So the fundamental case for a 20 year bull run as BMO is calling for and certainly many other banks seem to be onboard with that is not looking great YTD. In fact, most perma bulls have shy’d away from even mentioning fundamentals other than to say that generally they aren’t looking great but don’t worry the Fed is still engaged. And so I feel its a worthwhile exercise to have a look at the technicals. Thing about the technicals is that you can cherry pick any baseline point to really make any case, good or bad. But if we take a look at a time period that encompasses several cycles we negate our ability to cherry pick the baseline and we can be much more confident in our overall analysis.
So what I’ve done is taken a two decade period of S&P pricing which encompasses several cycles. Mid 1990′s was a market mid cycle having recovered from the short recession of the early 1990′s but before things really began heating up in the late 1990′s. If we just have a gentle look at the chart we see we’ve had a couple large cycles with fairly extreme booms and subsequent busts. Currently we are in the midst of the third boom which has taken us to new all time highs. Now even a 5 year old can look at the chart and say at some point this thing has a large down turn, same as it always does. That’s easy to see and not many will argue it. But as so many bulls remind us we could have said the same thing about this chart a year ago and we’d have missed out on significant returns. Very true. So the key is then figuring out where the down turn begins. I know I know that’s the kind of stuff you have to go to biz school for eh. Ok so let’s first have a look at the easy chart.
There is a saying if you do not know where you are going…how will you get anywhere. There is some what of an analogy with trading and having rules and a trading plan. When you follow trading rules which match your personality along with your trading plan, you are on a path to just let the probabilities occur. Every facet of your trading needs to be thought out. It is not easy developing a trading plan with rules…however once you have it in place & accept the fact that any trade is 50/50 & does not have to work…your edge over time could possibly provide you a rising equity curve.
When you have trading rules & you follow it……you reduce the anxiety and stress levels. You know you need to follow your plan because the only certainty when trading is complete uncertainty. If you think you know where any market is going and do not put on a protective stop…Good luck and would bet you will encounter a huge shock one day.
Part of your trading rules are what to buy or sell
Janet Yellen was asked if there is something out of place with the S&P hitting all time highs at a time when even she (not to mention numerous other Fed presidents) discuss froth in the bond markets. Her answer: no. Specifically, based on some “model” the Fed watches to get a “feeling” for valuations, she concluded the equity valuations are not out of historical norms.
In other words, “no bubble here.”
And here is what JPM had to say about that.
Even assuming trailing earnings are valid, sustainable, and not goosed by the Fed itself (not to mention non-GAAP accounting gimmickry): the most recent median S&P 500 Price to Earnings ratio as of this moment is higher than 89% of all P/E prints in the history of the market. Said otherwise, equities have only been more expensive just about 10% in the history of the S&P.
Jack Schwager: You have picked a lot of traders in your career. What do you look for when you hire a trader?
Michael Platt: I want market makers, people who know that anything can happen. The type of guy I don’t want is an analyst who has never traded – the type of person who does a calculation on a computer, figures out where a market should be, puts on a big trade, gets caught up in it, and doesn’t stop out. And the market is always wrong; he’s not. Market makers know that the market is always right. You are wrong if you are losing money for any reason at all. Market makers have that drilled into their head. They know value is irrelevant in times of market stress; it’s all about positions. They understand the markets will trade against positions. They get it. It is built into their books. It colors the way they think. I look for the type of guy in London who gets up at seven o’clock on Sunday morning when his kids are still in bed, and logs onto a poker site so that he can pick off the U.S. drunks coming home on Saturday night. I hired a guy like that. He usually clears 5 or 10 grand every Sunday morning before breakfast taking out the drunks playing poker because they’re not very good at it, but their confidence has gone up a lot. That’s the type of guy you want – someone who understands an edge. Analysts, on the other hand, don’t think about anything else other than how smart they are.
Last Close : 6547
Above is Daily Chart of Nifty Future
We need Three (3 ) Consecutive close above 6593 +Weekly close will create Fresh Buying Wave
Next Target : 7363-7720 level.
11th Week (including this week )…………will see Unexpected level in Nifty Future
-Yesterday after kissing 6602.80 it crashed Intraday to 6522 level !!
Yesterday’s low very Crucial for Traders.
Decisive Break with volumes below 6524 level and stays below for 15-20 minutes ,We see PANIC upto
& There after more Panic upto 6463—6454 is possible.
Yesterday’s High Crucial Hurdle for Traders ,Crossover and stays above 6602 level with volumes will take to 6635 level.
Laxman Rekha for Traders at 6644 level.
Nifty Future will it kiss 6650 First…………………or Will it tumble to kiss 6450————–6410 level ??
Again Writing :Buy 6700-6800 put and Forget.Buy 6400 Put too.
Connecting : 6239——————————6480 …………….Fallen back from 6603 level !
This will act as Crucial Hurdle ,Yes Long Term Formation of Inverse Head & Shoulder formation on Weekly CHART
Perhaps it was his comments today that “a construction boom is coming… tune out the noise and enjoy the bull market” due to lower oil costs and improving weather; but it appears JPMorgan and the permabull are about to part company after 15 years:
*JPMORGAN U.S. CHIEF EQUITY STRATEGIST THOMAS LEE DEPARTS FIRM
*JPMORGAN ANNOUNCES LEE’S DEPARTURE IN INTERNAL MEMO
It is unclear if Lee’s next career will be as waterboy for Ben Bernanke on his $250,000/speech global speech tour. What is, however, likely is that in his place JPM will simply unleash an algorithm that keeps raising JPM’s “official” S&P500 price target to 100 points above wherever the S&P may be at any given moment.
1. Average gas price in 2013 was a 3-year low. 2. Initial jobless claims come in 4k lower than expected. 3. Existing home sales (December) rose for the first time in 3 months, making 2013’s total the highest in 7 years. 4. IMF boosts global growth forecasts, showing how shallow positive news was this week. 5. Bad news seems to be bad news again, and good news is good news. Surely this is positive news. 6. AAII Bulls down to a 2-month low (excessive bullishness is not healthy). 7. MBA said refi’s jumped 9.9% 8. China’s economy grows 7.7% in Q4
1. For the first time in 3 months the S&P 500 and Dow both close below their 50-day moving averages. 2. HSBC’s China Manufacturing PMI came in at 49.6 (contraction) which is its lowest reading since July, this sent S&P futures deep into the red and triggered the 2 day sell-off. 3. US Existing Home Sales in December totaled 4.87mm annualized, 60k less than expected. 4. It looks like January will be the first red month since August. 5. Argentina’s peso suffered its worst day in 12 years, emerging markets got smacked.