investments much, but when the markets turn bearish … what do you do? Continue reading
All Golden Eggs in One Basket
Dear Editor,
I am a college student and amateur trader. I have a friend of a
friend who I have the unfortunate acquaintance with every now an then,
and when so I get to hear his loud obnoxiousness. He is a strong
believer in the “fraud” of Keynesian Economics and thinks I am
“foolish” to invest in stocks. He has recently inherited a fair sum of
money and has invested it solely in Silver and Gold. Continue reading
Stocks Setting up for Big Slide
By Tim McMahon, editor
Historically whenever the 10-year Treasury yield drops 1.2% over a short period of time a bear market for stocks resulted within two months . This signal presaged steep market crashes in 1990, 2000, and 2007.
The Treasury yield signal is now flashing a major warning. On April 5th, 2010 the 10-year Treasury bond was yielding 4.01% and is currently yielding only 2.79%. So over four months the T-bond yield has fallen 1.22%. By this signal we can expect a 20% drop in the stock market over the next two months and it is possible that the beginning of that drop has begun today with a 2.5% drop. Continue reading
S&P Video Update- Which way from here?
The S&P 500 is turning out to be a conundrum for many professionals and home traders alike. The conflicting information on good earnings, high unemployment, and other factors continue to batter the market.
One moment the SP500 is heading for the stars and the next, it’s heading to the cellar.
So what’s a trader to do?
In my new video, I share with you some steps you can use to help improve your trading in the S&P 500 and other markets. The new video is approximately 3 minutes long and it will show you several key areas and levels that I am looking at.
As always our videos are free to watch and you do not have to register.
I would like to see your feedback on how you see the market, as so many traders are becoming frustrated with the lack of real follow-through in either direction.
Enjoy the video and all the best,
Adam Hewison
President of INO.com
Co-founder MarketClub Continue reading
Big Bear Markets: More Than Falling Stock Prices
A look at history shows that when markets go haywire people do some strange things to try to cope. The mass psychology of an entire country is intricately connected with the state of the markets. We saw a small sample of this in the panic that accompanied the market melt down of 2008. People were willing to put up with any sort of government boondoggle in exchange for a glimmer of hope that it might help. Robert Prechter has studied this interconnection and even coined a term for the phenomenon he calls “Socionomics”.
Let’s take a look at what could happen if Prechter is right and we see some major market pain from here. ~Tim McMahon, editor
Big Bear Markets: More Than Falling Stock Prices
Many infamous authoritarian regimes emerged during or after big bear markets
By Elliott Wave International
Fear and uncertainty that drive a severe bear market are the same emotions which can set the stage for authoritarianism, in most any nation.
“Bear markets of sufficient size appear to bring about a desire to slaughter groups of successful people. In 1793-1794, radical Frenchmen guillotined countless members of high society. In the 1930s, Stalin slaughtered Ukrainians. In the 1940s, Nazis slaughtered Jews. In the 1970s, Communists in Cambodia and China slaughtered the affluent. In 1998, after their country’s financial collapse, Indonesians went on a rampage and slaughtered Chinese merchants.” - Bob Prechter, Wave Principle of Human Social Behavior, p. 270
Why do authoritarian tendencies emerge only during bear markets in stocks? Continue reading
‘Defensive’ Stocks: Are They the Ticket in a Downturn?
In a severe sell-off, 99 percent of ALL stocks can fall.
By Elliott Wave International
Approximately three out of four stocks go down in a bear market. This ratio doesn’t just apply to high beta names; historically, 75 percent of all stocks go down when the general market falls.
Considering we could be headed into a severe bear market (read Bob Prechter’s latest special two-issue Elliott Wave Theorist, if you haven’t yet), we could see more than 75 percent of stocks take a dive. In that case, even a basket of “defensive” or “quality” names isn’t likely to help your portfolio. What good are dividends when you’re losing far, far more through capital depreciation? Continue reading
