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Is a major top at hand? It is often said that bells do not ring to signal the end of a bull market
but if the broad averages were in fact to plummet in the weeks ahead, never forget that bells did indeed ring. This article contains the opinions of three heavyweights in the guru world which are so insightful that any investors who ignore their observations do so at their great peril.
The above introductory comments are edited excerpts from an article* by Rick Ackerman (rickackerman.com) entitled Death Knell for the Bull Market?
Ackerman goes on to say in further edited excerpts:
Permabulls and Wall Street managers charged with throwing Other People’s Money at stocks will not likely have noticed the bells ringing in the end of a bull market, so intent have they been on headlines proclaiming the soundness of America’s alleged economic recovery.
U.S. stocks closed at an all-time high last week [in spite of]:
- money velocity collapsing,
- ominous divergences developing in both the NYSE Advance/Decline line and the New Highs/New Lows summation,
- the Hindenburg Omen, which signals an increased probability of a stock market crash, flashing red on Friday,
- an unequivocal pronouncement from the Elliott Wave Theorist after the Dow Industrials came within a single point last week of fulfilling their long-term rally target at 17280: “Next week, the U.S. stock averages should begin their biggest decline ever” [and
- yours truly]…drum-rolling a key “Hidden Pivot” target at 2028 in the S&P 500 Index that has been 27 years in coming. On Friday, the index hit a record 2019.
For those trying to decide the bullish/bearish case for themselves, let me add the opinions of three heavyweights in the guru world with whom I’ve corresponded over the years: Peter Eliades, Alan Newman and Bob Hoye.
- Hoye’s latest Pivotal Events insightfully answers the question of how the stock market could be going bonkers while the U.S. economy continues to languish: “At the moment, cash hoarding is being used to explain another failure of interventionist theories that easy money forces GDP growth. Not when the public wants to speculate in financial assets such as now.”
- Eliades, like Hoye an analyst whose perspective on the markets stretches back not just decades, but centuries, notes in the latest issue of Stockmarket Cycles that the NYSE Advance-Decline line has failed since June to follow the broad averages higher and has, in fact, been falling since the beginning of August. This, he says, is “one of the fingerprints that accompanies important market highs that has been missing over the past year and longer.”
- As for Newman, market watchers may recall that for years his Crosscurrents newsletter diligently tracked the dollar volume of all NYSE transactions versus the total dollar value of U.S. GDP. Over decades, the former has grown to several times the size of the latter, supporting Newman’s contention that the main business of America is no longer selling goods and services, but trading stocks. Now he sees a looming train wreck in the chart above, which shows 10-Day New Highs/New Lows for the combined NYSE, Nasdaq and S&P indexes. “This could be the worst chart we’ve ever seen,” notes Newman in a bulletin sent out to subscribers over the weekend. “All the major indexes made new highs on Friday. For the S&P 500 and Dow Industrials, all-time records. For Nasdaq, the same level reached only two weeks before the final tech mania peak yet, when you measure new highs minus new lows for the last ten day period, the sum is barely positive. Fewer stocks are participating in this madness. “Frankly, we do not understand how anyone in their right mind could be bullish on the prospects for stocks. As far as we are concerned, this is a dreadful technical condition and we believe stocks are extremely vulnerable at this juncture.”
Conclusion
Odds of calling the exact top of a bull market, that has been snaking its way higher for five-and-a-half years, will never be great or even good no matter how savvy the forecaster. Even so— investors who ignore the observations above do so at their great peril.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://www.rickackerman.com/2014/09/when-will-the-bull-market-end-2014/ (All Contents © 2014, Hidden Pivot Enterprises. All Rights Reserved.)
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