Stocks Bull Market Appears to have a Destiny With 1929

Stock-Markets / Stock Markets 2018 Jan 23, 2018 - 05:19 AM GMT

The stocks bull market continues to confound my expectations for a significant correction which is just failing to materialise! Firstly understand this, I AM a stock market bull i.e. I am net long of the stock market, so a rising stock market is good for my portfolio. BUT, for a while now I have not considered this ongoing rally to be healthy for the life of the stocks bull market, and why despite being a bull I am BEARISH for its prospects.

For instance my last update on the stock market at the start of 2018 concluded in expectations for an imminent correction towards Dow 23,000 from the then lofty level of 24,700.

01 Jan 2018 - Dow Stock Market Trend Expectations into Early 2018

A quick look at the Dow chart shows that despite being overbought, the Dow is not showing signs for an imminent demise to this stocks bull market. Whilst the most probable trend likely to materialise over the first few months of 2018 is for the Dow to revert back down towards hugging the central trendline that currently stands at very distant 23,000. So ahead of my in-depth analysis I would not be one for expecting the Dow's December surge to continue during January, instead expect the Dow to unwind its overbought state.

Clearly given the ongoing rally the market is continuing to deviate from my expectations. For me this is a RED DANGER WARNING FLAG! That I need to do in-depth analysis of to try and get a grip with, and even then I may not be able to wrap my head around the markets current behaviour. However, the thought that is increasingly coming to mind is 1929. You know what happened in and after 1929, the stock market did not just crash, it crashed and burned for three long years from a peak of around 390 to a low 40!

Yes, I am a stocks bull, and despite being bullish on sectors such as Artificial Intelligence, I am seriously considering liquidating most of my remaining stock holdings which despite the rally are at about 50% of peak exposure i.e. I sold 50% of my holdings a year ago, and sold some more during the remainder of 2017. But seriously this is not healthy, yes, I am prepared for a temporary 20% to 30% loss on what's left when the market turns, not 'IF' but when it turns! BUT a 90% LOSS over 3 years! That would be PAINFUL!

So take this as another warning to lighten your stock holdings as I will continue to do so as to limit the damage done when the SHTF. And ensure you are subscribed to my always free newsletter and youtube channel for my forthcoming in-depth analysis and detailed trend forecasts.

Your worried bearish stocks bull.

By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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 trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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Comments

kudikyala
03 Feb 18, 05:30

Just in time!

Hi Nadeem,

I love your insights into stock market and following you for last 8-10 years. The comment you made on 01/23 clearly reflects irrationality built into current market behavior and indicates how close it is to for a well deserved correction. AND FINALLY MARKET yields and starts the process from 01/28 and followed through on Day5 on 02/02.

(hopefully!!) We will see how it unfolds next 2-3 months.

>>That I need to do in-depth analysis of to try and get a grip with, and >>even then I may not be able to wrap my head around the markets >>current behaviour

Nadeem_Walayat
03 Feb 18, 23:07

Stock Market Analysis

Yeh, I should could have should have done it, but didn't, neverthless I have been bearish for the prospects for stocks this year. Will do a semi-indepth analysis shortly, after I take a look at bitcoin.

Best

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