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Neely, Prominent Elliot Wave Analyst, Says Equity Market To Drop 50% In Next 6 Months
- Thread starter ByLoSellHi
- Start date
I don't see the markets dropping to that magnitude. The Fed and Treasury have printed money into existence and purchased shares. This money will never see the open economy, and will be used to prop up the market. Fed and Treasury can now just park money into shares for an indefinite amount of time, and once stocks eventually bounce back (in a way supported by fudies), the Fed can slowly sell the shares, and take the dollars out of circulation. This will keep a inventory out of the open market.
Also, the ferocity of the March/April/May snapback has put a support level in this market that will not go lightly. Maybe we revisit March lows, but unless things really take a terrifying turn, I don't really see the S&P hitting 450. Even Prechter stated that massive monetary stimulus can keep declines from reaching their true potential. I would say the US has "massively stimulated" the economy, and has distorted the market to the upside.
Also, the ferocity of the March/April/May snapback has put a support level in this market that will not go lightly. Maybe we revisit March lows, but unless things really take a terrifying turn, I don't really see the S&P hitting 450. Even Prechter stated that massive monetary stimulus can keep declines from reaching their true potential. I would say the US has "massively stimulated" the economy, and has distorted the market to the upside.
Quote from circadian:
I don't see the markets dropping to that magnitude. The Fed and Treasury have printed money into existence and purchased shares. This money will never see the open economy, and will be used to prop up the market. Fed and Treasury can now just park money into shares for an indefinite amount of time, and once stocks eventually bounce back (in a way supported by fudies), the Fed can slowly sell the shares, and take the dollars out of circulation. This will keep a inventory out of the open market.
Also, the ferocity of the March/April/May snapback has put a support level in this market that will not go lightly. Maybe we revisit March lows, but unless things really take a terrifying turn, I don't really see the S&P hitting 450. Even Prechter stated that massive monetary stimulus can keep declines from reaching their true potential. I would say the US has "massively stimulated" the economy, and has distorted the market to the upside.
Just a basic point.
The amount of money the government has infused into markets is a proverbial drop in the bucket compared to private dollars.
The fed targeted specific sectors such as financials during the market meltdown last fall, and has been propping that sector up since.
The government is hoping and praying its confidence game has suckered the investment sheeple and American consumer at large.
Watch and see what happens when investors get truly frightened and rush for the exits all at the same time - no amount of government intervention past, present or future will stem that tsunami.
If Neely is the EW guy on CNBC today then avoid his stuff. He sends you boat loads of contradictory or vague research on a daily basis. Along the lines of typical EW, we're in Wave A of Wave D which will be a breakdown of a bigger Wave G, unless we go up which would be a Wave D.. and on and on and on. Enough this that or the other to cover all bases. And probably enough paper to heat your home in the winter.
Unemployed in NYC? In honesty only know a handful of people I know directly were laid off. But certainly anyone that worked on Leverage Loans, Structured Debt, most FID's, MBS/ABS/CMBS is history. There was certainly a period in OCT/NOV where we ALL thought our jobs were toast.
The right bars & restaurants are packed but many others have certainly closed down.
Unemployed in NYC? In honesty only know a handful of people I know directly were laid off. But certainly anyone that worked on Leverage Loans, Structured Debt, most FID's, MBS/ABS/CMBS is history. There was certainly a period in OCT/NOV where we ALL thought our jobs were toast.
The right bars & restaurants are packed but many others have certainly closed down.
Quote from marketsurfer:
Thanks for posting, good stuff and entirely possible despite my bull bias.
Glenn Neely knows his stuff.
I wouldn't take it lightly!
surf
Quote from ByLoSellHi:
Just a basic point.
The amount of money the government has infused into markets is a proverbial drop in the bucket compared to private dollars.
The fed targeted specific sectors such as financials during the market meltdown last fall, and has been propping that sector up since.
The government is hoping and praying its confidence game has suckered the investment sheeple and American consumer at large.
Watch and see what happens when investors get truly frightened and rush for the exits all at the same time - no amount of government intervention past, present or future will stem that tsunami.
Well, if you could prop up some of the DOW 30, or S&P stocks, and keep the indices alive, you can keep large portions (correlating portions) of the markets from falling to pieces.
I would not even begin to speculate how much $$ the Fed has pumped into the market. It's probably alot larger number than any of us know.
I will agree with your point about confidence. It all began with the 60 Minutes interview of Bernanke....the Campaign of Confidence I mean. Pres. Obama abruptly stopped talking about how screwed we all were, Geithner started doing weird stuff with his face and hands....all coordinated. Seems to have worked for now. Sure brought some retail investors back to the market, and that's a fact Jack.
Quote from ByLoSellHi:
The fed targeted specific sectors such as financials during the market meltdown last fall, and has been propping that sector up since.
The government is hoping and praying its confidence game has suckered the investment sheeple and American consumer at large.
Watch and see what happens when investors get truly frightened and rush for the exits all at the same time - no amount of government intervention past, present or future will stem that tsunami.
The banks have raised their capital, now they will crash the stock market to sell the sheep Treasuries.
NYSE Bullish % Index has gone into Bear mode as of today:
http://www.elitetrader.com/vb/showthread.php?threadid=167299
I personally can't see a 50 % decline, but 12-15 % decline is in order.
http://www.elitetrader.com/vb/showthread.php?threadid=167299
I personally can't see a 50 % decline, but 12-15 % decline is in order.
Elliot wave is total bullshit. The premise doesn't make any real prediction. It simply says "stocks go up, and stocks go down", which is no different than the lay person's understanding of investing. I'd pay no attention to such idiocy. Average Market PE is 14, we were at 10, which made absolutely no sense. S&P 450 would be a 5 PE. Only a fucking idiot like an Elliot Wave theorist would ever suggest such a stupid price.
anyone think the VIX will spike soon<
Quote from marketsurfer:
anyone think the VIX will spike soon<
Absolutely. I don't know if that was rhetorical or not.
Anyways, regarding the underlying economy, and indirectly, Neely's take on at least future market direction, I believe this is as telling as anything:
Companies Signal High Anxiety With Share Sales to Retire Debts
June 17 (Bloomberg) -- Almost two years into the worst financial calamity since the 1930s, companies are doing everything they can to reduce their indebtedness, selling record amounts of equity to pay back bonds and loans.
âStock buybacks are a thing of the past: Itâs reducing debt and bond buybacks that are in vogue,â said Kathleen Gaffney, co-manager of the Loomis Sayles Bond Fund in Boston. âStocks arenât going to move and earnings arenât going to move without a healthier balance sheet,â said Gaffney, whose firm manages $98 billion in fixed-income assets....
http://www.bloomberg.com/apps/news?pid=20601109&sid=akugWPwhe9DQ
Companies are retiring as much debt as possible for three main reasons: Servicing costs on revolving debt will mushroom, the people with direct knowledge of order books see declining revenue going forward with a ton of consumer and business customer weakness, and equally importantly - they lack confidence that they'll be able to go to private markets to raise capital in the future when the need arises to finance their debt, whether by floating bonds or selling stock.
I see this as an incredibly bearish red flag.