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Weekend Reading: View From The Edge
Submitted by Lance Roberts via STA Wealth Management,
Earlier this week, I posted a fairly in-depth look at the recent correction to try and determine whether this is simply just a correction in a bull market, or potentially something worse. To wit:
"But the underlying fundamental and economic data have been weak for some time, yet the market continued its unabated rise. The Bulls have remained firmly in charge of the markets as the reach for returns exceeded the grasp of the underlying risk. It now seems that has changed. For the first time since 2007, as we see initial markings of a potential bear market cycle.
The first chart below shows the long-term trend of the market."
"The bottom part of the chart is the most important. For the first time since 2000 or 2007, the market has now registered a momentum based "sell" signal. Importantly, this is a very different reading that what was seen during the 2010 and 2011 "corrections" and suggests the current correction may be more significant."
I continue to suspect that the weak market internals, deterioration in earnings and a generally weak economic backdrop that odds reside with the "bears" for now. However, we have all been surprised by what happens "next" particularly when the Federal Reserve stands at the helm.
With that in mind, and a dismal August month now behind us, our weekend reading list once again takes a look at the markets from the seemingly "edge of the cliff."
THE LIST
1) Don't Blame China For Market Woes by Ben Stein via CBS News
"August is the cruelest month.
A good chunk of my savings disappeared as the stock market convulsed, and we're down at some points by well over 10 percent. Why did it happen?
The pundits and analysts appeared and said it was because of the Chinese devaluation and possible serious weakness in China. This, in turn, would devastate U.S. exports, supposedly, to China and sink the ship of our prosperity."
Read Also: Jim Chanos - 5 Things About China by Linette Lopez via Business Insider
2) Bad August Months Lead To Worst Septembers by Anora Mahmudova
""In the 11 instances since 1945 when the S&P 500 fell more than 5% in August, September returns were negative 80% of the time, averaging a decline of 4%, said Sam Stovall, U.S. equity strategist at S&P Capital IQ.
History is a good guide, but not necessarily a gospel,"
Read Also: Why This Market Sell-Off Could Keep Going by Paul Lim via Time
3) Nobody Panic - This Is Just A Retest by Ron Insana via CNBC
"Of course, if the market's internal strength deteriorates further on the second wave down, it could be indicative of something more serious.
But right now, we haven't seen any sign of that, so panic would be premature.
It has long been my view that U.S. stocks are in the midst of a secular, or long-term, bull market that is likely in its 5th or 6th inning.
Prior to this correction, it had been 46 months since U.S. markets had suffered a pullback of more than 10 percent. Corrections occur, on average, every 18 months, so this was long overdue."
Read Also: This Is The Start Of The Sell Off by Bill Bonner via ContraCorner
4) If The Market Hits This Level, Then Get Nervous by Heather Long via CNN Money
"Time will tell who is right. But remember that we live in an era where computer trading dominates the American stock market. The "robots" that are making a lot of trading calls aren't sitting around pondering China's economy. They are paying attention to whether stocks fall below key levels.
What are those levels? No one knows exactly. But these two metrics are worth watching. If these thresholds are crossed, both computer and human traders will consider it a game-changer point."
Also Read: How To Survive A Market Crash by Brett Arends via MarketWatch
5) Why Fear Dominates Investors Sentiment by John Shmuel via Financial Post
"One difference is that corporate balance sheets and the U.S. economy remain strong. Another is that China, which has been a large source of fear recently, still has significant policy tools available to help it spur growth and calm markets there and, by extension, around the world.
'This episode does not match equity declines in the major sustained financial crises of the last 20 years,' Oxford Economics said.
That does not mean that markets can't go lower. Canaccord notes that the current correction has two analogs in the 1998 and 2011 corrections, with the former preceding a rise in U.S. interest rates and the latter being driven by worries over China and emerging markets."
Read Also: Don't Buy The Stock Market Dip This Time by Jeff Erber via Real Clear Markets
Other Reading
Market Still Isn't Where Its Going by Joe Calhoun via Alhambra Partners
If You Need To Reduce Risk, Do It Now by John Hussman via Hussman Funds
Best Tweets In August by Meb Faber via Meb Faber Research
Recession Odds Surge To Highest Since 2011 via ZeroHedge
This Is The Worst Environment For Investors By Jesse Felder via The Felder Report
"Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the time to sell." - John Templeton
Have a great weekend.
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No, but China boats are 9.23409832 nautical miles from Obama. They are just waiting for a bendover moment to assimilate target.
They can't lock onto the target. All they see when he bends over is a big black dark spot-----its like looking into infinity.
You lost me with Ron Insana
What a classic douche
He does however, reign 'King' of the virtual trading market...
Classic giveaway for a Classic April fool joke article, mentioning the Claissic Douchbag.
Israeli helicopters transport ISIS terrorists injured in Syria battlefield: Report
http://presstv.com/Detail/2015/09/04/427721/Syria-Israel-helicopters-tre...
If Ben Stein has his savings in the stock market and Ron Insana says "Don't Panic" it is time to PANIC AND SELL!
You'd be dumb to own any equities since 2008, if not 2001 - unless you are an inveterate gambler.
the fact that those two ass clowns are still on the Jewb toob tells you everything you need to know,
we're gonna crash again, but 5 years from now they'll be back, peddling the same shit!
Nope, it's different this time, there are real consequences to be paid rather than simply imagining them and going into full denial stage.
If you don't know why something is happening, then there is no purpose for it happening.
We are just watching a computer simulation playing out with real consequences. It is idiotic to allow this farce to continue.
There is a point when something is so bad that it is actually entertaining. This isn't it.
Whats going to be entertaining is telling everyone "I told you so". I'll have to do it quick, in case we are all about to die.
What is the name of the bottom most indicator in the top chart? I'm sorry to say, I'm not familiar with it.
Looks like MACD to me.
Shoelaces, thank you. Trader1 provided the intervals.
in case anyone wants to replicate the chart:
RSI = 28 & MACD = 60, 172, 36
Thanks Trader1. Just what I was looking for.
I love this part, "It has long been my view that U.S. stocks are in the midst of a secular, or long-term, bull market that is likely in its 5th or 6th inning."
It has long been Insana's view that we're in the 5th or 6th inning.
What an insipid Moron.
#3 Ron Insan(e)a: reincarnated CNBC schlub previously a purser on the Titanic assuring 'guests' in first class that it was only a bump, that their jewels and precious metals were locked up tight in the ship's vault, and that there is nothing to worry about...
"...what happens "next" particularly when the Federal Reserve stands at the helm. "
“Where are you going?"
"The middle of nowhere."
"I thought this was it."
"Nah. This is just the edge.” Stolen
Since you beat me to some very fine rock and roll this Friday evening, I'll offer up some quite nice Van Halen:
Ain't Talkin' 'Bout Love
https://www.youtube.com/watch?v=2QO4XVazY2s
"I've been to the edge
and there I stood and looked down
you know I lost a lot of friends there, baby..."
(R.I.P. Chris Squire 2015)
Yes, miss him frequently.
Sayin' that she'd [Yellen] take the blame
For the crucifixion of her own domain...one can dream.
BTFD. Its FED software stupid.