This page has been archived and commenting is disabled.
Could Stocks Drop Another 30%?
The stock market is taking a breather from the recent bloodbath.
The key moving average that primed us for a bounce is the 252-DMA. If you take an entire year, remove the weekends and holidays, you arrive at 252 days during which the stock market is open.
As you can see in the chart below, this has been a line of great significance ever since stocks started going bananas in 2012:
As you can see, the 252-DMA has been “the line in the sand” three times since 2012. It was unlikely we’d take this line out the first time the market broke down.
However, the technical damage of this breakdown has been severe. We’ve learned a number of things:
1) When selling pressure comes in, stocks crater VERY quickly.
2) There are not a lot of buyers looking to enter the market during dips this time around.
This second point is key. The primary drivers for this latest leg up in stocks (the one that began in early 2013 has been individual investors and corporate stock buybacks.
We now are losing both groups. Individual investors put a record amount of money into bond funds last week. This money had to come from somewhere and most of it can from stocks.
Regarding corporate buybacks, it is now clear that the massive buying binge was the result of executives trying to juice stocks higher so they could cash out their options at the greatest possible price. We know this because while Corporate executives have been pushing their companies to buy stock at a record pace, on a personal level they have been dumping their personal stakes.
So… we’ve got a weak and fragile market, losing two of its biggest drivers… at the same time that the Fed is ending QE. This is a recipe for a potential bloodbath. If we wipe out the “bubble” portion of the market move from 2009, we’re going to 1,250 on the S&P 500.
That’s over 30% lower from where we are now.
The market is primed to drop. Now is the time to prepare.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
http://www.phoenixcapitalmarketing.com/roundtwo.html
Best Regards
Graham Summers
Phoenix Capital Research
- advertisements -
Time for the right shoulder
Somebody draw a map for this poor fuck, Summers. Where's he been? "Could stocks drop another 30%?" Best laugh I've had all day!
So what's the answer?
You know a stopped clock is correct twice a day.
As will Graham Summers be, eventually........
yes he will-soon.
Did Ireland just pull the plug? http://www.dailytech.com/Ireland+to+Close+Loophole+Apple+and+Google+Used...
Dow 16.400 - 15.800 - 14.300 by December.
Anyone who doesn't buy stocks is racist and likely a domestic terrorist
You may be on to something. None of my racist terrorist friends own stocks. They all seem to own gold, silver, guns and bullets. It would serve them right that when we confiscate their guns and bullion, we compensate them with stocks. Or give those communist SOBs the option of going to Russia. That bastard Putin doesn't own any US stocks either. Any American who doesn't own shares of Facebook is o true Americaan.
23%? Very very likely. 55% would be my best guess but 30%? No. Never.
30.1 percent?
Not a chance! 30.7%? Maybe....MAYBE...
from the alltime H to the L of 666.79, we go 61.8%. That is the way Trends work. We are now in a short/selloff Trend. It could change back; same % back to H will break it. Still don't like to use fibonacci? ok...don't. You probably just aren't doing it correctly.
I'm sticking with my theme of the week and see the drop today in the pound as more proof I may be on the right track. For months the major world currencies have traded in a narrow range as if held in limbo by some great force. This has allowed people to think all is well as central banks across the world continued to print and pump out money chasing the "ever elusive growth" that is always just around the corner. Recently some currencies have made multi-year highs or lows depending on the match-up .
The Fed recently whacked the dollar down but for how long? Because of weak demand for goods and most of this money flowing into intangible investments inflation has not been a major problem, but the seeds for its future growth have been planted everywhere. John Maynard Keynes said By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
While there are not many Bond Vigilantes there are a slew of Currency Vigilantes and they are ready to make their presence known. Weakness in the value of the Yen, Pound, and Euro must not go unnoticed. More on why this may be a signal that currency trading is about to get very wild in the article below. Please note, this may also be sending a signal that the whole system is unstable and the stock market is about to drop like a stone.
http://brucewilds.blogspot.com/2014/09/caution-alert-currencies-may-get-wild.html
My theme of the week is from The Love Boat. I'm sticking with it as well.
Love, exciting and newCome aboard, we're expecting you
Love, lifes sweetest reward
Let it flow, it floats back to you
Love Boat soon will be making another run
The Love Boat promises something for everyone
Set a course for adventure
Your mind on a new romance
Love won't hurt anymore
It's an open smile on a friendly shore
Yes, love
It's love
Love Boat soon will be making another run
The Love Boat promises something for everyone
Set a course for adventure
Your mind on a new romance
Love won't hurt anymore
It's an open smile on a friendly shore
It's love, it's love, it's love
It's the Love Boat, it's the Love Boat
Ebola-infected UN doctor dies in Germany, 41 more monitored
http://wtfrly.com/2014/10/14/ebola-infected-un-doctor-dies-in-germany-41...
Assuming the corps borrowed the money to do the buybacks on a variable-rate loan from big banks, and that this rate will go up when QE/ZIRP ends, then when that happens they will need to pay back those loans ASAP, and to do this they will have to sell those shares they bought - only there will be no buyers.
So two things will hit the market. First, yields on stock portfolios will need to go up to match new non-ZIRP rates, that means stock prices fall. Second, the bought-back shares will be sitting on the sell side, with motivated sellers, and no buyers.
But, this is ONLY IF ZIRP ENDS. Apparently the Fed thinks they can KEEP ZIRP even when QE ends. How? I dunno. Do you? If ZIRP ends, then just where will rates be this Xmas, next Valentine's Day? THAT is the question.
On the chart, a 30% drop is entirely plausible. On a valuation basis a 30% drop is entirely plausible. It's only a retracement to January. On fundamentals that ain't nuthin.
I fully agree, " On fundamentals that ain't nuthin."
Calculate it for yourself :
See
https://www.academia.edu/8770429/Optimal_Markups_for_Sustainable_Growth
No.
The Fed is the market and can always buy via swaps. It has 4 trillion of liquidity to create a market for any financial asset that drops low enough to cause panic selling.
Algos are programmed for buying on the dips and will put a floor on any chance of a large correction.
"Can stocks drop 30%?"
Obviously.....in the age of QE enlightenment....one needs to brush up on the Greenspan-Bernanke-Yellen put.
There are no more bubbles left to blow or reflate.
Stocks are the line in the sand.
"Stocks are the line in the sand."
Indeed Sir! For now.
No reason to think another real estate bubble will not be manufactured. The S&L crisis and the Mega - Crisis of 1997 to 2008 are glaringly obvious in hindsight. At the time though "Everybody's Doin' It!" was the call of the day.
I don't care if it does or not.
Another 80% would be good and appropriate. Then it will create a real value buying opportunity.
Yes
But that would require a large group of computers to suddenly be reprogrammed, no?
Could individual investors drive it down 30%? Interesting question.
Minimum 30%
If this is a bloodbath, these markets are weak.
We have not even gotten into margin calls and a retail selling panic.
This market needs QE like diahrea needs a toilet.
QE is having less and less of an effect and the next round will be as effective as pissing on a house fire.
Nice visual....
The Market needs QE like Moochie needs her daily plucking and oiling.
Dow 8000!