One Year To Nowhere

[OriZ 3,157]

Still no change in any of the above despite(and for the monthly S&P500 and NASDAQ, due to) the recent rally.

I do not recall seeing them this tight in the monthly in like...forever. While bands don't provide a direction of where price will go once they expand, the other indicators in the bottom I believe do. I'll give them 2-3 more months before they start expanding again.

However notice XFactor the really isn't very broad anymore. ad's today were negative. Many indexes(besides the main 3) are way below their last highs. hyg:iei is already diverging again, oil is back down, this is all telling me that in the very short term we are due for at the very least a 4-5% correction. When I say short term I mean this month. Beyond that if they decide to go higher is fine with me, but 1. I wouldn't count on it and 2. even if it happens, it won't change the longer term picture as evident in the chart above, as well as valuations which imply negative returns in the next 10-12 years. This is one big trap just like we called the one for the bears at 1820, this time for the bulls.

So we were at 2072 then and we're at 2065 now. Inbetween we actually made it to 2111. I still see 4-5% from the 2072 at the time this was written, that puts us somewhere around 1970-1990, which would be a total decline(from 2111) of ~6-7%. That area should serve as strong support, if they break it it can snowball again and we can talk about the bear some more, but if it holds we can get new highs(again I'll stress that will not change the longer term picture).

[OriZ 3,157]

I am going to do a slight "quote galore" here for a lil bit...make no mistake about it, the reason I bring up quotes from time to time and follow up on things I have anticipated in the past is not in order to pat myself on the back...it is in order to show, that in general ,whether by me or others, in fact certain moves are possible to predict. The point is to show the power of utilizing certain important tools in order to make a more or less accurate forecast(obviously there is no 100%)...this is not about me. I am just tired of hearing people say that these moves cannot be predicted. So I am proving they can. And also kind of to summarize, to those that didn't follow the whole thread, and like to come in here, make a comment about something and disappear. So there ya have it all in one page.

Lookie lookie, after the recent decline now markets are only pricing in a 65% chance of a rate hike in june, whereas before that they were certain a hike was already going to happen in March. And the FED itself expected(supposedly) to raise it 4 times this year. And the three month t-bill? Still saying no. I'll wait till that changes.

I believe they will raise again in March/April. Fundamentally the job market/wages appears to be improving and I believe their goal is to normalize their policy.

I have said it before and can't stress it enough - the job market is the single most lagging indicator that exists. The fact it seems to be improving means nothing as it normally turns down many many months behind most other measures of economic activity.

During the past 4(!) years there were many, many periods of time everyone expected a rake hike "this month" "next month" etc, and each and every time bonds signaled it was not the time. As I have tried to show in my earlier post, the fed follows the bond market and not the other way around. Once the bond market was finally ready, in December, I said they will finally do it, and they did. Right afterwards I said bonds are signaling it's done(at the time, expectations in the market were for a hike in March). Today, all of a sudden expectations are for a hike not before June. And soon enough it will be Sep, and so on and so forth just like the last 4 years.

Do you really think they will raise rates into a falling market? If you expect this thing to seriously go south by the end of spring, then expect even the jobs market to show early signs of weakness by March/April. I say there's no way they raise rates as long as t-bills remain where they are at present. Once they start moving again, if that happens, I will have a different anticipation and will state it but for now, no hikes in 2016.

Markets were betting on a hike in March initially, but after the past week this has changed to now a 65% chance in June and not before. I think it will keep moving later and later as it has been doing for years. Yes, in the minutes link I posted earlier they also said it would be a mistake for the market to not expect 4 hikes, but, as I have pointed out before, the FED is always behind the curve when it comes to the economy so I think they are genuinely expecting to raise rates this much for the moment because they are under the illusion everything is going to be fine. Once reality slaps them across the face, as it has across history, they will shift course. Just my opinion, nevertheless should be interesting to see how all this pans out.

I think the sellers are just piling cash at this point, honestly. Gold is building a base. Rallies don't happen overnight and markets require alot of patience, for sure.

