The Market Perspective

Did bonds top Friday?

Monday April 19, 2021

 

TBF rises when bond prices fall, It appears TBF is completing an A down B up C down fourthe wave pattern.

We will need a bit more confirmation but this looks like a good prelude to going long TBF for a fifth wave up.

Daily suggests a fourth wave is ending, fifth wave up beginning

Lots of Bucks chasing Clean Energy

Monday April 19 2021

See page B9 Streetwise intoday's WSJ.   It details how money poured into ETFs which track the S & P Clean Energy Index. Among the 30 stocks

there many which are thinly traded. The massive inflow of money juiced the prices skyward. Some of the funds grew five times in value over four months.  The values reached 14 B before dropping back to 10 B.  This is not Graham and Dodd investing.

Again this is a sign of mania chasing whatever is perceived to be hot at the moment.

Not much movement in bonds this morning.

A Point of Resolution is Coming

Weekend April 18 2021

Social mood is echoing the period of  1928-29 and 1965-66 and 1999-2000 and 2007.  Both ere periods of positive social mood as stocks rose to new highs,

Having lived through that era, the late 21960s upended mood with street riots, the TET offensive in Viet Nam and anti war protests including Woodstock.

Mood turned negative as the public rejected the family friendly comedy of Bill Cosby (yes I realize he is no longer family friendly but he was then) for eventually replacing him with Richard Pryor and Eddie Murphy.

At the movies we went from musicals winning the Oscar, My Fair Lady and Sound of Music to Midnight Cowboy then the Exorcist and two Godfathers.

Ending mood finds investors running up prices of losers like Gamestock and embracing new ideas like dot.coms and crypto currencies.  As noted in our column Friday

investor enthusisasm over crypto has dwarfed Robinhood's ability to process the trades.

Financial failures are surfacing including Archegos, Luckin, and Wirecard. All of rthese are signs of a frothy market and one wonders how many other potential blow ups are out there.

 

Most new brokerage accounts are belong to young people with no investing experience, recall that social mood is endogenous and unremembered, No one investing now remembers the NASD collapsing form 5,000 to  1,500 after its  March 200 high.

How long will this go on?  The Revolutionary War began April 19 and Fort Sumner was fired on April12. This date has been a turn point for many historic occasions.

Tom McClellan has June July for a final high. If financial history and Fibonacci numbers intrigue, I suggest subscribing to Bob Prechter's Eliott Wave Theorist. This month he again shows a chart dating to 1788,  233 years ago the founding of the USA. That period ends this and next year. couple that with the events listed above and the potential for change is in the air.

https://www.elliottwave.com/Investor-Research/Financial-Forecast-Service

 

 

 

weekend April 17, 2021

I did not buy bonds friday, a re examination suggests my original thesis was correct, we are in a fourth wave correction of the bond chart, lower rices lie ahead.

Here is the  120 minute chart

the move up Thursday likely ended th fourth wave up, affirmed by the PMO turning down on the  120 minute chart.

This idea is re enforced by the TBF opposite chart

 

so we did not go long bonds friday, we look to re enter tbf short term Monday, stay tuned for more updates

We certainly believe focusing on bonds back and forth is a much safer alternative to investing in any stock

 

Panic Euphoria Model

Friday April 16 2021

 

the other message about market extremes is that extreme indicators can stay that way for a LONG TIME, longer than one can hold out against them

In my previous post today I suggest this will last into the summer, though we could see some sideways action.

 

Dennis Elam

 

8 Indicators in 1: Here's the Message of the Panic/Euphoria Model
Prior model extremes occurred in March 2000 and October 2007

By Elliott Wave International

Elliott Wave International has been providing market analysis for more than four decades -- which includes many bull/bear market cycles.

That said, the public's current market mindset -- especially among inexperienced investors -- is a reminder of the extremes surrounding the 2000 market top, and a few others.

For example, a February 27 MarketWatch headline said:

A new wave of fearless retail investors is ready to pour $170 billion into stocks ...

Also, according to an early February Deutsche Bank survey of online brokerage users, 61% are under 34 years of age and 45% are in their first year of investing.

As Barron's reports (Feb. 25):

Younger, Savvier Investors Are Making Up a New Movement

So, all in all, there's no shortage of financial optimism.

Indeed, the March Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets, showed this chart and said:

This chart shows SentimenTrader.com's version of the Panic/Euphoria Model, which is an amalgamation of eight indicators that range from New York Stock Exchange short interest to individual and advisory sentiment surveys and retail gas prices. Prior model extremes occurred at 1.413 on March 24, 2000, the day of the top in the S&P 500 that led to a 51% decline, and 1.337 on October 12, 2007, one day after the S&P 500 peaked and started a 58% decline. The other two extremes were 1.427 on January 7, 2011 and 1.444 on April 8, 2011, neither of which mattered immediately to stock prices, but the S&P soon declined 22% from May 2, 2011 to October 4, 2011. On February 12, 2021, one trading day before the high in the NASDAQ indexes, euphoria clearly got the best of the investment public as the model shot to a new record at 1.613.

