{"id":77002,"date":"2015-08-17T18:07:43","date_gmt":"2015-08-17T22:07:43","guid":{"rendered":"http:\/\/countingpips.com\/?p=77002"},"modified":"2015-08-17T18:07:43","modified_gmt":"2015-08-17T22:07:43","slug":"global-markets-and-dow-jones-fire-warning-shot-across-investors-bow","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/08\/global-markets-and-dow-jones-fire-warning-shot-across-investors-bow\/","title":{"rendered":"Global Markets and Dow Jones Fire Warning Shot Across Investors Bow!"},"content":{"rendered":"
August 17, 2015<\/div>
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By Chris Vermeulen – www.TheGoldAndOilGuy.com<\/a><\/strong><\/p>\n

Last week, the\u00a0global equity markets\u00a0were quite undecided. China\u2019s and Japan\u2019s equity prices have been moving higher. The Japanese Nikkei reached its highest level since 1996 on Tuesday, August 11th<\/sup>, but then pulled back at the end of the week. Hong Kong\u2019s Hang Seng made a new monthly low and the Australian Market\u00a0fell to a new 6-month low.<\/p>\n

Europe was more decisive. Traders mostly sold stocks. \u00a0The German DAX, London FTSE, and Zurich SMI all fell to monthly lows by mid-week and did not recover much by Friday August 14th<\/sup>\u2019s close. In Russia, it was much different. Moscow\u2019s MICEX index rallied to its highest mark in 3 months.<\/p>\n

In the US Markets, the selling was even more intense.\u00a0 On May 19th<\/sup>,2015, the DJIA topped out at 18,351.\u00a0\u00a0The DJIA has failed to make a new high since then and continues to sell off. The decline, so far, has been over 1,220 points which is its\u2019 greatest loss of the year. \u00a0Last week, began very strong, with the DJIA up 245 points on Monday, August 10th<\/sup>; Tuesday was down 212 points, and by Wednesday, the DJIA had fallen all the way to 17,125, its\u2019 \u00a0lowest level since February 2nd<\/sup>, 2015.\u00a0We had a CONFIRMED BEARISH\/SELL signal on August 4th<\/sup>, when the Dow Jones was at 17,596.\u00a0 Before I can take any BEARISH positions in the US Markets, this signal needs to be CONFIRMED by the SPX and the NDX-100 as BEARISH, which are currently NEUTRAL\/TRENDLESS.<\/p>\n

The SPX landed at\u00a0support levels and found its\u2019\u00a0footing,\u00a0once again.\u00a0We are getting closer to the cycle lows in September\/October when the downward pressure will\u00a0push it through its\u2019 support trend lines.\u00a0 We are still into a sideways direction. It is a little too early to tell if it will continue the sideways motion or decline in some downward momentum, next week. SPX is undergoing a consolidation in a downtrend trend using the 200-\u00a0Day Moving Average\u00a0as support. A daily close below 2076, which does not hold, should bring about the next challenge to the 2040 major support level.\u00a0The current declining patterns are represented in those of the DJIA,, NYSE and the Dow Jones Transportation\u00a0Indexes.<\/p>\n

\"spxsupport\"<\/p>\n

The Dow Jones Transportation Index and the Dow Jones Industrial Average are leading the US Markets down during this topping process \u00a0 They are declining further than the other indexes, and the other indexes should be establishing their downtrends, in the near future.\u00a0With the exception of a monumental one-day market crash, that happens once in a blue moon, bull markets that are topping undergo\u00a0a drawn-out process that usually takes, at least, many months before bearish momentum\u00a0finally\u00a0<\/em>takes over and a new downtrend emerges.<\/p>\n

\"DJTASPXAUG14\"<\/a><\/p>\n

Considering that US stocks have been in a 7-year bull market<\/em>,\u00a0it would be\u00a0unreasonable to expect such bullish momentum to change overnight.<\/strong><\/p>\n

Therefore, even though\u00a0price momentum has been favoring the bulls lately, it is still my belief,\u00a0that it is\u00a0dangerous<\/em><\/strong>\u00a0<\/em>to be invested\u00a0on the long side of these markets, as of November 25th, 2014.<\/p>\n

The stock market is undergoing a big trend change and most of the analysts are missing it, which is normal. They lack the access to \u201cThe Predictive Trend System Analytic\u2019s\u201d of a Financial Forecasting Model. My\u00a0clients have the access to this knowledge from our subscription service that we provide.\u00a0 This knowledge provides you, the client, with THE EDGE that other professional investment firm\u2019s lack.<\/p>\n