End of April. No hikes yet.

Edited April 30, 2016 by OriZ

[OriZ 3,157]

I'm sure someday it will. My opinion on gold is sorta mixed right now, it's a complicated juncture. On the one hand, I believe very long term(10-15 years at least) gold will definitely be above 2,000. On the other hand, medium term I think gold's not done going down. But very short term, I think it will experience a decent bounce, maybe even back to 1,400 before turning back down to lower lows. So it's a mixed bag.

All joking aside, I see a massive rally(at the very least a short term one) brewing in oil and gold, and I'm not sure at the moment how that ties into the correlation oil seems to have with stocks at the moment. Of course that correlation changes all the time so it could just go away, but we'll see.

I just think it is brewing. Doesn't mean it can't go down a little bit more first, but basically everything that I've been thinking for the past several years(which has happened) ie. most metals and commodities as well as currencies opposite to the dollar down, and the dollar up - I now think the opposite, at least in the short term. Oil, gold, etc are massively oversold atm, they've been hammered for quite some time now and there's too many technical divergences starting to show up(and too much pessimism by the "experts" who were bullish at the top).

BTW I also think the market tends to lead "fundamentals"(like iranian oil) and not the other way around but that's for a whole nother conversation.

On 18 Dec Gold was at 1052. On Jan 2 gold was at 1059. It is now 1294.

I definitely agree about spring as I have said in the past, but also as I've said then I am just not sure it will already be over by then. I think we will get a taste of it for sure, and then a rally afterwards, but don't exclude further downside later on in the year, or even into 2017, especially if the spring one isn't as deep as we think it will be.

I wanna clarify my post from earlier when I said "everything in between" I of course was talking about only the other metals and commodities besides oil and gold. I was NOT in any way shape or form referring to the stock market. I think Gold's upside will be more modest than that of oil's. Whereas at some point during 2016 I can definitely see oil around $50 a barrel, I only see gold at $1200-1400 an ounce. Considering oil right now is in the mid 30's and gold in the mid 1000's...percentage wise of course oil's rally will be larger. But generally speaking across the board I would say 30-50%.

I believe between oil, gold and everything inbetween a 30-50% rally from current levels is not out of the question. However, when I say from current levels does not mean it can't dip a little more first, but it does mean that that won't change the eventual target.

On Jan 2 Oil was at $37. It now stands on $46. True, inbetween it went as low as 27. Still, we're currently ~25% higher than at the time that was written. From the bottom at 27, oil has almost DOUBLED. Who would have thought that several months ago? Anyone?

Dollar is down over 5% since it was written.

[OriZ 3,157]

Yes, just like I said before energy is kind of interesting only because I believe oil will see $50 this year...makes no difference if there is further downside first, as even $10(don't get me wrong, I certainly don't think it will hit that) should not change that target.

Stood at 29.7 at the time that was written. Again, 46 now.

I actually think the heaviest selling will come after May. That's what I'm seeing - and I don't go by the news as the market is its own boss.

Someone should remind him that the bottom was already over 2 weeks ago. A short term bottom that was called here in this very forum. I think they will keep going sideways for the next couple weeks before taking another small dip, but still remain roughly in my 1800-2000 range till spring.

Ok, made it a little higher, but, roughly, still range for the past year+ 1800-2100. Did not go under at all, nor significantly over.

OK. So it definitely looks like 2020 is on the table. The fakeout decline happened sooner than I thought(latest 1810 low) and was a trap as was called by X Factor and I. The range is still roughly 1800-2000 give or take some, and while I still believe a decline to 1850-1900 to retest as support is possible, I'm not counting on it. This rally does have more to go both in terms of price as well as time, and then as the old saying goes "sell in May and go away" this year will be more true than ever.

I still think the bulk of the decline will happen in the second half of the year. Maybe this rally tops sometime in mid april. Most violent part of the decline should be in the Aug-Oct range. I think this for several reasons - for one, this is how I'm reading the map in this particular case. But also, if you study it from a historical perspective, that tends to be the weakest time of the year even in rising markets. It just coincides nicely with how I see this year going; notice, for instance that in 2001 the S&P500 declined almost 30% in that 3 month window. In 2008 almost 40%. Then we had the decline in summer 2014 and the one last summer. So I think late summer/early fall definitely going to be a hot season.

