Current condition of the stock market..

[dscher]

So, I just felt compelled to come on here and and share some concerns I am seeing with the market currently. I will try and keep this short..promise. lol. I study technical analysis, if some already didn't know.. and what I am seeing in the volatility index, ie $VIX is definitely concerning.. the tradable vix futures all are showing huge patterns of accumulation called bottoms. This is now in the third bottom called a triple bottom, one of the most reliable chart patterns in TA. This chart has me the most concerned.. among many others right now. The last bottom we had was in October, and we all know what corresponded afterwards. If we make this move in the vix back up to the previous highs then it will be that the market will test new lows and maybe break those lows without much support.. either way, this could play out for months. In my estimation, it looks like a 4-6 month span before this all occurs..

Also, Don't even get me started on these phony economic numbers coming out of our government. It's all fluff..the economy is stagnant. There is no question.. in my mind. The charts and indicators will also paint this picture. But this is all very hard to explain or really get too far into unless you study these charts as well.. regardless, I just think it is a very tedious time in the markets right now with a lot at stake for the normal investor and wanted to just throw this out there as warning. Not doom and gloom. I'm open for any discussion as well, as I love conversation about the markets in general.

 

[BigRedRage]

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[dscher]

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You'll get a good rate. Probably a 30 yr at 2%. We are going to negative interest rates. Imo The charts already show huge downward pressure on the 10yr yield.

 

[puckhead]

Could you be more specific in which economic numbers you believe are phony? I've always felt that Wall Street was pretty far removed from the realities of Main Street, but I would be interested to hear from someone who watches these data with an expert eye and doesn't need to spin them for an agenda.

 

[BigRedRage]

You'll get a good rate. Probably a 30 yr at 2%. We are going to negative interest rates. Imo The charts already show huge downward pressure on the 10yr yield.

Rates are the last of my concerns. The cost of housing if far beyond investment potential and I am waiting for that to drop. It is well above sustainable levels as a whole. Right now if you buy and rent, you won't even cover the damn mortgage payment. It's been this way for a while.

I bought a house in 2013 for 170k that would now sell at 320k and it is about startup family home. Not affordable to them, investors, anyone.

I know we are highly unlikely to have another 2008-2011 type correction but to at least get that example down to 250k would be more reasonable.

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[dscher]

Could you be more specific in which economic numbers you believe are phony? I've always felt that Wall Street was pretty far removed from the realities of Main Street, but I would be interested to hear from someone who watches these data with an expert eye and doesn't need to spin them for an agenda.

My take is that these numbers can easily be manipulated. Basically when they release "unemployment" numbers, it's not that they are not correct numbers.. but the quality of the numbers if off base to fit their narrative. There are tons of factors that go into this.. but this goes to my conspiratorial nature. So we won't go too far into that. .

Anywho.. I still do take the numbers from this data and use them for my charts. They do a great job of leading you towards guidance of where the economy is in the economic cycle. These same charts can track previous historical data as well. Unemployment rate, claims, housing starts, new jobs, and other economic data is starting to show massive divergences in momentum vs price. Meaning just like a ball, momentum changes before the actual ball does. This is what is happening currently. Momentum is building within all these charts to show an imminent recession..msm will more than likely report a recession in 2020 but that will be after the market has corrected 20-30 percent...imo

Also, remember that we just came out with numbers for the lowest unemployment rate in over 50 years. Can we guess what other period we were at historic lows? Just before the great depression in the 30s. I'm not saying this will or won't be like a depression..but that we always have to take numbers from our government with a grain of salt. They very much trail the markets and economy by at 6 months to a year..meaning, these numbers now were relevant about a year ago...not now. Jmo

 

[dscher]

Rates are the last of my concerns. The cost of housing if far beyond investment potential and I am waiting for that to drop. It is well above sustainable levels as a whole. Right now if you buy and rent, you won't even cover the damn mortgage payment. It's been this way for a while.

