Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Dow 30k before End of 2020? - 13th Jul 20
Credit Market Investments Turned Into End-User Risk Again - 13th Jul 20
Investors Are Going All-In on This Coronavirus Proof Industry - 13th Jul 20
5 Vital Insights That You Can Gain From Instagram Trackers - 13th Jul 20
Stop Believing The 'Economy' Is The Same As The Stock Market - 12th Jul 20
Spotify Recealed as The “Next Netflix” - 12th Jul 20
Getting Ahead of the Game: What Determines the Prices of Oil? - 12th Jul 20
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Stock Market Getting Frothy ?

Stock-Markets / Stock Markets 2014 Jun 28, 2014 - 08:04 PM GMT

By: Tony_Caldaro

Stock-Markets

The general market made a new bull market high on Tuesday at SPX 1968, dropped to 1945 by Thursday, and then rallied to 1961 to end the week. For the week the SPX/DOW were -0.35%, the NDX/NAZ were +0.90%, and the DJ World index was -0.25%. Economic reports for the week were slightly positive. On the uptick: existing/new home sales, personal income/spending, consumer confidence/sentiment and PCE prices. On the downtick: Q1 GDP, Case-Shiller, durable goods orders, the LEI and the monetary base. Next week we get reports on Nonfarm payrolls, ISM and the Chicago PMI.


MARKET VALUATION: Wilshire 5000 v US GDP

This week Q1 GDP 2014 was reported lower than the previous quarter for the first time since Q2 2009. The end of the great recession. While the stock market took this information in stride, blaming the decline on the weather, we are starting to get concerned about market valuations. The best day-to-day measure of the total equity market capitalization in the US, is the Wilshire 5000.

On Tuesday, the day before the GDP report, the Wilshire 5000 hit $20.909tn. With GDP currently at $17.016tn, this represents a 23% premium over the total economy in the US. Of course, lots of US companies do lots of business overseas. Since the mid-1980′s, however, a total market cap with this kind of premium over the GDP has only been reached twice: 1998 and 2000. Notice the 2007 high, which was also an all time high, was only a 9% premium over the GDP. And prior to 1997, bull markets topped before even reaching a premium. The stock market certainly looks a bit frothy at current levels.

LONG TERM: bull market

The bull market hit a new high this week. At the high it was +6.5% for the year with nearly six months completed. Last year the market gained 29.6% for the entire year. This market does appear to be struggling at these lofty valuations.

We continue to count this bull market as Cycle wave [1] consisting of five Primary waves. Primary waves I and II completed in 2011 and Primary wave III has been underway since then. When it concludes, which could occur in the next few months, the market could experience its largest drop since the 22% decline during Primary II in 2011.

Currently Primary III is in its fifth wave, Major wave 5, from the October 2011 low. Major waves 1 and 2 completed in late-2011, and Major waves 3 and 4 completed in early-2014. Major wave 5, however, is subdividing into five Intermediate waves. Intermediate waves i and ii completed in April, and Intermediate iii has been underway since that low. When this Int. iii uptrend ends we should see a small correction for Int. iv. Then another uptrend to new highs to end Major 5 and Primary III. We have been expecting a June high, July low, August high. But the current uptrend may stretch into July.

MEDIUM TERM: uptrend

The current uptrend, Intermediate wave iii, has been rising since mid-April at SPX 1814. We have been counting it as five Minor waves with a subdividing Minor wave 3. Minor waves 1 and 2 ended at SPX 1885 and 1851 respectively, and Minor wave 3 ended just this week at 1968. Minor wave 3 was approximately 1.618 times Minor wave 1. We are currently expecting Minor wave 4 to unfold, before Minor wave 5 takes the market to new highs and completes the uptrend.

This week we had a decline from SPX 1968: 1947-1961-1945. Originally we labeled this as Minute waves ‘a’ and ‘b’ expecting Minute ‘c’ to follow. The market, however, rallied back to SPX 1961 on Friday and closed there. This suggest this three wave decline was only Minute ‘a’ of an expected Minute a-b-c Minor wave 4. The current rally is probably Minute ‘b’. When it concludes, momentum ended the week overbought, Minute ‘c’ should follow. We have been expecting the market will find Minor 4 support around the OEW 1929 pivot. Medium term support is at the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots.

SHORT TERM

Short term support is at the 1956 and 1929 pivots, with resistance at the 1973 and 2019 pivots. Short term momentum ended the week overbought. The short term OEW charts are positive with the reversal level now SPX 1956.

The hourly chart displays the entire movement of all the waves within this uptrend to date. Notice many of the pullbacks were quite short in time and similar in price. The pullbacks have generally taken 2 to 4 days, ranging between 31 and 40 points. Thus far, the current pullback has only has a 2 day (Tues.-Thurs.) 23 point decline. After a two month Minor wave 3 advance this appears to be too short, and small, for a Minor wave 4. The NDX made a new high on Friday, while the NAZ came within one point of its high. When they rollover the SPX/DOW will probably finish Minor wave 4.

FOREIGN MARKETS

The Asian markets were mixed on the week gaining 0.1%.

The European markets were all lower losing 2.6%.

The Commodity equity group were mixed and lost 0.7%.

The DJ World index is still uptrending but lost 0.3%.

COMMODITIES

Bonds remain in a downtrend but gained 0.6%.

Crude is still uptrending but lost 0.8%.

Gold remains in an uptrend and gained 0.1%.

The USD appears to be downtrending and lost 0.4%.

NEXT WEEK

Monday: Chicago PMI at 9:45 and Pending home sales at 10am. Tuesday: Construction spending, ISM manufacturing and Auto sales. Wednesday: the ADP index and Factory orders. Thursday: Monthly payrolls (est. +220k), weekly Jobless claims, the Trade deficit and ISM services. Friday: Independence day holiday. On Wednesday FED chair Yellen gives a speech at the IMF on Financial Stability. Best to your weekend and week!

CHARTS: http://stockcharts.com/public/1269446/tenpp

http://caldaroew.spaces.live.com

After about 40 years of investing in the markets one learns that the markets are constantly changing, not only in price, but in what drives the markets. In the 1960s, the Nifty Fifty were the leaders of the stock market. In the 1970s, stock selection using Technical Analysis was important, as the market stayed with a trading range for the entire decade. In the 1980s, the market finally broke out of it doldrums, as the DOW broke through 1100 in 1982, and launched the greatest bull market on record. 

Sharing is an important aspect of a life. Over 100 people have joined our group, from all walks of life, covering twenty three countries across the globe. It's been the most fun I have ever had in the market. Sharing uncommon knowledge, with investors. In hope of aiding them in finding their financial independence.

Copyright © 2014 Tony Caldaro - All Rights Reserved 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.

Tony Caldaro Archive

© 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