Archive for the ‘Stocks - U.S.’ Category

How Concerning Are These 7 Bad Signs For Stocks?

Monday, August 21st, 2017

Scary Things About The Stock Market

There is never a perfect time to invest in the stock market. There is always something concerning on the technical, fundamental, and political fronts…. always. There are many “reasons stocks are in big trouble” lists floating around in 2017, including 7 signs the stock market is ready to run smack into a wall.

Let’s Examine The Bullish Side Of The Argument

Given the article outlines logical and rational bearish arguments, our objective is not to criticize the “7 signs” MarketWatch piece, but rather to provide an alternative, longer-term view.

Small Caps Drop Below 200-Day

How concerned should we be that the Russel 2000 Index dropped below its 200-day moving average? Since the S&P 500 bottomed in March 2009, small caps have dropped below their 200-day 23 other times. Despite the 23 pieces of bearish evidence, small caps have gained more than 300% over the same period. In the chart below (2009-2017), the Russell 2000’s 200-day moving average is shown in red.

Correlation Breakdowns

How concerning is the present-day correlation between the S&P 500 and the German DAX? The chart below shows the correlation between the U.S. stock market and German stock market dating back to the major bottom in equities that occurred in March 2009. Notice how the present-day correlation remains in the same range that it has been in since March 2009; a bullish period for stocks. Is it possible a weaker correlation could be followed by a pullback in the S&P 500? Sure, but in each case since March 2009, the S&P 500 went on to post a new high (it did not derail the long-term trend in stocks).

VIX Pops Above 200-Day

How concerning is it when the VIX Fear Index moves above its 200-day moving average? The chart below shows the VIX since March 2009; its 200-day is in red. The S&P 500 is shown below for comparison purposes.

Gold’s Rally

When gold is moving higher, does that mean stocks will move lower? The long-term correlation between the S&P 500 and gold is all over the place (see below). Sometimes gold zigs and the S&P 500 zags; other times gold zigs and the S&P 500 zigs in unison. In short, gold is not a reliable tool to monitor the long-term health of the stock market.

Transportation Weakness

Given the Transportation Average made a new all-time high in July, it may be too early to say much about the current pullback in terms of the longer-term trend. Since making the new all-time high, no significant new low has been made.

Hindenburg Omen/Market Breadth

Regarding the often cited as bearish evidence Hindenburg Omen, Barron’s sums it up this way:

“Don’t freak out just yet. The Omen does not have a very good track record for being right.”

Trump Agenda

While it is possible the lack of progress in Washington may be starting to weigh on the markets, it has not shown up on the long-term charts yet, as outlined in detail in this week’s video. The video compares the tops in 2000 and 2007 to August 2017.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



Long-Term Means Long-Term

The well-written MarketWatch article lays out some legitimate concerns; however, most of them speak to increasing odds of a possible short-term stock market pullback/correction, rather than a major trend change/new bear market.

The issues above could spill over into the longer-term charts, meaning it is always important to remain flexible and open to all outcomes, including wildly bearish outcomes. We will be monitoring the evidence day by day with an open mind.

Are Stock Market Trends Starting To Roll Over?

Friday, August 18th, 2017

Why Does The Present Day Market Always Seem So Difficult?

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



Skeptical Bias Toward Stocks Aligns With Bullish Charts

Monday, August 14th, 2017

Skepticism Common Before Multiple-Year Moves

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

“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.”

Is 2016-17 significantly different from 1981-1982? Yes, just as 1994 was different in many ways from 1982. However, there are some similarities between the early 1980s and 2016-2017, as outlined in detail on January 19. The topic of valuations is addressed in How Helpful Have Valuations Been Over The Past 30 Years?

Tech To Rise 600%? No Way

If someone told us in 1994 the NASDAQ would rise over 600% in the next seven years, it would have been extremely difficult to believe. In fact, given all periods in history have numerous things to be concerned about (including 1994 and 2017), human beings will always have trouble comprehending the possibility of long-term gains in the financial markets that fall into the 100% to 1,000% range. Similarities between 2016-17 and 1994-95 were outlined in detail in December 2016.