I bought a house in 2013 for 170k that would now sell at 320k and it is about startup family home. Not affordable to them, investors, anyone.

I know we are highly unlikely to have another 2008-2011 type correction but to at least get that example down to 250k would be more reasonable.

Sent from my LG-LS993 using Tapatalk

Sell sell sell..

I am in the same boat. I don't believe we will see a bubble to the extent of 2008. But in the market circles this is being called the everything bubble. So it's gonna be global..and it's going to hit every segment of the economy. What kind of damage? No one knows and we can only speculate. But it won't be pretty imo.

PS. I hate to sound doom and gloomy, but I would feel alot worse if I did not at least share my views and opinions with others if and when it does happen.

 

[Folster]

One thing that I find interesting is the effect of Trump's unpredictible trade and policy rhetoric has had on the markets. He keeps throwing curve balls at the markets and investors that seem to shake investor confidence.

You could argue that this has been positive.

Usually at the end of a bull market, we see a euphoria where markets surge as everybody piles in. This is called a melt-up. And many have predicted a melt-up to end this latest bull market.

Every time the markets seem to get a little overheated Trump tweets something or slaps tariffs on someone and it causes investors to pause or even pull back. Some refuse to invest at all due to their fear of Trump's presidency.

W/o Trump, I believe the markets would be much higher but not justifiably so.

 

[dscher]

One thing that I find interesting is the effect of Trump's unpredictible trade and policy rhetoric has had on the markets. He keeps throwing curve balls at the markets and investors that seem to shake investor confidence.

You could argue that this has been positive.

Usually at the end of a bull market, we see a euphoria where markets surge as everybody piles in. This is called a melt-up. And many have predicted a melt-up to end this latest bull market.

Every time the markets seem to get a little overheated Trump tweets something or slaps tariffs on someone and it causes investors to pause or even pull back. Some refuse to invest at all due to their fear of Trump's presidency.

W/o Trump, I believe the markets would be much higher but not justifiably so.

One floating rumor is Trump wanted his rate cut with the fed and got it, one way or another by spooking the markets with his tweet. Sort of a slight to Powell. The 10yr tanked yesterday as well so this helped his cause.. but I don't look too far into the political stuff when it comes to my market analysis, because the charts just confirmed the result I was expecting for weeks. Momentum has been waning for a long time and with this fear index that is gaining traction... Not great news. If the s&p and Dow get below their 200 day moving averages it could be tough sledding for stocks. Jmo

 

[Russ Smith]

One thing that I find interesting is the effect of Trump's unpredictible trade and policy rhetoric has had on the markets. He keeps throwing curve balls at the markets and investors that seem to shake investor confidence.

You could argue that this has been positive.

Usually at the end of a bull market, we see a euphoria where markets surge as everybody piles in. This is called a melt-up. And many have predicted a melt-up to end this latest bull market.

Every time the markets seem to get a little overheated Trump tweets something or slaps tariffs on someone and it causes investors to pause or even pull back. Some refuse to invest at all due to their fear of Trump's presidency.

W/o Trump, I believe the markets would be much higher but not justifiably so.

Agree which is why I think he is actively profiting from what he's doing, somehow he's making money.

But it does create these windows where he tanks the market and you can buy back in.

The problem is he's so irrational you just don't know when he's going to tank it further and it won't recover as quickly when he says nevermind trade is good again.

If he follows through with actions on Iran the markets will likely tank, I don't think anybody wants military action with THIS POTUS.

 

[DutchmanAZ]

Trump’s latest comments towards China that rattled the market (or so I’ve read) were a result of them backing out of a great deal of previously agreed points in trade agreements.

https://mobile.reuters.com/article/amp/idUSKCN1SE0WJ

Where is a good place to safely store investments these days?

 

[dscher]

Trump’s latest comments towards China that rattled the market (or so I’ve read) were a result of them backing out of a great deal of previously agreed points in trade agreements.

https://mobile.reuters.com/article/amp/idUSKCN1SE0WJ

Where is a good place to safely store investments these days?

