The Markets Have Entered a Blow Off Top

Phoenix Capital Research's picture




The markets are entering a blow off top.


For five years, by keeping interest rates near zero, the Fed has been hoping to push investors into the stock market. The hope here was that as stock prices rose, investors would feel wealthier (the “wealth effect”) and would be more inclined to start spending more, thereby jump-starting the economy.


This has not been the case.


From 2007-early 2013, individual investors fled stocks for the perceived safety (and more consistent returns) of bonds. During that time, investors have pulled over $405 billion out of stock based mutual funds.


The pace did not slow throughout this period either with investors pulling $90 billion out of stock based mutual funds in 2012: the largest withdrawal since 2008.


In contrast, over the same time period, investors put over $1.14 trillion into bond funds. They brought in $317 billion in 2012, the most since 20008.


Throughout this period, the market rose, largely due to institutional buying. Every time the market started to collapse, “someone” stepped in and propped it up. Consequently, institutional traders were not committed to a collapse, and gradually the market moved higher.


At this point the “mom and pop” crowd was, for the most part, not participating in the rally.


That all changed in early 2013. Suddenly the “crowd” began to get religion about the Fed’s monetary madness and piled into stocks. We’ve now reached truly manic proportions: thus far in 2013, investors have put $277 billion into stock mutual funds.


This is the single largest allocation of investor capital to stock based mutual funds since 2000: at the height of the Tech bubble. That year, investors put $324 billion into stocks. We might actually match that inflow this year as we still have two months left in 2013.

Indeed, investors are reaching a type of mania for stocks. They put $45.5 billion into stock based mutual funds in the first five weeks of October. If they maintain even half of that pace ($22.75 billion) for the remainder of the year, we’ll virtually tie the all-time record for stock fund inflows in a single year.

As a result of this, the market has entered a blow off top from a rising wedge pattern.  You can clearly see the mania beginning to hit in the middle of 2013.



So, we have investor sentiment showing record bullishness, investors are piling into stocks at a pace not seen since 1999-2000: at the height of the Tech Bubble, earnings are generally falling, the global economy is contracting, and the Fed is already buying $85 billion worth of assets per month.


We all know how this bubble will burst: badly. It’s just a question of when. The smart money is either selling into this rally (Fortress and Apollo Group) or sitting on cash (Buffett). They know what’s coming and are waiting.


For a FREE Special Report outlining how to protect your portfolio from a market collapse, swing by:


Best Regards

Phoenix Capital Research 







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Sun, 12/01/2013 - 18:49 | 4204503 honestann
honestann's picture

The markets will crash shortly after Phoenix Capital Research becomes bullish... per the usual expression of self-negating prophesy.

Sun, 12/01/2013 - 17:34 | 4204244 Bruce Flea
Bruce Flea's picture

This outfit has been calling doomsday, and a top for at least four years now.

Eventually they will be right and crow about it.

Sun, 12/01/2013 - 17:32 | 4204231 NoTTD
NoTTD's picture

I'd like to believe this but this guy has been wrong nearly 100% on his timing projections over the last couple of years.  So, grain of salt.

Sun, 12/01/2013 - 16:01 | 4203971 steveo77
steveo77's picture

I did an article on How to Buy Precious Metals

Based on decades of experience.   Its a good one.  Check it out

Sun, 12/01/2013 - 14:58 | 4203849 tradewithdave
tradewithdave's picture

From a hair club for men perspective, technically speaking 20,000 is not a "blow off top", but rather it's a "blow dried top" Altucherly speaking... rather than a Carrott Top Top which would be Vegas speak for going in the red by (20,000).

Sun, 12/01/2013 - 14:55 | 4203834 OutLookingIn
OutLookingIn's picture

The "wealth effect" is alive and well with about 10% of the population. However, its a false sense of wealth, that is purely paper based, stacked to a great height in the stock market. The minute this stack gets too top heavy and lopsided, it will fall over.

As for the other 90% of the population, they will be left with the task of cleaning up the mess! This oncoming train wreck will make the crash of 07-08 look like a walk in the park.   

Sun, 12/01/2013 - 14:33 | 4203785 orangegeek
orangegeek's picture

The S&P500 hourly is about the only chart showing any indication of a possible down turn.


Another $85B will be pumped into markets in December by the US Fed - expect more divergence.


This well eventually end and it will be awful when it does - but the banks are making lots "short squeezing" their clients and taking their cash for now.

Sun, 12/01/2013 - 14:14 | 4203732 Oldballplayer
Oldballplayer's picture

I spent the weekend speaking with relatives.  Not one of them mentioned the stock market.

In 2008 they were talking housing and debt.

In 1999 I had guys at the local health club giving me stock tips.

This doesn't feel like a retail bubble.

I think people might have just started adding back to their 401(k)s because they saw a couple of quarters of growth.


Just my two centers worth.

Sun, 12/01/2013 - 18:42 | 4204476 neidermeyer
neidermeyer's picture

Same here , I can't remember the last time I heard anyone talking about investing in stocks or a particular hot stock ,, if it's a bubble it's all Bernanke's .

Sun, 12/01/2013 - 14:41 | 4203806 Papasmurf
Papasmurf's picture

Maria won't be there to coax them in.

Sun, 12/01/2013 - 14:36 | 4203793 andrewp111
andrewp111's picture

You may be right. This bubble may have a lot more room to run. When a bubble is actively pumped by the government, there are no real limits to the heights of madness that are possible. Empty cities in China are a perfect example of this.

Sun, 12/01/2013 - 17:33 | 4204239 NoTTD
NoTTD's picture

"The Fed can  print longer than you can remain solvent betting against it."

