28 replies to this topic

[dTraderB]

Lance has been a permabull and then turned bearish, now super bearish. 

 

Bear Market Growls As Market Remains Weak 11-16-18

Written by Lance Roberts | Nov, 17, 2018
 

"...so far, the market has not declined enough to “trigger” margin calls.

At least not yet.

But exactly where is that level? 

There is no set rule, but there is a point at which the broker-dealers become worried about being able to collect on the “margin lines” they have extended. My best guess is that point lies somewhere around a 20% decline from the peak. The correction from intraday peak to trough in 2015-2016 was nearly 20%, but on a closing basis, the draft was about 13.5%. The corrections earlier this year, and currently, have both run close to 10% on a closing basis.

My best guess is that if the market breaks the October lows, which given the current state of the market is a very high probability, we will likely see an accelerated “sell off” as the realization a “bear market” starts to set in. If the such a decline triggers a 20% fall from the peak, which is around 2340 currently, broker-dealers are likely going to start tightening up margin requirements and requiring coverage of outstanding margin lines.

This is just a guess…it could be at any point at which “credit-risk” becomes a concern. The important point is that “when” it occurs, it will start a “liquidation cycle” as “margin calls” trigger more selling which leads to more margin calls. This cycle will continue until the liquidation process is complete.

The last time we saw such an event was here:

https://realinvestme...s-weak-11-16-18

[beta]

Agree with Lance's long-term view, but I dont think the real sell-off begins until after Thanksgiving.

 

Like patents, markets require the element of Non-obviousness, to function properly.

 

Short-term, I expect to see a 1-2% decline on Monday,followed by a significant bounce/rally, led by beaten-down large caps like AAPL, AMZN.

 

That should get everyone complacent in time for Black Friday.  THEN, the real selloff will begin.

Edited by beta, 17 November 2018 - 02:11 PM.

[beta]

Alternatively, we might see a retest of the recent lows early this week.    That would likely spark a huge rally.

Edited by beta, 17 November 2018 - 02:37 PM.

[da_cheif]

Every bar, every tick, every day is critical but some more so than others, and Friday's fading bullish momentum opens a path for more downside action unless the previous daily swing high at SPX 2747/50 can be taken out in the next session or two. Just above that is the well-watched but insignificant 200ma. 

A daily close above these two important levels is absolutely necessary to maintain the  bullish momentum and the next important target @ SPX 2805. 

In the current over-heated global political environment, it is not only TA or FA that determines the market direction. Talk of talks about trade war, probes, geopolitical events etc are affecting the markets. Nothing new, but also important. 

Many bearish scenarios are emerging so here is a cautiously bullish one:

 

S&P 500 Weekly Update: The Fate Of This Bull Market Will Be Decided On How The Many Uncertainties Are Resolved

The Technical Picture

The consensus view from technicians now is that there HAS to be a blow-off, capitulation event to ensure that the lows are in. Some say that it also HAS to take place in and around the February lows of 2,532. Perhaps the consensus view will be correct in their forecasts.

One thing I have learned, markets rarely do what we want or expect. We didn't experience any of that in the February sell-off, and we didn't see that in the 2015 and 2016 declines that scared everyone to death. All three shared the same price action. A low established, a retest of that low, followed by a recovery. To date, the retest in this corrective phase has produced a low of 2,670.

 

The DAILY chart shows the downward pressure on equities continues. It sure looks like more downside may be in store, based on the fact that all indicators that I use do not indicate an extremely oversold condition. In fact we entered the week in "neutral" and are still in that condition.

Chart courtesy of FreeStocksCharts.com

A common characteristic of Bull markets is that equities often find support at upward sloping 200-day moving averages, while a common Bear market trend is that equities run into resistance at their downward sloping 200-day moving averages. As you can see, the index is once again below that trend line (red line). Note the difference between the corrective phase back in April compared to the present day. Back then we saw a quick dip below the 200-day MA, not so today.

From a technical perspective, our current situation looks like the 2015/2016 time period. In early 2016, the S&P remained below that trend line for about 11 straight weeks before recovering.

As noted earlier, the S&P traded down to the 2,670 level, and that set a new short-term line in the sand that must be held, or the S&P lows (2,603) may be tested. On the flip side, more sideways consolidation in this area, and the index could mount a run back to the 2,800 level. The Bulls would like to see a series of higher lows as the bottoming process unfolds.

Overhead resistance lies at the 200-day moving average at 2,760.

The Political Scene

As we all look out to the next quarter, market pessimism has been fueled by tariff fears and concerns about global economic growth. Yet, analysts are seeing 8% U.S. gains for both exports and imports in 2018 that are the largest increases since 2011. The oil related sector and broader factory boom of 2017-18 explains part of the bounce, though analysts have seen broader strength across the industrial supply, equipment, and food components.

