Current Orientation on U.S. Stocks
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Financial Market Technical Analysis
Elliott Wave :: Intermediate and Long Term Swing Trading
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Eventually, all bull markets will see significant corrections of price gains. During the last secular bull market from 1982-2000, SPX saw corrections of 14.18%, 35.94%, 20.36% and 24.51% on its way to a gain of 1419%.
Even the terrifying 1987 crash was nothing but a correction in a perfectly trending long term bull market.
In my view SPX and US equities in general are in the process of finishing a bull wave that started in November 2012. It is possible that the bull wave can see a significant extension from current levels before it completes, but analysis tends to support limited upside and substantial downside risk going forward. When equally viable Elliott Wave counts compete, the technician needs to examine the technicals, liquidity, sentiment and psychology of the market to see which count is better supported by underlying conditions. In my view there is substantially more evidence to support a correction than there is to support a bullish extension at this time. For this picture to change, we would need to see a fairly immediate and aggressive bull breakout move at the outset of 2015. Failing that, if we see a continuation of last week's selling, it is likely that a sizable correction will be nearby.
According to an article in Forbes (12 Mar 15): "Comparing units outstanding versus one week ago at the coverage universe of ETFs at ETF Channel, the biggest inflow was seen in the ProShares Ultra Bloomberg Crude Oil (UCO), which added 14,300,000 units, or a 13.2% increase week over week."
My 2c: While there is short term downside risk, oil is more than likely to see a price recovery over the long term. There is a limited supply of oil and no legitimate replacement for oil despite…Continue
Traditional signals and fundamental and technical analysis really don't matter any more. They really don't. You can't stop this train. All aboard. Dow 18,000 by December 17th. Dow 20,000 soon. You can't lose. You'll never have this chance again.
(comment to a mildly bearish article on a popular financial blog)
Eventually, all bull markets will see significant corrections of price gains. During the last secular…Continue
Since January I have been recommending long positions in Treasuries trading vehicles with a focus on the 20 Year+ Bond ETF, TLT. Those positions performed very well, particularly relative to stocks, but it is time to exit and change orientation once again on Treasuries. During the period that I was bullish on Treasuries I was neutral to bearish on stocks, calling for a corrective period. January to May 2014 was indeed a largely corrective for stocks, but that has come to an end and a new…Continue
The home-builder stocks have been coming under some selling pressure since the start of April. Many talking heads in the financial media are now calling the sector run as being over. Most traders…Continue
This morning, leading off-price apparel and home fashions retailer The TJX Companies Inc (NYSE:TJX) is declining lower after reporting earnings. The TJX Companies Inc operates its stores under the…Continue
The iShares Dow Jones Transport. Avg. (NYSEARCA:IYT) has continue to rally to new all-time highs in recent days. Even today, with the market under pressure, transports are higher. Why? Simply put,…Continue
Just a couple months ago, Janet Yellen issued a warning that biotechnology may be in a bubble. Today, the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) are 20% higher. While Janet Yellen was…Continue