Market Overview

Holy Bull Market Batman


While most of the herd, and the media (and PBO) are focused on nominal SPX moving to new highs, the REAL SPX, which is adjusted for loss in global buying power peaked in early '00. That is when the real bull market ended. So what? Well, the piper always gets paid, and he's overdue his payment. While the Fed's liquidity has reflated the banks, and bankers are lending newly printed money to Wall Street speculators, who use it as collateral to buy stocks on ten to thirty times leverage, the canard of systematically debasing the measuring unit (dollars) to benefit the "insiders" at the expense of the savers is losing its cloak. Notice how Main Street's confidence follows the lower highs and lower lows of the real SPX. The point where counterfeiting money can no longer hide the truth is due to arrive at any time.

Meanwhile, the herd is pouring more money into stock mutual funds than any time since '07! Where is the herd getting the money to buy stocks when they're net worth is declining? More leverage and debt.

Despite the now obvious desire for the herd to maintain the Dow over 16k, Nasdaq over 4k, and SPX over 1800, these numbers were elusively toyed with all week. We noted on Monday night to WaveMUJO members that the bullishness in the market was at incredible extremes. Friday's DSI of 90%, which was the highest since May's 92%, was bettered today, with a Daily Sentiment Index (from reading of 93%. THAT'S BULLISH, baby! This is the diametric opposite to the bearish extreme last November '12 of 92% bears! THAT WAS QUITE A LOW, as this high should be of "shock and awe" proportions, once the market's finale is complete (if it hasn't done so today).

In that same message on Monday night, we noted to members that we have to give the market the chance to turn up this week. If the market chooses to peak this week in ominous fashion, it will let us know by declining in 5 clear, clean waves in the coming days/weeks.

A peak of monumental implications is in the making, and those that get caught with their hands in the greed till will end up losing more than a few fingers.

With bullishness to profound, all "risk on" markets are as one, so crude, euro, etc, won't do much until stocks illuminate the path.

We noted on Wednesday that the SKEW Index from the Chicago Board Options Exchange jumped to 137 on Monday, which is one of the highest readings in history. It suggests an approximately 12% probability of a "black swan" event - a rapid, 2-standard-deviation market move - within 30 days.

Bullish sentiment in silver is nearing its lowest level since 2001. It got lower during the depths of the decline earlier this year, but had not been lower than that since mid-2001. This augments DSE's warning that this is NOT the time to be short metals here, as at least a multi-day/week bounce is due to start at any time; perhaps from lower levels though. Betting on the last of the decline in metals now is like putting new money into long stock exposure now...potentially profitable if you are flexible enough, but sub-optimal on a risk/reward basis.

Dollar is rising after DSE allowed us to warn that we'd be adding, and we have in both PowerShares DB US Dollar Index Bullish Trust (NYSE: UUP) and ProShares UltraShort Euro (NYSE: EUO). WaveBOOM members were notified Tuesday night of the DSE's signal in both of these positions.

Thursday the markets were reset due to the taper talk being back in the news when NO ONE was prepared for it, and the Fed raised various things up the flag pole to see if the herd will salute or ignore them.

We also saw a few signs towards the end of the week, but nothing more than we were looking at all week...

The SPX closed above its upper Bollinger Band last week, then back below it this week, which is a "change in trend" sell signal, at least for short term timers. Couple that with the Fibo Phi-mate that is occurring now, and the market has the opportunity to teach a lesson to those that believe they "know" what the market is going to do! 1740 is the target for the minimum correction off this Spx/BB sell signal, with 1805 as a place to put protective stops to exit shorts taken upon this signal.

The Dow finally went from playing above 16k, to closing there for the first time. 16,100 is still the ideal extreme of this 5th wave up from the Nov. 8 low; but it's not required to reach that exact number for completion.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets


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