Look at gold(physical or etf) or total bond ETFs. That's where I would possibly put cash into position for longs. Or you can just short the market..... I don't recommend this for casual investors though. Even though the institutional and hedge funds do it all the time.. not a game for the faint of heart.

 

[Ouchie-Z-Clown]

Look at gold(physical or etf) or total bond ETFs. That's where I would possibly put cash into position for longs. Or you can just short the market..... I don't recommend this for casual investors though. Even though the institutional and hedge funds do it all the time.. not a game for the faint of heart.

Dscher. Let’s remember our audience here. We know little about the experience, sophistication, and risk tolerance of the individuals that post here. Throwing out something like shorting the market could cause individuals to undertake actions that have consequences they do not understand.

Anyone that is in the biz needs to be careful when posting stuff here. We have little info regarding the readers. Talking about macro economic stuff and some limited educational items about capitalized markets, ETFs, mutual funds etc seems warranted and can be helpful, but getting any deeper can serve to accidentally lead readers only partially down a path that needs an in-depth exploration to be effective on an individual basis.

Not an admonition. Just a gentle reminder. Those of us in the industry tend to like to help others and it’s easy to forget that a lot of the folks reading don’t necessarily have the background to use some limited information effectively. And we don’t want to inadvertently harm anyone.

I hope this isn’t coming off as heavy-handed.

 

[MaoTosiFanClub]

I am in commercial real estate (broker and investor) and was just at a five-day conference and specifically sought out my colleagues a generation or two above me who have been through multiple down cycles and they all said things are just too frothy and the numbers are not there on your average transaction. Part of that could be the conservatism of older age or just plain wisdom, I guess we will see. They did say I would be fine investing in properties right now that had high cash flows right off the bat in good markets (almost impossible to find in single-family rentals in a non-war zone market but still available in some niche asset classes) but anyone who is investing based on rent increases or equity gains might be in a bit of trouble.

They all did say to a T though that once current tax laws sunset or get changed to expect a sizable dip in transaction volume so to save my money for a large reduction in my brokerage income.

 

[dscher]

Dscher. Let’s remember our audience here. We know little about the experience, sophistication, and risk tolerance of the individuals that post here. Throwing out something like shorting the market could cause individuals to undertake actions that have consequences they do not understand.

Anyone that is in the biz needs to be careful when posting stuff here. We have little info regarding the readers. Talking about macro economic stuff and some limited educational items about capitalized markets, ETFs, mutual funds etc seems warranted and can be helpful, but getting any deeper can serve to accidentally lead readers only partially down a path that needs an in-depth exploration to be effective on an individual basis.

Not an admonition. Just a gentle reminder. Those of us in the industry tend to like to help others and it’s easy to forget that a lot of the folks reading don’t necessarily have the background to use some limited information effectively. And we don’t want to inadvertently harm anyone.

I hope this isn’t coming off as heavy-handed.

Absolutely. It was why I followed up with the mention of not getting involved with techniques that can confuse the casual investor.

But, no harm no foul.. Im all about education first. I am a self taught trader and investor working as an EMT. So I don't take the learning side of the markets lightly.. I've been chewed up and spit out many times. It will humble you very quickly indeed.

I have discussions with many people about these techniques, and sometimes it's just to show off my market expertise. jk. But I do enjoy helping others...which is why I started this thread. No fees involved.

 

[MaoTosiFanClub]

Also the issue in expecting a large drop in housing prices is the lack of inventory especially in large cities with jobs.

 

[crisper57]

Absolutely. It was why I followed up with the mention of not getting involved with techniques that can confuse the casual investor.

But, no harm no foul.. Im all about education first. I am a self taught trader and investor working as an EMT. So I don't take the learning side of the markets lightly.. I've been chewed up and spit out many times. It will humble you very quickly indeed.

I have discussions with many people about these techniques, and sometimes it's just to show off my market expertise. jk. But I do enjoy helping others...which is why I started this thread. No fees involved.

