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THAT'S the ST LOW! SPX up 50 points from today's low


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#31 AChartist

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Posted 28 October 2018 - 08:51 AM

my daily cycle is good now but in the next 52 day low is a big weekly cycle low late Dec.

I was high cash and have deployed about 1/2. Cost averaging mostly going into cash for now, whether higher or

lower low I'll deploy the rest with next low late Dec.

 

I havent looked again at quarterly cycles and may change my thesis some with that.

 

I suspect a huge red tsunami will launch mkts short term with favorable daily cycles so I probably will spend a little more by Nov 5 particularly

if conditions are improving in the next week.

 

Put there is alot more historic globalist communist disruptions coming with them in death throes, thrashing and puking

and counterstriking false flags after effectively already dead.


"marxism-lennonism-communism always fails and never worked, because I know

some of them, and they don't work"  M.Jordan


#32 dTraderB

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Posted 28 October 2018 - 09:44 AM

This week I outlined a bullish looking chart, the $BPSPX:

BPSPX-23.png?resize=584%2C514&ssl=1

Bullish in the sense that the $BPSPX RSI has now reached a rare oversold reading, the kind of reading that has produced at least short term bottoms or more meaningful bottoms.

These are mere examples, but they highlight a common message: There are positives to be found in the charts that suggest there is ample firepower building for a sizable bounce once a bottom confirms itself.

Whether a bottom was made last Friday I can’t say yet. I don’t like bottoms on Fridays. They are rare, most Friday bottoms get retested on a Monday or even pierced to the downside. But they do happen and we will know a lot more on Monday.

But if a low was made it shouldn’t surprise either.

But a rally is coming and whether the next rally will lead to a lower high before a full blown bear market emerges or new highs are still to come, I remain open minded about it. There’s a lot in the charts that suggests that a major top has formed, but from my perch it’s too early to confirm this.

Much now depends on how the month closes and how stocks react into early November and following the mid term elections.

One particular reason I’m staying open minded here is the confluence of the larger signal charts and market history.

Many signal charts are vastly and some even historically oversold. During an October. Why is that potentially very relevant?

You’ve head of October bottoms before.

One famous example of course was 1987 following the crash. Here’s another, 1998:

1998.png?resize=584%2C347&ssl=1

But hey, that’s just 2 examples you say. Allow me to retort:

October 1957, October 1966, October 1974, October 1987, October 1990, October 2002. All were major bottoms.

That’s a lot of Octobers. Just saying, hence keeping an open mind here. From my perch the real test for markets will come after the next big rally. New highs or bust.

https://northmantrad...-the-positives/



#33 dTraderB

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Posted 28 October 2018 - 09:54 AM

But the real kicker comes when he gets more granular in the course of documenting the malaise. “1742 of 2767 global stocks, 919 of 1150 EM stocks and 1164 of 1899 NYSE stocks are in bear markets,” Hartnett marvels, adding that all told, “63% of global stocks are in a bear market (80% in EM, 61% in US)”.

Bears-1.png?resize=621%2C320&ssl=1

(BofAML)

As far as that 63% number is concerned, Hartnett reminds you that “at the 2011 and 2016 equity market lows, that figure maxed out at 70% [which] tells you if this a big correction and not a harbinger of recession/crash, an excellent entry point would coincide with better policy news.”

That said, he goes on to warn that it’s a bad sign when things that are oversold aren’t able to sustain a bounce. “[It] suggests investors are worried by either a systemic financial market event or recession”, he adds, stating the obvious.

If you’re bullish (which, again, Hartnett is not), he thinks snapping up some of the distressed assets mentioned in “Slow Bleeding The Aging Bull” might not be a terrible idea. But that’s if you’re bullish. If you’re bearish, well then it’s defensives, cash, vol. and gold for you.

We’ll leave you with Hartnett’s “crash watch” because you know you want it.

