Where Will The US Stock Market Crash End?

As the carnage continues with stocks now ignoring anything the Fed throws at them — and the Fed has pretty well thrown everything it has used in the past and is now moving into bailout mode — where is the US stock market crash likely to to stop falling? So far, it’s been limit-down all the way.

Before posing “The Fed is Dead” later today, I wanted to rush this out because I can get it published quickly:

The above graph shows two reasonable targets that I would suggest.

Three Stages Of Bull And Bear Markets

By Mark J Lundeen – Re-Blogged From Gold Eagle

What a wild week; I’m overwhelmed!  In my articles I usually find a narrative theme with which to insert my graphics in.  But this week the only theme that comes to mind is what an awful week it was – just awful.  Come to think of it, that’s actually a pretty good theme to use for a week like this.  So all hands standby for heavy rolls to both the port and starboard, as here’s the Bear’s Eye View of the Dow Jones.

Every day this week the Dow Jones saw a 2% day, a day of extreme-market volatility and almost broke below its BEV -30% line on Thursday.  It’s hard to believe, but the Dow Jones saw its last BEV Zero (all-time high) just a month ago (twenty-two NYSE trading sessions ago) on February 12th.  Since then the bottom has fallen out of the stock market as painfully evident in the BEV chart below.

Starting next week, I’m recalibrating my Dow Jones Corrections based on something more than just a 30% decline.  Thursday saw the Dow Jones’ BEV value close at -28.26%.

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Stock Market Overmedicated on FedMed, Patient Goes into Cardiac Arrest

By David Haggith – Re-Blogged From Silver Phoenix

The Federal Reserve on Tuesday gave the market a double-dose of exactly what it thought the market needed, and the market just about died! On the theory that, if a little is good, more is better, the Fed gave a double cut of interest. It did not go as planned.

At first, the medicine hit like nitroglycerin tablets, and the patient’s heart leaped. You can see how instantly the patient bolted up on the operating table in the graph, but the double dose the Fed administered was too much, and by the end of the day the patient’s vital signs were down 785 points.

Simultaneously, bond yields busted through a major psychological barrier with the 10-year yield going deep into a coma below the 1% near-death zone to rest at 0.97%!

Fighting Inflation, Fighting Deflation, Fighting For Their Lives

By Mark J Lundeen – Re-Blogged From Gold Eagle

The Dow Jones Index closed the week down 5.38% from its last all-time high of July 15th, a month ago. But looking at the Dow Jones as Mr Bear does in the BEV chart below, with every new all-time high registered as a 0.0%, or BEV Zero, and all other daily closings as a percentage decline from their last all-time high, comes short of displaying what has happened in the stock market since July 15th.

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A Look At Futures Contracts

Mark J Lundeen – Re-Blogged From Gold Eagle

Every bull market advance eventually sees its last all-time high. No one rings a bell when it happens, but from that point on things begin to change for the worse for the bulls.

The Dow Jones’ BEV chart below begins at the -54% bear-market bottom of the 2007-09 credit crisis. We don’t see a -54% BEV value as I began this series on the March 09, 2009 bear-market bottom. So instead we see a 0.00%, as the first data point of all BEV series begins at zero percent.

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GE’s Century on the Dow Nears End as Drumbeat Builds for Removal

Re-Blogged From Newsmax

General Electric, an original and steadfast component of the Dow Jones Industrial Average for over 110 years, may get the boot.

Deutsche Bank analyst John Inch wrote in a note to clients that the illustrious index could remove the manufacturing conglomerate as its challenges accumulate.

Image: GE's Century on the Dow Nears End as Drumbeat Builds for Removal

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Dow 20,000 Deja Vu

cropped-bob-shapiro.jpg   By Bob Shapiro

In the last 50 years, prices have gone up around 20 times. Aside from the obvious fact that the FED’s printing of new Dollar Bills out of nothing has stolen 95% of the Dollar’s value, I find it interesting when I consider the Dow Jones Industrial Average.

Around 50 years ago, the Dow approached the 1000 mark for the first time. (I recall seeing a Broaway show “How Now Dow Jones” which used Dow 1000 in the plot line.)

dow-65-to-82

But, the Dow couldnt make it past 1000 at that time. It pulled back by 25% and made another run in ’69, but still it fell back – way back.