This.

The biggest lesson I learned is to trust your instincts and research. I've been burned by being reactive to short-term news. I've never been burned by a long-term play.

 

[AZCB34]

Time horizon is the key. Additionally the vast majority of investors should avoid market timing period. They will do more damage than good.

1. Build a solid investment plan that matches your goal and time horizon
2. Don't allow the daily market machinations concern you because you know your plan is good.
3. Use dips as buying opportunities.
4. Reallocate at least annually to about getting too heavy one direction or the other.

 

[dscher]

Time horizon is the key. Additionally the vast majority of investors should avoid market timing period. They will do more damage than good.

1. Build a solid investment plan that matches your goal and time horizon
2. Don't allow the daily market machinations concern you because you know your plan is good.
3. Use dips as buying opportunities.
4. Reallocate at least annually to about getting too heavy one direction or the other.

Good write up. In general, I agree.. diversification across all asset classes is an investors best friend for the long haul. Imo

 

[Ouchie-Z-Clown]

Good write up. In general, I agree.. diversification across all asset classes is an investors best friend for the long haul. Imo

But with some proper allocating. Not the N/1 philosophy.

 

[AZCB34]

But with some proper allocating. Not the N/1 philosophy.

My use of investment plan infers pepper allocation and diversification but I shouldn't assume everyone would automatically take that away from what I said.

 

[Ouchie-Z-Clown]

My use of investment plan infers pepper allocation and diversification but I shouldn't assume everyone would automatically take that away from what I said.

Given your experience in the industry I assumed you meant that, but as you state I don’t want anyone to think that means just divide up your money equally among asset classes.

 

[Russ Smith]

Also the issue in expecting a large drop in housing prices is the lack of inventory especially in large cities with jobs.

There's a huge bubble forming in commercial real estate. There's all sorts of building going on in the Bay Area and there's a bunch of issues with it driving up the rates on existing real estate. The building I work in now was vacant for over 7 years before my company moved in(I wasn't here then). That's apparently happening more and more as companies are getting priced out of newer buildings so they take risks on older ones.

The problem is there's a huge amount of real estate controlled by a few very large companies. If and when the economy takes a fall and those companies see hard times, you're going to see a massive dump taken in commercial real estate. Apple, Google, Facebook etc they're going to be desperately trying to sublease or sell off buildings which will cause a drop in prices.

I have a friend who's a commercial broker he said in the industry they consider it a when not if scenario.

 

[Russ Smith]

Time horizon is the key. Additionally the vast majority of investors should avoid market timing period. They will do more damage than good.

1. Build a solid investment plan that matches your goal and time horizon
2. Don't allow the daily market machinations concern you because you know your plan is good.
3. Use dips as buying opportunities.
4. Reallocate at least annually to about getting too heavy one direction or the other.

Yep I mentioned months ago I was really tempted to start shorting the market with ETF's but I have a healthy fear of the downside to that so I didn't. I would have made some money at first but unless you are a psychic you don't know when to get out and I would have been burned. I'm convinced Trump is tipping friends who are doing exactly that, shorting the market with ETF's.

Most of my cash right now is in CD's or money market and most of my retirement savings is in the market. THat's largely a family thing my GF has much less risk tolerance than I do so we agreed take less risk with the cash. every now and then I point out to her the cash in a brokerage account went is up 28% in 2.5 years and the other stuff is up about 4 .5 % over the same time horizon, but I know I'm not going to change her mind.

My IRAs are all managed by Fidelity right now, they are largely in Fidelity funds and fidelity ETF's so they're not really trying to time the market. I would note my broker for Wells Fargo that has our brokerage account pointed out the first 6 months FIdelity was managing my IRA's, they underperformed the S&P. It is awfully tempting to just put it all in index funds.

 

[Yuma]

I tell my kids, when you are young it's about shares! I was more excited when the market was down because I could buy MORE shares. In the long run, in the stock market, just keep buying shares. You don't lose any money as long as you don't cash your shares out.