It's important to know that this extreme in optimism ties in perfectly with what the Elliott wave model is conveying right now.

The beauty of the Elliott wave model is that it can help you to anticipate trend changes.

Here's a quote from Frost & Prechter's Elliott Wave Principle: Key to Market Behavior:

It is a thrilling experience to pinpoint a turn, and the Wave Principle is the only approach that can occasionally provide the opportunity to do so.

The ability to identify such junctures is remarkable enough, but the Wave Principle is the only method of analysis that also provides guidelines for forecasting.

Learn these Elliott wave guidelines for forecasting financial markets by reading the online version of Elliott Wave Principle: Key to Market -- 100% free!

All that's required for free access to this Wall Street classic is a Club EWI membership -- which is also free. Club EWI is the world's largest Elliott wave educational community (approximately 350,000 worldwide members) and members get free access to a treasure trove of Elliott wave resources on financial markets, investing and trading.

Get started now by following this link: Elliott Wave Principle: Key to Market Behavior -- free access.

This article was syndicated by Elliott Wave International and was originally published under the headline 8 Indicators in 1: Here's the Message of the Panic/Euphoria Model. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

Enjoy the Mania

Friday April 16 2021

Enjoy the Mania While it Lasts

Dogecoin is up 400% this past week. The IPO of Coin base renders its CEO an instant $17 billion, now that’s some coin! Robinhood brokerage is unable to process all the client crypto trades. Goldman and Morgan handily beat earnings estimates. Crude oil nears $64 on expectations of greater demand as more venture out from the Covid Lockdown. The high-flying NASD 100 doubles in one year.   The pullback the last two months resets the index for more gains.

The ‘hemline indicator’ posits that fashions are more revealing during stock market manias. Indeed even mainstream Yahoo.com has featured Elizabeth Hurley and Salma Hayek in their skimpiest bikinis. And positive sentiment, hello Buzz Lightyear, extends to infinity and beyond. Richard Branson is planning consumer space travel. SpaceX boss Elon Musk has said the next major flight test of the Mars bound Starship craft will take place next week. The Pentagon confirms photos of ‘unidentified aerial phenomena’ captured in 2019. This is an echo of American landing on the moon subsequent to the DJIA reaching 1,000 for the first time in 1966. The movie 2001 A Space Odyssey suggested lunar travel, much as is being discussed today.

Mathematically speaking, a rally might be arithmetic with a slope of 1.5x. A mania exhibits a geometric scope, the slope is raised to a power, not just a multiplier.   Such events are rare. The first in modern times was Tulipmania in Holland in 1636. The South Sea Bubble occurred in England in 1720.   The United States has endured numerous ups and downs such as the Panic of 1907 and the Roaring 20s followed by the Crash of 1929.

Ralph Elliott postulated that markets move in a three step one-way, two step the other fashion. Both the NASD and the NDX appear to be in their fifth wave up. That suggests a top in the next few months.   Parabolic increases usually collapse in a near vertical move down, a mirror of the move up. Last week I suggested several potential worries but all that is over looked as the markets celebrate Coming out of Covid.

Add to the list Russia incursion on the Ukraine and China’s continued expansion into the South China Sea. A retired admiral just published a book titled 2034 predicting a war between China and the US.

As commodity prices boom, bond prices advanced yesterday the opposite of what one might think. Expect a bond rally for some weeks retracing the first quarter rise in interest rates.

Or as Hal Holbrook remarked to Charlie Sheen in Wall Street , enjoy it while it lasts, cause it never does.

Bonds Rally

Thursday April 15 2021.

this long dated bond fund is a much lower cost alternative to TLT.  We are officially going long bonds tomorrow.

A Good Day

Thursday April 15 2021

 

Inflation markets had a great day as you can see, banks advanced again with the expectation of more business activity and higher interest rates.

Crude oil has broken out above previous resistance and should move higher.

TLT

TLT a fund of 20 year bonds seems to have invalidate the idea there would be another move down. This certainly seems odd with crude, gold and silver and bank stocks all advancing.

One would expect bond prices to fall and yields to rise but the market goes where it wants.

European Financial Forecast

Thursday April 15 2021

Click for Free Trial of European Financial Forecast

Markets Advance Again

Thursday April 15, 2021

Market indexes are up again in another day of advance. Oil has broken to the upside as more demand is seen with increased travel.

Tom Bowley at stockcharts is wildly bullish looking for years of advance.

My friends at EWI note over the top optimism that usually accompanies market tops as well as numerous examples of five waves complete.

Tom McClellan suspects the markets can hold up unitil this summer, that at the moment appears to be the most accurate assessment.

Bonds are still in a trading range not breaking big either way.