Crash watch: $45tn of systemically risky shadow banking assets (source BIS), of which 72% (in bond ETFs, mutual funds, credit HFs, bank loan funds) are vulnerable to forced selling (note record $14bn outflows from IG funds past 10 days = 4sd event); record $4.2tn of CRE (commercial real estate) debt outstanding, and 73% of loans in CMBS last 9 months interest-only; ‘87/’98 “late-cycle” crashes coincident with policy disputes & currency volatility (watch ADXY <100); there are vulnerabilities and therefore catalysts for higher volatility.

https://heisenbergre...ctober-selloff/



#34 dTraderB

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Posted 28 October 2018 - 10:18 AM

In simple terms, lax credit conditions, cheap cost of debt and reckless chasing of yields by the corporates, fuelled by the unprecedented money printing by the Central Banks over the period post-GFC has now inflated asset market bubbles well beyond the risk levels seen in the run-up to the last crisis. Today, virtually all financial markets are more reckless at mispricing financial and strategic risks and uncertainties, more concentrated and complex in terms of contagion pathways and exhibit more ambiguity and complacency in investors' perceptions of the core risk dynamics than at any time in living memory. Unlike the dot-com bubble and just as at the time of the onset of the GFC, we are in an explosive VUCA environment of heightened volatility, uncertainty, complexity and ambiguity; the environment that has served as the basis for every single one of the past major financial crises.

Tricky timing

While the large scale, systemic blowout in the financial markets is no longer a prospect worth doubting, the timing of the next market collapse is much harder to predict. Thanks to the very cautious tightening of monetary policies, to-date, credit carry costs remain benign even for the financially fragile companies. And the recent experience with quantitative easing suggests that the central banks have acquired a virtually limitless willingness to continue underwriting fiscal and corporate recklessness into the future. 

Cyclically, the U.S. economy (as well as that of the EU) is overdue a recession. Consensus amongst macroeconomic analysts suggests the recession around late-2020. It is highly likely that, given current forward guidance, the recession will arrive somewhat earlier, some time around the end of 2019-start of 2020, triggering a large downward correction in financial markets. Unless, of course, a different shock, arising from the ongoing problems in the financial and real economies across the emerging markets and China, leads us into a global downturn ahead of the U.S. and European one. Timing is a precarious game of guesses and ambiguity-rich analytical forecasts. That said, the fundamentals are now ripe for a Global Financial Crisis 2.0. History tells us, it is likely to be more painful than the previous one.

https://www.focus-ec...inancial-crisis



#35 blustar

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Posted 28 October 2018 - 11:04 AM

Great stuff.  My read is we have just finished wave "x" of a bearish wxy bear flag and "y" should take us up to SPX 2840 by Nov 2.  The next wave down is due somewhere around Nov 12 at the earliest (Nov 16 +/- 4 TD's due to Venus Direct and Mercury Retro and the 20 week low from June 28 '18 and 40 week from Feb 9 '18) and my guess is we make a marginal new low in the low 2600's.

 

I don't think the selling off the Oct 3 top will be done until January 2019.  My gold cycle work suggests a low like Dec '15/Jan '16 in the PM's and miners ahead like the stock market low of 2016.

 

A move down to test the 2500 level or thereabouts is due I think in Jan '19 then up to test the 3000+ area by mid year '19 where I see a 20% bear emerge taking us down to test 2417, the August '17 low by no later than Jan '20. This sets us up for a nice bull flag rally into 2021, likely a huge rally like 1928-29, maybe as high as 3600-4400!!



#36 trioderob

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Posted 28 October 2018 - 12:33 PM

"I think in Jan '19 then up to test the 3000+ area by mid year '19 where I see a 20% bear emerge taking us down to test 2417,"

 

why would the market rocket to 3000 - only to turn right around and crash 20 % - what's your logic on this ?



#37 dTraderB

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Posted 28 October 2018 - 12:50 PM

I am absolutely sure many companies would not mind, in fact they would welcome it, if their stocks go down another 10% or more because they are eagerly waiting to wade into the market and scoop up tons of it after the BUYBACK BLACKOUT period expires. 

 

NO, I can't say this is a sure thing, but if companies do not come in to buy at these low prices or even at lower levels then we are talking about a 1929 or 2008 crash environment. 

 

Here's A Key Reason Why Stock Market Buyers Left — But Will Be Back Soon 

 

 

Keith Parker, chief U.S. equity strategist at UBS, noted in a Monday report that corporate stock buybacks and dividend payments fell "near trough levels" in the past week. But he advises investors to get ready for a turnaround. The UBS daily corporate liquidity signal shows that the combination of buybacks and dividends will more than triple over the next six weeks, "rising from the current (roughly) $14 billion weekly pace to $48 billion by mid-November as earnings are announced and blackouts end."