Skepticism Remains High In 2017

If you monitor stock market charts with an open mind, especially long-term charts, the August 14, 2017 Bloomberg headline below is a head scratcher, especially the “recession looms” portion. The headline writer’s choice of pessimistic words captures the mood of many in 2017 despite an overwhelming amount of long-term bullish evidence (see links at bottom of post).

Market Not Hinting At Imminent Recession

Rather than looking like a recession and bear market are right around the corner, the U.S. stock market appears to be setting up for a multiple-year bullish move, which is understandably very hard for many to believe, just as it was in 1981, 1994, or March 2009.

The charts below were first presented as long-term bullish evidence on December 13, 2016. The first chart below shows the S&P 500 as of Monday, August 14, 2017; notice how concerns about North Korea, which were also present in 1994-1995, have not significantly altered the present day long-term trends.

Does 2017 Look Like The Early Stages Of A New Bear Market?

This week’s video was recorded on August 11, after one of the worst trading weeks of the year for stocks. The video highlights the market’s present day profile in detail, including historical comparisons to past bearish turns and periods of tension between the U.S. and North Korea.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



Facts: The Basis For Long-Term Optimism

Even in the face of skepticism from the media and investors, the stock market’s profile has improved significantly over the past year. The links below show numerous examples of hard evidence that has come to light since August 1, 2016 that told us, and continues to tell us, to keep an open mind about all stock market outcomes, including much better than expected outcomes:

  1. Consensus View On Stocks Is Not Being Confirmed By Price
  2. The Market Is Telling Us Something Has Changed
  3. How Does 2017 Compare To Stock Market Peaks In 2000 And 2007?
  4. Signal Has Only Occurred 10 Times In The Past 35 Years
  5. History Tells Us Polls And Anticipated Market Reactions Can Be Way, Way Off
  6. S&P 500 Index: Rare Bollinger Band Width Worth Monitoring
  7. Reliable Contrarian Indicator Says Stocks Could Rise 25%
  8. Numerous Long-Term Signals Support Bullish Case For Stocks
  9. These Charts (1982-2016) Paint A Bullish Picture
  10. Stocks: 1987 Crash Or 1994 Buying Opportunity?
  11. Merrill Lynch Sees 1950s-Style Secular Bull Market
  12. What History Tells Us About Low VIX Readings & Stock Market Risk
  13. Secular Stock Market Signals Have Occurred Only One Other Time Since 1928
  14. How Helpful Have Valuations And Earnings Been Over The Past 30 Years?
  15. How Does 2017 Compare To Historical Bubbles?
  16. How Was The Collective Mood As Stocks Started A 19-Year Secular Bull Run In 1982?
  17. The Mother Of All Stock Market Signals
  18. Is Market Breadth Waving Bearish Flags?
  19. How Concerning Is An “Overbought” Reading On Weekly RSI?
  20. Rare Signal Says Stock Rally Is The Real Deal
  21. S&P 500: Rare Bollinger Band Signal Clears Important Hurdle
  22. Stocks Post 35-Year Breakout
  23. Why Odds Still Favor New Record Highs In Stocks
  24. How Concerning Is The S&P 500’s Pullback?
  25. This indicator had a divergence in both 2000 and 2007; a divergence is also present in 2017
  26. Are Defensive Assets Waving Red Flags For Stocks?
  27. Early Stages Of A Life-Changing Rally?
  28. Stocks: The Big Picture
  29. Numerous Charts Support Long-Term Bullish Case (Top vs. Bottom)
  30. Sector: Be Open To Enormous Upside In Stocks
  31. Low Volatility And Stock Market Risk
  32. How Concerning Are Predictions Of A Stock Market Crash?
  33. How Does 2017 Compare To Stock Market Peaks In 2000 And 2007?
  34. Are Stocks In A Bubble That Is About To Burst?
  35. Investing: The Incredible Power Of Staying In The Now
  36. Is The NASDAQ Showing 2007-Like Cracks?
  37. Is Volume/Breadth Aligned With Bullish Case?
  38. Stocks: The Forest And The Trees
  39. These Charts Paint A Long-Term Bullish Picture
  40. Is The Market Reacting To Earnings Or Just Charts?