 

Stay tuned. Any announcement from the G20 summit meeting on this topic will be a market-moving event.

https://seekingalpha...inties-resolved

 

 

u worry 2 much......watch the sky    https://www.siliconi...f996f396583.png

[dTraderB]

This is one of those "event risk" thing, although the headline is somewhat misleading...

 

Will We See A 30% Correction Due To A Trump Impeachment?

Impeachment may become the excuse for an expected 30% correction.

 

 Again, if you have been following me closely, you will know that I am expecting a 30% correction and for the S&P 500 to revisit the 2200SPX region. And, yes, this applies regardless of whether the market can still move over 3000 in early 2019. The only question in my mind at this time is not whether we get that correction, but what the media pundits will blame that correction upon.

 

As I have said so many times before, I am an analyst, and not a prophet. So, I am unable to tell you what the news of the day will be at the time. But, I can assure you there will be some news cycle to which the pundits will certainly point to explain the market decline.

 

https://seekingalpha...ump-impeachment

[dTraderB]

I hate these bloody WINDOWS updates! Spent a few hours this weekend updating 3 laptops and 2 desktops. 

I am hearing the latest WINDOWS update is buggy! 

 

The one before this was bad, now they promise this one will be fine:

 

Microsoft resumes rollout of Windows 10 version 1809, promises ...
In-Depth-ZDNet-15 Nov 2018

 

and then this crap:

Windows Update cannot currently check for updates because updates ...

TWCN Tech News (blog)-16 Nov 2018

If while trying to change Windows Update preferences or manually update, you have received the following message – Windows Update ...

[dTraderB]

"...There’s little room for error here and bulls need a big rally fast to recapture the big MAs or this bull pattern constellation is history.

Let’s not forget that bulls have so far failed to recapture the 200MA and there’s danger in that the $VIX could be forming a bull flag pattern:

Note also that $SPX remains below its broken 2016 trend line. Not a good spot for bulls to be in.

It’s a mixed signal on the volatility front. One could argue a topping pattern and/or a bull flag.

And that’s the concern into month end: If $SPX invalidates the bullish structures and reverts back to a bear flag then the lower risk zone is in full play and with it the break of the 2009 bull trend.

The task for bulls this coming week is clear: Stay above 2700 and recapture the daily 200MA and the weekly 50MA and, better yet, recapture the monthly 5EMA before month end: 

 

 

https://northmantrad...te-level-watch/

[qqqqtrdr]

Markets with Expectations...    The market sold off because expectations were lowered... Economic numbers such as GDP, Housing were lowered and over 3 - 5 weeks match the expectations...   Currently the economic expectations now from we will be supporting a

3% decline in home sales going forward, a 2.5% GDP growth going forward, decent Auto Sales, and pretty good Christmas.. Wage growth of 4.4% or so is expected.    There is a bet on interest rates increasing as well......  Although the market got ahead of expectations the expectation got lowered from 3.5% GDP growth 2.5% GDP growth so the market adjusted...  Expectations are that earning growth will continue

 

Going forward if expectations are met on these fronts and others I do think the market will go up...   Disappointment, and change in Guidance can lower the market...    Rydex Ratio and others have also shown an increase in pessimism, this gives a positive bias on market price.   If economic numbers come in as expected we could likely have a melt up as shorts cover their position...   I believe home Sales are this week.

[dTraderB]

From WSJ

 

Market Facts

• The Dow industrials and S&P 500 are up 1.2% and 0.9%, respectively, in November while the Nasdaq has dipped 0.8%. 
   
• So far in 2018, $122 billion has flowed into equities, $35 billion has moved into money-market funds and $24 billion has entered into bonds, with cash outperforming stocks and bonds for the first time since 1992, according to a Bank of America Merrill Lynch analysis of EPFR Global data through Nov. 14.
   
• On this day in 1792, the Insurance Company of North America held its IPO at $10 a share in the same room where the Declaration of Independence was adopted 16 years earlier. More than 660 investors signed up for shares. If an investor had spent $1,000 to buy 100 shares on the first day, they would have been worth more than $10.1 million by 1998.

 

[dTraderB]

Has APPLE bottomed?

The earnings boom hasn't lifted investors' spirits. Nine years into the stock rally, investors are grappling with two forces: many feel the best days of this economic cycle are past, and analysts say the recent pullback offers a reminder of the risk that markets will fall sharply as rising interest rates and slowing growth hit profits.

Apple suppliers suffer as it struggles to forecast iPhone demand. Lower-than-expected demand for Apple’s new phones and the company’s decision to offer more models have created turmoil along its supply chain. Apple shares are now on the cusp of a bear market, potentially creating a leadership void for U.S. stocks.

An economic summit of world leaders ended in acrimony. A Sunday fight over Chinese trade practices cast doubt over the ability of Washington and Beijing to resolve their trade battle soon.

Facebook's Zuckerberg adopts a more aggressive style. With the social-media giant under siege from lawmakers, investors and angry users, Mark Zuckerberg's new approach is causing unprecedented strife atop Facebook, driving several key executives away from the company.