Both stock buybacks and dividends free up more cash for investors to put to work. Yet as that liquidity entered a brief dry spell, another Fed rate hike and ballooning Treasury issuance also have helped drain liquidity and created headwinds for the stock market. Fed rate hikes, for example, push up interest rates for investing on margin.

Meanwhile, the Fed last week unwound $19 billion worth of government-bond buys made in the wake of the financial crisis, as quantitative easing has turned to quantitative tightening. That was the biggest drop in the Fed balance sheet since late July, Parker says.

Parker also notes that weekly S&P 500 returns have been inversely correlated to the size of Treasury issuance, which has been on the rise as the federal deficit heads toward $1 trillion in the new fiscal year.

The unofficial blackout period for corporate and insider stock purchases generally goes from the last two weeks of a quarter until after earnings are announced. The rule isn't hard and fast. Corporations can execute a buyback within a blackout period if they have a preset rule for doing so.

While the apparent turning off of stock market liquidity has been a downer for the stock market as a whole, it doesn't fully explain the rotation that's been going on within the market. Value stocks like Exxon Mobil (XOM) and Bank of America (BAC) have outperformed growth stocks since the sell-off began amid firm oil prices and higher long-term interest rates.

https://www.investor...arnings-season/



#38 dTraderB

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Posted 28 October 2018 - 12:53 PM

Buyback ‘Blackout’ to Test U.S. Stock Market Share repurchases can play a role in boosting stock prices—but a freeze is coming
 
By 
Amrith Ramkumar
Updated Sept. 18, 2018 5:17 p.m. ET

A steady stream of robust earnings and economic data has virtually zapped volatility from U.S. stocks, but a coming freeze on share buybacks could challenge the market.


Booming BuybacksChange from a year earlier for S&P 500companiesSources: Compustat; Goldman SachsNote: 2018 data through June
%BuybacksCapital expenditures2013’14’15’16’17’18-100102030405060

Companies typically don’t repurchase their own shares in the month before reporting quarterly results because of regulations, and with the third quarter coming to an end, 86% of the S&P 500 will be temporarily restricted by Oct. 5, according to Goldman Sachs GS -0.77%analysts led by David Kostin.

 

That could remove a source of support to financial markets: Buybacks currently account for the largest percentage of cash spending by companies in the benchmark index for the first time in 10 years, the bank said in a note Friday.

Share repurchases can play a role in boosting stock prices because they lower the number of shares outstanding—driving up per-share earnings even without overall profit growth. Company demand can also trigger stock-price gains.

Analysts have said record stock buybacks have underpinned recent market advances, helping major indexes stay near all-time highs despite ongoing U.S.-China trade tensions and a rout in emerging markets. Historically, companies used the most cash on capital expenditures—spending on factories, equipment and other goods.

However, in the first half of the year, share buybacks increased nearly 50% and approved repurchases are on pace to set a new full-year record above $1 trillion, Goldman said.

Stuck in the MudThe Cboe Volatility Index has stayed in amuted range lately after rising earlier in thesummer.Source: FactSet
July ’18Aug.Sept.10111213141516171819

That is why the imminent blackout period for buybacks injects uncertainty for investors and traders. Returns from the S&P 500 during blackout and nonblackout periods have been roughly in line going back to 2000, but market volatility tends to be higher when buybacks aren’t allowed, the Goldman Sachs analysts found.

The current blackout period comes during another remarkably placid period for U.S. stocks. The Cboe Volatility Index, which measures expected swings in the S&P 500, has dropped in five of the last six sessions and remains near historically low levels

https://www.wsj.com/...rket-1537272000



#39 dTraderB

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Posted 28 October 2018 - 12:55 PM

Stocks are due for a lift as buyback blackouts end, says JPMorgan

 

https://www.marketwa...rgan-2018-10-18

 

Corporate America is spending more on buybacks than anything else

https://money.cnn.co...cuts/index.html



#40 misiu_byk

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Posted 28 October 2018 - 04:28 PM

Thanks for the articles! These buybacks seems a little fishy to me as they increase leverage, especially when some corporations do with very high P/Es (spending lots of cash, but not cancelling many shares with higher prices)?? I guess if they are growing revenues and earnings simultaneously it makes sense, but for some like IBM it probably wasn't best use of cash.  

 

*I think the bottom is in, at least short term, mainly because I sold some stocks last week....and I am about as retail as it gets...just couldn't handle anymore pain on some of my positions! smile.png


Edited by misiu_byk, 28 October 2018 - 04:30 PM.