Well, I guess we have to wait and see how that pans out.

Ok that was your summary for tonight hope you enjoyed it. Markets are very much predictable. Don't believe anyone who tells you otherwise.

Edited April 30, 2016 by OriZ

[Expat1 971]

Nah, but definitely need to/going to see it at 3XX.

BTW, did you see oil is getting really close to $50?

I see oil all day every day whether I want to or not LOL

I dont get excited at stocks that trade at 500-600X earnings. Thats beyond speculation, thats filling inside straight flush kind of investing

[OriZ 3,157]

I see oil all day every day whether I want to or not LOL

I dont get excited at stocks that trade at 500-600X earnings. Thats beyond speculation, thats filling inside straight flush kind of investing

Yeah, bubbles everywhere. BTW IDX is also still having trouble with the 20-21 resistance range I cited I see...

[Expat1 971]

Yeah, bubbles everywhere. BTW IDX is also still having trouble with the 20-21 resistance range I cited I see...

Oil isn't holding. India's building storage, and after that there will be no more storage to fill while at the same time our neighbor Iran is targeting another 1.2 MBD. Supply exceeds demand (at least it exceeds consumption), and that incremental supply will have to back someone out and to do that the price has to drop back to the mid--to-upper 30's. Right now the US and Canada are being backed out.

IDX, though interesting, isn't interesting enough to hold when the dam breaks and I still believe it's a matter of short time until it does. In the meantime I'm still piling cash and short term fixed income and quite happy. Biggest quandary? To buy or not to buy the next dip.

Edited April 30, 2016 by Expat1

[OriZ 3,157]

I agree oil will drop again soon, but, for those same reasons you mentioned no one thought it was going to rally almost 80%. But it did, and is close enough to the $50 target range for me to mark it with a nice big V.

I would wait with IDX until most global markets(including US) bottom. I don't see any significant decoupling.

[OriZ 3,157]

http://www.cnbc.com/2016/05/02/warren-buffett-i-might-consider-taking-money-out-of-banks-if-they-charge-for-deposits.html

[X Factor 1,112]

http://www.cnbc.com/2016/05/02/warren-buffett-i-might-consider-taking-money-out-of-banks-if-they-charge-for-deposits.html

I too would take my money out for negative interest rates and park it in my trading and IRA accounts

Edited May 3, 2016 by X Factor

[OriZ 3,157]

You, me....eventually everyone. Nice way to create a run on the banks.

"If currency in a bank is worth less than currency in your hands ... that could produce something in the way of behavior," he said. "It's a different world. If you have a lot of money in euros, as we do ... you're better off putting it under your mattress than in a bank."

The easy money policies from central banks around the world is a "fascinating movie to watch," Buffett said, stressing he does not try to make money off central bank rate moves.

Edited May 3, 2016 by OriZ

[Expat1 971]

My money called me and asked me to ask you how my money can make money. This the kickoff of our correction or are we going to bounce around for another year?

[OriZ 3,157]

My money called me and asked me to ask you how my money can make money. This the kickoff of our correction or are we going to bounce around for another year?

Dude I think you've been sniffin those greens too much.

I need a break of 1970 to raise the probability that we're not going to eke out marginal new highs.

Edited May 4, 2016 by OriZ

[Expat1 971]

Dude I think you've been sniffin those greens too much.

I need a break of 1970 to raise the probability that we're not going to eke out marginal new highs.

Looks like a long boring summer. Got a great vacation coming up in July/Aug tho.

[OriZ 3,157]

Looks like a long boring summer. Got a great vacation coming up in July/Aug tho.

I think the second half of this year will be anything but boring. Can only stay in a narrow range for so long.

We have Vegas planned end of May and Milwaukee to visit wifey's family end of Aug.