Monday Oct 27 2014
Brazilian ETFs around the world are down 7-10% on the news . the news is that the same government that has over seen the fall in the markets and the real hs been re elected. Once again, Brazil fails to take the baton of the country for the next century.
A week ago we noted American markets had erased their gains for the year. Now last week we are told was the best week for the stock market in years. Sounds a bit like Zero Hedge observation that the US Govt would spend what ever it took to keep the markets up into hte election. This makes it all the more probable that there will be a larger decline in the US once that really sets in.
John Hussman makes the case for a falling market. Please read this article. It displays charts of the prior crash scenarios, 1929+, 1987, 2000,2007,and now 2014. My take is that the real crash started in the oil market. As Art Hill noted on stockcharts this weekend, it happened with no warning.This past week was no doubt an engineered bear market rally. His five concluding points are things we ahve discussed here for months.
Though to at least defer our immediate concerns about market risk, we should also be mindful of the sequence common to the 1929, 1972, 1987, 2000 and 2007 episodes: 1) an extreme syndrome of overvalued, overbought, over bullish conditions (rich valuations, lopsided bullish sentiment, uncorrected and overextended short-term action); 2) a subtle breakdown in market internals across a broad range of stocks, industries, and security types; 3) an initial “air-pocket” type selloff to an oversold short-term low; 4) a “fast, furious, prone-to-failure” short squeeze to clear the oversold condition; 5) a continued pairing of rich valuations and dispersion in market internals, resulting in a continuation to a crash or a prolonged bear market decline.
Read more: http://www.businessinsider.com/hussman-the-stock-market-is-crashing-2014-10#ixzz3HLdAqJZ0
Speaking of which, speculators go long oil too soon.
Again as we have noted many times, the entire 50% 1973-74 decline never experienced a genuine crash. Rather it was a series of just what has happened since the Russell peaked months ago. Other indexes stayed up before plunging and then rallied in such a fashion to convince many a low was in. They were all way early.
Euro Bank lousy performance reverses early rally. THis article is typical of what we describe in the paragraph above.
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