The Dow made another 3 tries – and even made it 7% above 1000 before the Recession in 1974 – but it wasn’t until 1982 that the Dow finally broke above 1000 for good.

That was 16 long years that the Bulls had to wait. If a market player had invested all he had in 1966, it took him 16 years before he could start to make a profit.

Of course, the CPI kept going up, so Dow 1000 in 1982 wasn’t worth nearly as much as Dow 1000 was in 1966!

If we consider today’s Dow 20,000 – after prices have run up 20 times – the stock market looks very similar to 1966 with the Dow at 1000.

Except that today:

  • The FED has been printing Dollars for the last 10 years at a much faster pace than it did between 1956 and 1966.
  • The PE Ratio today is around 50% higher than on the Dow 50 years ago.
  • The stock buybacks of today, with their manipulative effect on earnings, were only a twinkle in corporate officers’ eyes in 1966.
  • The Dollar still was “As Good As Gold,” and was 3-4 times the value in 1966 to other currencies compared to today, even after the recent run up.
  • The numbers coming out of DC for such items as Prices and Unemployment were reliable back then, as opposed to the laughable fictions they are today.

So, I guess maybe today’s Dow 20,000 is a bit overextended compared to Dow 1000 in 1966. In 1974, the Dow fell around 50% peak to trough.

But if the Market and the Economy are not in as good shape today as in 1966, then maybe the coming fall from grace will be much bigger.

Do I need to say, “Look out below?”

The FED and the Elections

cropped-bob-shapiro.jpg   By Bob Shapiro

The Stock Markets often predict the outcome of Presidential elections. If stocks are up – or even if they just are flat – the party which holds the White House tends to win the election. If stocks are down – especially if they’re down big time – the opposite party is favored to take the day.

The Dow Jones Industrial Average has been in the 18,000 area for the last two years, and as the US Economy has stagnated, the PE Ratio has gotten up to a near bubble level over 25. This has been achieved single handedly by the FED, which except for last December’s hike, hasn’t raised rates for 10 years, keeping them near zero for several of those years.

fed-funds-85-2016

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Dr Copper, The Economy And The Stock Market No Longer In Sync

By Sol Palha – Re-Blogged From http://www.Silver-Phoenix500.com

Doctor copper, can no longer be viewed as a leading indicator, in fact, a name change might be in order. A change of name from Dr Copper to deadbeat copper might in order, given its dismal record over the years.  After the financial crisis of 2008-2009, the economy, the stock markets and copper parted ways; while the markets and the economy trended higher, copper plunged into an abyss, and it is still trying to find its footing.

All Jokes aside, the reason copper is diverging from the markets is because the Feds destroyed the concept of a free market system long ago.  Copper is indicating that this economic recovery is nothing but an illusion.   However, several rounds of QE, plus interest rates being held down for a record-breaking period, have altered reality.  The markets are moving higher because of hot money, and the economic miracle would end without the low-interest rate band aid.  Against such a backdrop, copper ceased to work. In this environment,  fundamentals and basic technical analysis can lead you astray; in such an environment Mass psychology works the best.  The masses have accepted that Fed intervention is the new norm and that the Fed is the saviour. Hence, this is what investors need to pay attention too, as the psychology of the masses is what drives the markets.  Given the old historical pattern between, copper and the markets, the stock market should have followed copper into the abyss, but instead we find that several indices are dangerously close from putting in new highs.

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CRITICAL Support Has Failed!

cropped-bob-shapiro.jpg   By Bob Shapiro

[I’m on vacation this week with my family, including grandkids, and I’ve just located a WiFi hotspot.] The US stock market has been down the last couple of weeks. With the Chinese market losing 9%(!) yesterday, and the US market down 367 more points as I write, it looks like the US downturn may continue to correct from the market’s unsustainably high levels. A “Mean Reversion” to more normal PE levels of 14 could lop off another 6000 points from the Dow. Mean Reversions seldom stop at “Normal Levels,” so an eventual drop over the next couple of years, to Dow 7000 or so, is not out of the question.

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Warren Buffett Predicting Upcoming Stock Market Crash

When it comes to investing in the stock market, we’re told to follow the smart money. Who might that be? The most influential investors/businessmen in America today are Warren Buffett, John Paulson, and George Soros. Their investing acumen has helped them amass billions of dollars and millions of followers.

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