{"id":61329,"date":"2014-10-03T02:38:52","date_gmt":"2014-10-03T06:38:52","guid":{"rendered":"http:\/\/countingpips.com\/?p=61329"},"modified":"2014-10-03T02:38:52","modified_gmt":"2014-10-03T06:38:52","slug":"bullish-fever-who-said-anything-about-a-stock-market-correction","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/10\/bullish-fever-who-said-anything-about-a-stock-market-correction\/","title":{"rendered":"Bullish Fever: Who said Anything About a Stock market Correction?"},"content":{"rendered":"
October 3, 2014<\/div>
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By MoneyMorning.com.au<\/u><\/a><\/p>\n

If you’re familiar with my research and writing, you’ll know that I’m a mega stock market bull<\/strong><\/a> — 2015 will be a huge year for equities<\/u>. <\/strong><\/p>\n

However, I said prepare for a stock market correction stretching from week one of September into, possibly, late <\/strong>October<\/a>. Check out that article if you want to know why…<\/p>\n

I must admit my analysis has been slightly off. <\/p>\n

Yes, the Australian share market<\/a> has corrected by close to 6% since September 1, 2014. But I said that the US Dow Jones would lead the way down. The Dow has gone almost nowhere, down a paltry 1.7% since my correction call. <\/p>\n

With that said, volatility is on the rise and this trend is set to continue…<\/p>

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The Dow Jones has seen daily 1% moves in both directions since last week. However, thanks to these big moves, it still<\/u> hovers around the crucial 17,000 support level. It doesn’t know which way it wants to move…yet. <\/p>\n

I believe that the US could soon play catch up and correct. However, my confidence on the market correcting is waning. Based on my analysis, there’s now a 25% chance of correction in the US — still a possibility that shouldn’t be ignored.  <\/p>\n

The fact is we are in a history making bull market. You’ll see why below…<\/p>\n

A multi-hundred point bounce off the 17,000 support level may be the bullish sign that equities need to rally hard. <\/p>\n

For months, I’ve detailed to Diggers and Drillers<\/em> readers why Europe’s economy and financial system is a basket case — France, Greece, Italy, and Spain will all default on their debts. Europe is in a massive deflationary environment, and this isn’t good for European investments. <\/p>\n

It’s clear that money is moving out of Europe — look at the euro\/US dollar currency pair. The US dollar<\/a> is only getting stronger against the euro. This means that money is flowing out of Europe and into the US. Investors want nothing to do with Europe. And rightly so… <\/p>\n

The US stock market may not see a correction<\/u>. When the US stock market runs hard again, the Aussie should<\/u> follow. <\/p>\n

If a US correction shows no sign of coming, a bullish burst will happen before you can blink. <\/p>\n

I believe that November will be the start of the 2015 bull market. This will be after the US Fed’s money printing program ends. Investors will see that the market is still going up and buy again.<\/strong><\/p>\n

There’s a clear shift from debt to equity going on before your eyes — this is gaining momentum. It’s why I keep looking for quality resource stocks that will benefit from the 2015 bull market. <\/p>\n

In Diggers and Drillers<\/em> this week, I wrote an extensive report uncovering the truth behind the Middle East conflict. It isn’t surprising that this is a political conflict over money and power — it’s highly<\/u> likely to blow up soon. Western economies are weak and this is the driver behind rising global<\/u><\/strong> geopolitical conflict.  <\/p>\n

In my view, geological conflict will send the crude oil price to US$150 per barrel before you know it. I’m taking advantage of this for readers<\/a>. <\/p>\n

With that said, let’s take a look at the technical picture. The chart below tracks the ASX 200<\/strong>. Each bar represents one week.<\/p>\n

\"Australian<\/a>
\nSource: Diggers and Drillers; IGMarkets<\/em>
\nClick to enlarge<\/a><\/em><\/div>\n<\/p>\n

As I said before, the ASX 200 is down 6% since the beginning of September. It’s trading at 5,264 points. <\/p>\n

Bring your eyes to the 5,270 support level — the market just fell through it. 5,270 was the crucial support level before the market crashed in 2008\/09. This level acted as major resistance for much of 2013; we only broke through it this year. Now back down at this level, it’s becoming an important base.  <\/p>\n

But times have changed since the financial meltdown of 2008\/09. <\/p>\n

You should look at this objectively. We’re in a bull market of massive proportion — this is a fact. If you don’t believe it, watch the market rally hard in the next six months. Money is flying around the world thanks to geopolitical risk and major economic unbalance. Equities are the new safe haven. <\/p>\n

However, let’s assume that the US stock market does correct into November. It’s still a possibility…although small.<\/p>\n

Technically, a steep correction in the US could see the ASX 200 revisiting the 4,993-5,072 point support range. This is shown by the red line in the above chart. This is a major<\/u><\/strong> support and resistance level dating back to 2009, 2011, and 2013. Re-testing this region would represent a 9.9-11.3% correction. <\/p>\n

Even if the US shifts into the next phase of the bull market, there’s still a possibility that the Aussie market could fall to the 4,993-5,072 point support range. If it doesn’t fall that far, the ASX 200 is lining up that blue trend line. I’d suggest that, when the US market rallies, it could bounce off this level, which is around the 5,150 point level. <\/p>\n

The falling Australian stock market<\/a> has everything to do with commodity prices — the back bone of the Aussie economy. As I explained a couple of weeks back, a rising US dollar is the greatest risk to commodity prices in the years ahead. The US dollar is on the up. This isn’t going to change soon. <\/p>\n

As a resources analyst facing the real prospect of a rocketing US dollar, it’s important to select the stocks that will outperform in 2015. I’ve been hand selecting some of the best prospects for next year.<\/a> Don’t be discouraged about resources; much of what’s happening around the world is affecting resources — especially precious metals.<\/p>\n

There are always opportunities to profit in every market. Keep your objective hat on and get ready for the market to break out to higher highs. We’re in a major bull market that is only just about to be unleashed.  <\/p>\n

The bottom line is to watch the US dollar<\/a> closely. It will have an impact on future commodity prices and the Aussie stock market. <\/p>\n

Jason Stevenson+<\/a>
\n Resources Analyst, Diggers and Drillers<\/em><\/strong><\/p>\n

Join Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

The post Bullish Fever: Who said Anything About a Stock market Correction?<\/a> appeared first on Stock Market News, Finance and Investments | Money Morning Australia<\/a>.<\/p>\n

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\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au If you’re familiar with my research and writing, you’ll know that I’m a mega stock market bull — 2015 will be a huge year for equities. However, I said prepare for a stock market correction stretching from week one of September into, possibly, late October. Check out that article if you want to […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-61329","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/61329","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=61329"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/61329\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=61329"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=61329"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=61329"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}