U.S. equity markets have been fueled by cheap dollars and cheaper interest rates. The combination of the stock market crash from 2008 \u2013 2009, along with a declining U.S. Dollar, has been destroyed by the Federal Reserve Bank (FRB), which has helped US Equities to become a bargain on the global market. This allowed foreign buyers to come in and purchase US Equities, at both a nominal value, based on the markets\u2019 decline, as well as, a relative value based on their home currency. Foreign investors have capitalized on the rise in the US equity market<\/p>\n

On November 25th, 2014 my **Global Sentiment Model signaled the \u201cEXCESSIVE EXTREME OPTIMISM\u201d, which provided an exit point on all long US Market positions .\u00a0 Those traders and\u00a0investors, that remained in long positions, who were\u00a0not subscribers to our service, at that time, \u00a0have just been channeling, without any new\u00a0break outs\u00a0into new highs.<\/p>\n

There is a huge disconnect between the popular sentiment, among the \u00a0\u201ctalking heads\u201d on the news, regarding how these events will affect the September 2015 meeting of the Federal Reserve Bank. The general consensus, that I feel currently exists, is that this could very well push any increase in interest rates, out into the year, 2016. The Federal Reserve Board of Governors has been decidedly dovish, regarding this aspect, and has continued its\u2019 quantitative financial engineering.<\/p>\n

INVESTOR SENTIMENT READINGS<\/strong><\/p>\n

High bullish readings in the sentiment stock index usually are signs of Market tops; low ones, market bottoms.<\/p>\n\n\n\n
Last Week<\/strong><\/td>\n2 Weeks Ago<\/strong><\/td>\n3 Weeks Ago<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n\n\n\n
AAII Index<\/strong><\/td>\n<\/tr>\n
Bullish<\/td>\n30.5%<\/td>\n24.3%<\/td>\n21.1%<\/td>\n<\/tr>\n
Bearish<\/td>\n36.1<\/td>\n31.7<\/td>\n40.7<\/td>\n<\/tr>\n
Neutral<\/td>\n33.4<\/td>\n44.0<\/td>\n38.2<\/td>\n<\/tr>\n
Source: American Association of Individual Investors,<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Our current sentiment and technical features are\u00a0consistent\u00a0with a major stock market top.\u00a0\u00a0This model uses the market sentiment composite which is\u00a0a measure of investor sentiment. This metric tracks the mood of investors, which is then translated into a probability whether the markets will advance or decline, within the near term, as well as, an undisclosed period of time. It is a contrarian indicator that produces a bullish signal, when market sentiment is overwhelmingly negative, and a bearish signal when markets are overwhelmingly bullish.<\/p>\n

We\u00a0have not\u00a0disclosed these\u00a0models\u2019 methodology,\u00a0and its statistical data, as it is proprietary. \u00a0We\u00a0have also\u00a0not disclosed the correlation coefficient that is used to measure the strength of the linear dependence and its\u2019 algorithms between the market sentiment composite and the 12-month forward return. A trading friend of mine\u00a0developed this model thirty years ago.\u00a0 For the period of time that\u00a0it has been implemented, which is now 25 years, it has been\u00a0predicatively\u00a0accurate, 100% of the time,\u00a0prior to\u00a0any major changes within the US Markets.\u00a0The last signal that was generated was on November 25th, 2014, which registered\u00a0\u00a0\u00a0\u201cEXCESSIVE EXTREME OPTIMISM\u201d and the broad market had been\u00a0trading\u00a0sideways since.<\/p>\n

Learn how to read the market and make the same trades we do:\u00a0www.TheGoldAndOilGuy.com<\/a><\/strong><\/h4>\n

Chris Vermeulen<\/p>\n<\/div>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Chris Vermeulen – www.TheGoldAndOilGuy.com Last week, the\u00a0global equity markets\u00a0were quite undecided. China\u2019s and Japan\u2019s equity prices have been moving higher. The Japanese Nikkei reached its highest level since 1996 on Tuesday, August 11th, but then pulled back at the end of the week. Hong Kong\u2019s Hang Seng made a new monthly low and the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-77002","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/77002","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=77002"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/77002\/revisions"}],"predecessor-version":[{"id":77003,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/77002\/revisions\/77003"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=77002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=77002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=77002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}