{"id":94162,"date":"2016-08-10T11:02:39","date_gmt":"2016-08-10T15:02:39","guid":{"rendered":"http:\/\/countingpips.com\/?p=94162"},"modified":"2016-08-10T11:02:39","modified_gmt":"2016-08-10T15:02:39","slug":"wake-up-and-smell-the-bull-trap","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/08\/wake-up-and-smell-the-bull-trap\/","title":{"rendered":"Wake Up and Smell the Bull Trap!"},"content":{"rendered":"
August 10, 2016<\/div>
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By Chris Vermeulen \u2013 www.TheGoldAndOilGuy.com<\/strong><\/a><\/p>\n

We are currently experiencing a \u201c<\/em><\/strong>Kondratiev Winter<\/a>\u201d<\/em><\/strong> stage in this stock market which is at its\u2019 \u201ctipping\u201d point.\u00a0 This is where nominal to incremental highs on the SPX can be exceeded by 2%, but, by no more than 4%.\u00a0 I am observing a \u201cMARKET FAILURE\u201d right here and now. This is a BULL TRAP!<\/p>\n

Last Fridays\u2019, August 5th<\/sup>, 2016 rally in the SPX big price move, on low volume, resulted in no trend change to the larger BEARISH patterns. It does not change the Bearish pattern, but it probably does mean that the current rally will last for at least a few more days.\u00a0 There are multiple times in which rallies are reversed during the early part of the following week after a strong jobs report.<\/p>\n

Both investors and traders continue to throw money at stocks every time that there is any hint of \u201cmanufactured\u201d good news.\u00a0The majority of stocks, on the NYSE, are still in \u2018downtrends\u2019.\u00a0 Last Friday, August 5th, 2016, the Bureau of Labor Statistics released their \u201cbogus\u201d jobs report claiming that 255,000 new jobs were created.<\/p>\n

This strong number caused gold to drop sharply, which momentum traders could have profited handsomely if they knew about the rouge price spikes taking place in gold<\/a> just hours before the move.<\/p>\n

The labor participation rate rose a mere 0.2 percent to 62.8 percent which is at a 40 year low.\u00a0This means that potentially over 90 million Americans are still not working.<\/p>

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After adding only 11,000 jobs, in May of 2016, the Bureau of Labor Statistics would have the public believe that the US has now added over 550,000 jobs, in the sixty-day period, since. I find these numbers still hard to believe.\u00a0 There is no actual evidence of this having occurred:<\/p>\n

It is all just a statistical adjustment as well as the \u201cseasonal adjustment<\/a>\u201d factor as mentioned by Zero Hedge.<\/p>\n

Over the past 120 years, within in a 7-year bull market, it is during the Fall season of the 7th<\/sup> year when the next major decline commences.\u00a0 The SPX is putting in its\u2019 final TOP.\u00a0 It will become a well-defined top that usually cannot exceed a 2% to 4% throw over.<\/p>\n

We are currently witnessing an extremely aged and overvalued bull market.\u00a0 The SPX Index, despite the exuberance of \u201crecord highs,\u201d is just 2% above its\u2019 May 2015 peak.\u00a0 The SPX has pushed it to its\u2019 most extreme overvalued, overbought and over bullish syndrome in an environment where momentum is slowly rolling over.\u00a0 Whether one is bullish or bearish, one needs to recognize that any current extremes are \u201cunparalleled\u201d.<\/p>\n

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Statistically speaking, the single most probable outcome is actually a small gain which we have experienced and which is then followed by abrupt and severe losses that can have the potential of wiping out weeks or even months of upside progress with an unexpected and rapid decline.<\/p>\n

I will have to wait for the market sentiment to shift toward \u201crisk-aversion\u201d, before participating in any long-term bearish ETF trades.\u00a0 Within an increased global systematic world, both investors and traders are making \u201crisky and unparalleled\u201d bets, these days.<\/p>\n

I can visualize the financial meltdown.\u00a0 Many financial entities will have lower profits since low interest rates persist.\u00a0Historically, low yields squeeze the net interest income of banks and make liabilities harder to meet for insurance companies. I would cut their EPS forecasts by 5%-7%. The fall in Treasury yields explains most of the cut.<\/em> Their strong headwind is headed our way.<\/p>\n

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Sell into These Rallies:\u00a0<\/em><\/strong>If you are still in the stock market, I continue to recommend to sell stock positions into the rallies.<\/p>\n

Chart End of July 31st, 2016<\/em><\/strong><\/h2>\n

Take a look at the stock index outflows in July. This shows money continues to leave the leading indicator stocks (Russel 2k, and the Nasdaq).<\/p>\n

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CNN Chart of Fear and Greed August 6th<\/sup>, 2016<\/em><\/strong><\/h2>\n

Now, take a look at the fear index. While I personally use a slightly different mix of indicators to measure market sentiment, this is very close to my calculation and shows it in a simple visual format.<\/p>\n

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Conclusion:<\/em><\/strong><\/h2>\n

With all of the \u201cExtreme\u201d<\/em><\/strong> complacently and the \u201cExtreme\u201d<\/em><\/strong> greed in the stock market, it is the perfect storm for DISASTER!<\/em><\/strong><\/p>\n

With that said, nothing happens exactly when it should in the stock market. The market is constantly trying to get the mass of participants on the wrong side of the market. If it doesn\u2019t shake you out, it will wait you out and I feel it\u2019s doing the later method now.<\/p>\n

Huge opportunities are just around the corner for both swing trades and long-term ETF investment positions that shoot up in value sooner than later, which I will share with my readers.<\/p>\n

Get My Trade Alerts <\/strong>at:<\/p>\n

By Chris Vermeulen \u2013 www.TheGoldAndOilGuy.com<\/strong><\/a><\/p>\n

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

By Chris Vermeulen \u2013 www.TheGoldAndOilGuy.com We are currently experiencing a \u201cKondratiev Winter\u201d stage in this stock market which is at its\u2019 \u201ctipping\u201d point.\u00a0 This is where nominal to incremental highs on the SPX can be exceeded by 2%, but, by no more than 4%.\u00a0 I am observing a \u201cMARKET FAILURE\u201d right here and now. This […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-94162","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/94162","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=94162"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/94162\/revisions"}],"predecessor-version":[{"id":94163,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/94162\/revisions\/94163"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=94162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=94162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=94162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}