You may find this up and down action to be very confusing. But if you step back and look at the chart it's easy to see what is happening.
Frequented Asked Questions:
We talked about the big trends impacting the market now and what we are both keeping our eye on in the charts. This broadcast was part of This Week in Money.
Dave talked about the big runs seen recently in biotech and tech stocks and what appears to be the start of a new bull market in gold and mining stocks.
I think you'll be interested to see what sectors are now leading the market and which ones are now doing poorly and are essentially in bear markets right now.
Bloomberg estimates that all together investors took out $38.8 billion from the gold market in 2013.
I just did this interview with Ike Iossif of marketviews.tv about his views on the stock market right now and what his indicators are showing.
So you can see in this chart how in past bottoms the VIX jumped above its upper 200-day Bollinger Band and then had a key reversal day - a day in which it went up a lot during the day and then fell to close in the red.
The Baltic Dry Index which tracks shipping rates is starting a new bull market. It has really been in a bear market since 2008, but jumped up in 2009 and then collapsed again at the end of 2011 in the "euro crisis.". Since then it has formed a stage one base and broken out of that base in the past few weeks.
I just did this podcast with Jeff Pierce of www.zentrader.ca.
In this podcast Jeff and I talked about the rally in the DOW, Nasdaq and strong trending stocks and sectors in Japan, solar stocks, and chemical stocks that are making for good short-term trades. We also talked about gold.
I just did this fascinating interview with Ike Iossif of marketviews.tv.
Ike interviews many people each week for his Marketviews.tv website, including myself, and has them categorized by methodology. These people are many of the top thinkers and traders when it comes to the financial markets, such as people like Frank Barbera and Dan Zanger who turned less than $30,000 into millions in less than a year.
The stock market is at an expensive valuation. Of course this means nothing in regards to what the stock market may do tomorrow, next week, or next year. It means nothing when it comes to trading the market, but it means everything if you want to invest now and hold something for a few years.
I take this as evidence that the stock market is not on the verge of some huge correction or crash right now. If the market is going to have one this year, and usually it does have at least one 10% correction every year, it would have to first be preceded by weeks of sideways action to form a top.
I just did this podcast with Ike Iossif of www.marketviews.tv. In this interview Ike talked about the recent action in the VIX, how his intermediate-term indicators remain bullish, and the time risk that may be involved in the next bear market when it comes that no one is talking about - let alone thinking about.
Yesterday was another nasty day for the stock market as the DOW fell 185 points. The stock market has been in a correction since September within a cyclical bull market that began in 2009. We have seen corrections like this before as they have happened at least once every year for the past three years. The last time one happened was back in the Spring when the market peaked in March and made a bottom in June.
Looking at the short-term trend I don't like the action of the past few days. After a big dump like we saw on the 330 point DOW down day last week normally you see the stock market make a big bottom or else pause a few days and then drop again. It seems like the latter is more likely. Yesterday the S&P 500 was even while the VIX fell over a point. That is the type of action you see during a correction that makes it look like it is not over.
Yesterday the DOW dumped over 200 points and the VIX got near 20. The put/call ratio went above one again and the ratio of down to up volume on the NYSE reached 95% for most of the day. Yes this is more panic selling. The fear is also showing up in investor surveys and even emails I'm getting from people now. This morning's Investors Intelligence poll shows that the number of bulls fell again in this past week while the bears have gone up. The numbers now stand at 41.5% bulls and 27.7% bears.
On CNBC yesterday investment thinker Marc Faber stated that he thinks that there will a big mess in the markets and global economy in 5-10 years due to the growing government debt crisis. "I think the regimes will try to keep the system alive as it is for as long as possible, which means there's no fiscal cliff, there's a fiscal grand canyon," he said.
"I think the deficit here (in the United States) - irrespective of who is in the White House - will stay above a trillion dollars per annum for at least as far as the eye can see," Faber said.
I just did this podcast with Ike Iossif of marketviews.tv.
In this interview I talked to Ike about a technical model he has discovered that uses the difference in the strength of the long-term and intermediate-term trend in the market to generate buy and sell signals and what it is saying about the market right now.
Yesterday the Nasdaq fell over 45 points as several Wall Street analysts downgraded Intel and some other tech companise on earnings worries. Next week Intel will report earnings. Usually if the market rallies up into earnings it sells off a bit afterwords once earnings announcements come out while if it falls into earnings it rallies once they come out. What happens is that traders pretty much position themselves ahead of earnings so the news gets all baked in by the time it gets on to the TV screen.
According to Investors Intelligence in their last report the number of people who they polled and told them that they were bullish near the stock market peak for September was 54.1% while the number of people bearish was at 24.50%. 54% is a fairly high reading for the number of bulls and major peaks have come in the stock market during the past three years at readings of 55% and above.
Yesterday the DOW fell over 100 points and the S&P 500 fell 15 points. What is even more noteworthy though is that on the NYSE 90% of the orders were sell orders. This was panic selling.
The truth is a lot of people doubt that this rally is real and there are some people that get nervous at any sign of weakness and sell out. I'm sure there are many hedge fund managers that have felt like they have been forced to buy just because the market was going up and they can't miss out and not because they believe in it, so are quick to sell at any sign of weakness.
I've mostly been writing about the long-term trends of the market. Back at the end of July I started to talk to you about how cheap the valuations are in global markets outside of the United States and how bull markets seemed to be lining up to start there and in gold. And then I began to buy and show you exactly what I was buying, how much, and when. And things have gone up. New bulls have started just about everywhere.
I haven't said a whole lot about the short-term moves though. It looks to me right now we are seeing a little pause. Take a look at this chart of gold.
I just did this video market update for you. What I was thinking about before I did the video is a simple question - right now what can we know about the market and what can't we know? Well we can't know exactly how the Euro crisis is going to play out, we can't know whether Greece will default or not, we can't know whether Romney will win the election or whether Obama will be win - simply put there is so much that we can't know that it can easily make you to nervous or uncertain to do anything.
You simply can't predict the future.
I just did this podcast with Dave Skarica of addictedtoprofits.net. In it we talked about the current stock market action and investing in Europe and the world. He sees many similarities ti what is happening now in the stock market and what happened in the summer of 2010 before the Bernanke began his QE2 money pump.
I just did this podcast with Nicholas Santiago of InTheMoneyStocks.com. I haven't talked with Nick for several months so I was really curious to see what he thinks about the stock market now.
He thinks the market is going to up over the next few days or week or two and then peak out and dump again like it did in April and May. He thinks the Fed though will pump money out in the Fall to stabilize the market and give the Wall Street interests what they want.