Sun, 12/01/2013 - 13:54 | 4203689 ebworthen
ebworthen's picture

It was always the plan to use taxpayer money to reflate the equity casino in order to steal more taxpayer money.

Sun, 12/01/2013 - 13:50 | 4203676 thunderchief
thunderchief's picture

I like reading phoenix capital's article's.
I mean, I have read Moby Dick and War and Peace, but it doesn't mean I don't read Hustler or the Readers Digest.

Sun, 12/01/2013 - 18:45 | 4204494 mt paul
mt paul's picture

did you read

hustlers version

of Moby Dick....

Sun, 12/01/2013 - 13:33 | 4203656 Sufiy
Sufiy's picture

Bubbles Chronicles: Bill Still Is Pumping Quark vs Bitcoin - Collapse Is Near

 All world has gone mad: Bill Still is pumping Quark! Just watch this video and remember how the Bubble stage looks like and what are the arguments presented to buy something "which definitely will go up." We must be very close to the Bitcoin final parabolic rise before the Crash. If Bill Still can not withstand the plot to get fast rich scheme, what can we tell about the other people?   It is very interesting that Bill talks about another 30 crypto-currencies and there are at least 100 else are in existence. Why on Earth to buy Bitcoin at $1200 if you can buy "the better" Quark, which was pumped by Bill Still only to 4.5 cents by now (more then 2000% as Bill proudly has noted!?). Just Sell you Bitcoin now and move down the food chain - "it will be a sure thing: all crypto-currencies will go up once Chinese will be able to buy it, particularly after the Bitcoin will be Crashed."    It looks like we have found finally our own youth portion and will spread our bets evenly among all 100 crypto-currencies, with this kind of sure gains how can we lose anyway? Can you imaging if India will join this crazy feast, what about Malaysia?    Can somebody tell Obama to put NSA to proper work finally? Just make the super duper NSAcoin with triple encryption, warranted from Spying and accepted for Tax payments and let Obama to Pump it a little bit ... 17 Trillion in Debt will be repaid very soon - at least we will have better roads and bridges. Can we get into this one as well at the start of Pumping?   And yes, who needs Gold and Silver any more, particularly, when it goes nowhere in price or even down compare to Quark as Bill is reporting? All that dirt, billions of investments - who are those silly people buying all that Gold any more

Sun, 12/01/2013 - 14:43 | 4203809 HardlyZero
HardlyZero's picture

e-coin is a Tulip Mania.  Which color is yours ?  (such nonsense)

I look at the e-coin exponential value as "the sign" of the tipping point.

Keep stackin the safe and sane physical precious metals.

Sun, 12/01/2013 - 13:07 | 4203606 moneybots
moneybots's picture

"Isn't the real bubble in those bond funds?"


A bubble is a bubble is a bubble.  A debt bubble fuels them all.



Sun, 12/01/2013 - 13:38 | 4203660 Papasmurf
Papasmurf's picture

After the tech bubble, tech businesses closed up.  After the housing bubble, real estate collaped.  What happens after a government bond bubble?

Sun, 12/01/2013 - 17:35 | 4204250 NoTTD
NoTTD's picture

Lord of the Flies. 

Sun, 12/01/2013 - 14:40 | 4203803 Paveway IV
Paveway IV's picture

Martial law, FEMA camps and Zyklon B without the stylish uniforms?

Sun, 12/01/2013 - 13:07 | 4203605 endicott glacier
endicott glacier's picture

The markets may well be blowing off, however, until Phoenix Capital blithering does not capitulate they will most likely go higher. I would be very happy the day this fella starts expecting markets to go up or stop posting whichever comes first; then the markets will truly fall through the floor. Talk about making idiotic calls for someone who claims to be a professional!

Sun, 12/01/2013 - 13:03 | 4203594 moneybots
moneybots's picture

"For five years, by keeping interest rates near zero, the Fed has been hoping to push investors into the stock market. The hope here was that as stock prices rose, investors would feel wealthier (the “wealth effect”) and would be more inclined to start spending more, thereby jump-starting the economy.


This has not been the case."


Wages are dropping.  Wages are the real wealth effect.  People can't spend what isn't in their paycheck.  Double digit real unemployment is not a wealth effect.

Sun, 12/01/2013 - 12:00 | 4203459 Laughing Stock
Laughing Stock's picture

Holy crap this Phoenix Crapital guy ia an idiot.

Who let's this garbage through the editing process?

Sun, 12/01/2013 - 13:36 | 4203657 Papasmurf
Papasmurf's picture

Holy crap this Phoenix Crapital guy ia an idiot.

Could you be more specific?

Sun, 12/01/2013 - 13:03 | 4203597 max2205
max2205's picture

Lol.  He must be somebody's important nephew is all I can figure

Sun, 12/01/2013 - 14:56 | 4203748 ThisIsBob
ThisIsBob's picture

There has to be consideration involved;  don't think Tyler lets people post that stuff for free.

Sun, 12/01/2013 - 14:22 | 4203746 ThisIsBob
ThisIsBob's picture


Sun, 12/01/2013 - 11:59 | 4203446 pitz
pitz's picture

So let's see.  $405B out of stock funds, $1.14T into bond funds, and you think that $324B back into stock funds comprises a bubble?

Isn't the real bubble in those bond funds? 

Of course the numbers might look comparable to 2000 levels, its only been what, a dramatic expansion of the money supply and fucking 13 years of inflation since?

Sun, 12/01/2013 - 13:58 | 4203696 boogerbently
boogerbently's picture

He's basing his projection on the actions of people who owned mutual funds.

The same people that couldn't come within $500 of the price of gold.

The same people who voted for Obama......TWICE.

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