Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Stocks Bear Market Focus Point: Bull Trap Warning in equities still holds

Stock-Markets / Stocks Bear Market Apr 19, 2012 - 09:34 AM GMT

By: Garry_Abeshouse

Stock-Markets

Best Financial Markets Analysis ArticleTwo months ago in my last posting, I warned of an impending Bull Trap in equities. As the hedge funds do their ‘thing’ during this week of expiring  options, we see as in previous times, how easily they can create at will, short sharp rises in selected equities, that somehow seem to magically materialise from nowhere and often end up actually going nowhere. These are just the market plays of yet another market Bull Trap. 


At this time of the month, the bulls amongst the Hedge Funds try to take advantage of market apathy by pushing up the markets on low volume in order to better their positions, while the bears amongst them may see their short positions being squeezed and are pushed to send the markets higher as well, while they cover their positions.  But each month at option expiry time it’s technically different, depending on where the market is relative to recent bottoms and tops. These mid to late month moves in the financial markets, also make many of the media’s financial commentators look a bit stupid as they indulge in their daily search for reasons explaining the previous day’s market rises and falls.

Where do the Hedge Funds’ profits go?
According to Simon Lack’s recently published book “The Hedge Fund Mirage”, the bulk of Hedge Fund profits are not even derived from profits, but from fees charged, with apparently 97% going to insiders and a measly 3% to investors. He states that "If all the money that’s ever been invested in hedge funds had been put in treasury bills instead, the results would have been twice as good.".

As a reminder to the reader of what I said last time:
‘Bull Traps challenge our ability to see through all the media crap, (sorry, financial journalism) and newsletter promotional froth and bubble, so we may better ascertain what the future beholds. 

Market tops can be an extremely drawn out process containing a series of peaks over many years, each one a Bull trap. It is all part of the long drawn out unravelling process emanating from the material and financial excesses in our past.”

This particular Bull Trap is still working its way through a complicated process, which this time includes an up and coming USA Presidential election. But as long as financial markets have been around, most of the major falls have been born from the false dawn of a Bull Trap - and I do not expect this time to be very different. 

Corporate style imperialism is a highly profitable way of doing business
It just goes to show that the combination of brilliant innovation, impressive marketing, temporary lack of effective competition and essentially what should be construed as the use of slave labour, is an unbeatable combination for obtaining massive profits. But it is Peak Optimism and nothing else that defines when a market leader has reached its price peak in the financial markets. So the big question we all should be asking about Apple is – have we reached that time?

Peak optimism on future earnings of market leaders such as Apple have almost always been a key feature of major market tops. Between 2003 and 2007 Apple rose from $6.68 to $202.96. After falling to $79.14 during the financial crisis in 2008 it then rose to $644 just a few short days ago. This means the stock has doubled and redoubled approx. six and a half times since its 2003 lows just over nine years ago. (Note – I do realise that the lowest price for Apple was $1.78 in 1985, just after the introduction of its first Macintosh computer, but I consider that too far back in history to be relevant now.)

In conclusion
The charts I wish to highlight today are simply the ones I showed you last time on February 16th 2012 – with some minor trend adjustments. This allows you to compare the same charts over the last two months, so you can see what has or has not happened over this time. Take special notice of where current prices lie relative to price support and resistance and the trend lines shown. I shall show these same charts again over the coming months as the unravelling process continues.

And as George Soros depressingly summed up the state of the European union a few days ago, writing for Project-Syndicate.org:
‘Whether or not the euro endures, Europe faces a long period of economic stagnation or worse. Other countries have gone through similar experiences. Latin American countries suffered a lost decade after 1982, and Japan has been stagnating for a quarter-century; both have survived. But the European Union is not a country, and it is unlikely to survive. The deflationary debt trap is threatening to destroy a still-incomplete political union.’  He still sees the relationship between Germany and the rest of Europe caught up as they say ‘between a rock and a hard place’ - an intolerable situation without the prospect of a satisfactory solution in sight.

In Part 2 of this series I shall show charts highlighting the current relative weakness in commodities. This being a further sign of how the unravelling of the world’s major consuming economies are as we speak, having a negative feedback effect on  countries supplying raw materials, such as Australia, Brazil and Canada and those that in turn converting those same raw materials into consumables, such as China and other low wage countries. 

Daily Charts


Weekly Charts

 

Below – Complacency still rules

Till next time.

Garry Abeshouse
Technical Analyst.
Sydney
Australia

garrya@bigpond.net.au

I have been practicing Technical Analysis since 1969, learning the hard way during the Australian Mining Boom. I was Head Chartist with Bain & Co, (now Deutsch Bank) in the mid 1970's and am now working freelance. I am currently writing a series of articles for the international "Your Trading Edge" magazine entitled "Market Cycles and Technical Analysis".

I specialise in medium to long term market strategies.

© Copyright Garry Abeshouse 2012

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules