Market correction imminent?
- Thread starter Cuddles
- Start date
Good luck trying to pick a top......one thing worth noting is that the Emini has spent 38 consecutive weeks without touching the 20-week EMA....that is the 2nd longest streak in the history of the Emini....the longest streak was 56 weeks in 2003, but back then we were in the early innings coming out of the 2000-2003 bear, not in year 9 of a bull market. So at minimum, it is a safe to assume this current streak will end, most likely soon. Getting down to 2415 would end the current streak.
I think this is a top, and here are my simple reasons. First, very few stocks are moving higher on earnings. The new DOW high of last week basically came from Apple announcing their next iPhone. Second, volatility is just way to low, and the market is having trouble grinding higher. I feel that once a decent pullback occurs, the market will then move higher. I don't know how far it will fall, but I see no valid reason for a significant crash (except for North Korea hitting us with a missile 
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).Wow... you said everything, and said nothing. You see a top, but we will move higher. You see no reason for a crash, except North Korea.
In other words, it should go down from here, but really it just might just go higher. It won't go down, unless it really goes down.
Lol @Gotcha...that's one way to parse his post 
Here's the bull case for this posted a few days ago on my journal thread. Linky to the original (well, actually the original was a pm, but I digress)...and for clarity sake, I see clear skies and rising indices until mid October (start of next earnings season):
I don't think this is historically high valuations. On an exponential chart, we're right on target for the long term trend, while clear bubbles can be seen preceding each prior crash. The historic P/E ratio of the S&P might look high at the moment, but not in consideration of forward P/E. As long as the earnings party continues, the valuations will continue upwards. I don't think F and GM carry the weight they once did on the market. They're getting hit from all sides (disruptive competition, ride share, fewer shopping trips to be made, demographics, longer lasting cars, lessening air fares...). On the other side, it's disruptive companies that are propping up the high P/E ratios--think that AMZN alone makes up 2.5% of the S&P and contributes no earnings.
The last time humans saw this kind of change of habit over a single generation was after the civil war through 1929 (when railroads, automobiles, radios, refrigeration / A/C, telegraph, electric lights...). The run that ended that was a 16-year bull market, with two 12-year bulls immediately preceding it. Today's AMZN and NFLX naysayers sound quite similar to the railroad naysayers of the 19th century. And they were right in the early days when everyone with a hat to hold out to beg could find financing for a railroad (or a tech start-up). It wasn't until they consolidated that they really took off and ran. You notice how people complain about the decreasing number of IPOs today?
To my mind, we're in a mature bull market, and this is just the beginning. When the bubble forms on this one, it's going to look even less sane, and even more frantic. It's going to burst in spectacular fashion, but anything left on the table until then is just that much less cushion for the fall.
Here's the bull case for this posted a few days ago on my journal thread. Linky to the original (well, actually the original was a pm, but I digress)...and for clarity sake, I see clear skies and rising indices until mid October (start of next earnings season):
I don't think this is historically high valuations. On an exponential chart, we're right on target for the long term trend, while clear bubbles can be seen preceding each prior crash. The historic P/E ratio of the S&P might look high at the moment, but not in consideration of forward P/E. As long as the earnings party continues, the valuations will continue upwards. I don't think F and GM carry the weight they once did on the market. They're getting hit from all sides (disruptive competition, ride share, fewer shopping trips to be made, demographics, longer lasting cars, lessening air fares...). On the other side, it's disruptive companies that are propping up the high P/E ratios--think that AMZN alone makes up 2.5% of the S&P and contributes no earnings.
The last time humans saw this kind of change of habit over a single generation was after the civil war through 1929 (when railroads, automobiles, radios, refrigeration / A/C, telegraph, electric lights...). The run that ended that was a 16-year bull market, with two 12-year bulls immediately preceding it. Today's AMZN and NFLX naysayers sound quite similar to the railroad naysayers of the 19th century. And they were right in the early days when everyone with a hat to hold out to beg could find financing for a railroad (or a tech start-up). It wasn't until they consolidated that they really took off and ran. You notice how people complain about the decreasing number of IPOs today?
To my mind, we're in a mature bull market, and this is just the beginning. When the bubble forms on this one, it's going to look even less sane, and even more frantic. It's going to burst in spectacular fashion, but anything left on the table until then is just that much less cushion for the fall.
Okay, it is going down to zero. Hows that Gotcha?
I think you're absolutely right about this. Going forward, there will be huge structural changes. I read Amazon itself is responsible for one of the reasons why inflation isn't as good as they would like it to be. (lets not include housing though, cause clearly this number is through the roof in many cities if you calculate inflation).
The thing though is that going forward, so many jobs I think really do become obsolete, and there really won't be much for most people to do. At the same time, in this connected and social world, no way can people be left to just do nothing and try to survive. So either the governments step up with major changes, or there will be lots of civil unrest, etc.
I think absolutely right. The trouble is that it won't be like 2000 or 2007 where we just pick up where we left off. There will be too many holes in the entire system that I don't think they will be able to plug. Heck, if this bitcoin thing even takes off and lots of people accept it, the government won't even be able to control money, and that is one thing that makes them so powerful.
Obviously, I don't know what will happen. However, I do think that the probability is high that the market is potentially carving out a high for at least a decent pullback. The market could be at or near a major top with sizable downside. I am probably wrong. We will see what happens.
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We are probably in for a drop of say 500 Dow points or so soon, but that will be followed by a rise of maybe 1500 dow points