Long-Term Means Long-Term

Even if stocks surprise on the upside in the next 5-15 years:

  1. Normal volatility, pullbacks, and harsh corrections will always be part of any bullish equation.
  2. Unfortunately, short-term fear and narrow framing will cause many investors to miss what could turn out to be a generational opportunity in the stock market.

If your response is “no way” to all of the above, keep in mind “no way” was a seemingly logical reaction in 1982 and 1994 as well, and yet, stocks exceeded even the most bullish expectations.

Is North Korea The Bear Market Tipping Point?

Friday, August 11th, 2017

Have The Bullish Charts Started To Crack?

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



How Concerned Should Investors Be About North Korea?

Thursday, August 10th, 2017

Today’s post can be found on See It Market.

Post Coming Later Today

Thursday, August 10th, 2017

See It Market will be posting some comments/facts/history related to the North Korea situation. We will tweet a link when the story is published.

Is The Market Reacting To Earnings Or Just Charts?

Monday, August 7th, 2017

S&P Profits

Are corporate results improving or is the stock market rising based purely on technicals? From The Fat Pitch:

“The headline numbers for 2Q17 financial reports are good: S&P profits are up 19% year-over-year; sales are 6% higher; profit margins are at new highs. This is in stark contrast to early 2016, when profits had declined by 15%.”

Simple Can Be Powerful

The chart of the NYSE Composite above can be powerful based on its simplicity. This week’s video reviews the three basic types of markets in the context of risk vs. reward in 2017. The present-day charts reveal a great deal when viewed in the proper context.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



Economy Has Room To Run

Those who lived through the dot-com and housing bubbles know the present day shares very little with those excessively euphoric periods. From The Wall Street Journal:

Expansions tend to get tripped up by boiling excesses, like a housing bubble in the 2000s, a tech bubble in the 1990s and inflation in the early 1980s. But this economy appears to have some more room to run as it enters its ninth… Compared to six months ago, the global economic outlook has certainly shifted in a positive direction,” said John Silvia, chief economist at Wells Fargo. In the U.S., “there are more jobs, and better jobs, and that’s a confidence builder.”

As Long As The Trends Remain Favorable

The markets started telling us to be open to better than expected long-term outcomes in August 2016. Given the long-term facts in hand continue to favor good things happening relative to bad things happening, we will continue to run a growth-oriented allocation until the facts shift in a material manner.

Stocks: A Simple And Powerful Concept

Friday, August 4th, 2017

What Does It Tell Us About Risk?

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



Video Schedule

Friday, August 4th, 2017

Depending on how things play out, video may be posted very late Friday evening (10 pm to 1 am ET window).

These Charts Paint A Long-Term Bullish Picture

Tuesday, August 1st, 2017

Markets Were In Conflict

According to, trading ranges speak to a fairly even battle between stock market bulls and stock market bears:

Price action depicts a market in conflict. Only until the price breaks above resistance or below support will it be clear which group has won the battle.

As shown via the 1981-2013 S&P 500 chart below, neither the bulls nor the bears made much sustainable progress between 1996 and 2013, which resulted in a long-term trading range.

A Picture Is Worth A Thousand Words

The S&P 500 broke above prior resistance in 2013, meaning the bulls won the long-term battle that took place between 1996 and 2013. The lows in 2015 and 2016 served as a retest of the 2013 breakout.

Where Does The Average Stock Stand?

Has the average stock broken above long-term resistance? This week’s video uses present day market fractals to help assess the outlook beyond the major U.S. stock indexes. Some fascinating market fractals have formed over the past 35 years, which may have a significant impact on stock market behavior over the next 20 years.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



Dow Jones Industrial Average

The Dow entered the box in 1996 and remained there until the breakout in 2013.

NASDAQ / Tech Stocks

In 2016, the NASDAQ completed the trifecta by breaking above resistance that dated back to the highs made at the peak of the dot-com hysteria.

2017 And Beyond

From a short and intermediate-term perspective, markets will always be volatile and challenging. However, given what we know today, the charts above tell us the odds favor good things happening over the next 5 to 20 years. Therefore, under our approach, we will continue to give the long-term trends the benefit of the doubt as long as they remain in place. The closer we watch the markets and our account balances, the more difficult it will be to stay focused on the longer-term, and bullish, outlook.