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stock market melt-up ?
The October rally followed two brutal months for stocks, when equities sold off on global growth fears. However, investors found renewed optimism this month as China’s economic outlook stabilized and the country’s central bank cut borrowing rates. Meanwhile hints of more quantitative easing measures from the European Central Bank also helped lift global equity markets.
Investors took the Federal Reserve’s hawkish statement, which explicitly mentioned a possibility of and interest-rate increase at its December meeting, in stride, posting big gains after the announcement on Wednesday.
The main indexes recorded modest weekly gains for a fifth consecutive week. However, Friday’s session was more cautions, after a number of weaker economic reports and mixed earnings.
The S&P 500 SPX, -0.48% closed 10.05 points, or 0.5%, lower at 2,079.36 but was up 0.2% over the week. For the month, the benchmark index gained 8.3%. All 10 main sectors posted monthly gains, with materials, energy and technology shares leading the gainers.
The Dow Jones Industrial Average DJIA, -0.52% fell 92 points, or 0.5%, to 17,663.54 but rose 0.1% over the week. The blue-chip index gained 8.5% over the month.
The monthly point gains for both the S&P 500 and Dow industrials are the biggest on record.
But market-wise, no, not scary. As long as you’re not shorting LinkedIn. The stock is on fire this morning following some upbeat numbers. Its tearing up the sky and taking no prisoners. And it’s not the only one feeling peppy. Betting against equities, in general, is a frightening prospect, if our call of the day has it right.
There may be a reason to be fearful, with major U.S. indexes maybe headed for the best month in four years. All the while, lots of people were calling a top, and we just seemed to keep exploding higher. Ok, well not everyone out there is drinking the bullish Kool-Aid. “Most likely stocks will drop on the same fears of a rate hike in December until the Fed changes its mind again, So we might want to look out for that sort of a move. But remember the FED keep talking and talking and talking like a teenager girl on the phone. But they have not acted on any one of their rumored rate hikes. We can basically say that right now the FED has NO CREDIBILITY whatsoever. They say one thing, but then do the other. Its tricking alot of investors. Hopefully you do not get caught out in the hype and just follow your charts.
And if you’re looking for something else to support that fact that we are about to drop hard and crash on the market. We can confirm then when you see the rallies like we have just had over the last several weeks, that normal points to the market being at extreme overbought conditions in terms of what the internals and indicators are showing. The market does not go up in a straight line!!!
But below we have added a really cool chart, that you should take a look at. I never like the say history repeats, but I do in fact like the saying..... HISTORY RHYMES and stays in sync most of the time..... So we added a unique chart for you to take a look at today.
Is there really a melt up coming? Well, I guess the question is has it just started? some are looking for stocks to “absolutely soar” over the next 18 months. “Whenever we reach an extreme of fear in the markets, a bottom is often right around the corner,” when you look back over the last 100 years. “Once the uptrend returnsoh , if you owned stocks, you would have made off like a bandit!. In August, we can say that that sort of fear was reached real extreme fear. In September, the uptrend returned.” What we wanted to show our readers is that there was infact a similar time in the market’s history, right before a big dot com boom happened. We bottomed in the start of OCT 98 and then experienced a HUGE rally where dot com stocks exploded for more than a year. Here is the chart......
You can see that this chart to show what happened way back in 1998 and what he believes could very well happen again now. That is if the fed keep interest rates low, and earnings start to see lots more improvements. So far that is the case, but will it hold? That is the real question now. I have seen many predictions around the interwebs, however cheap money, and low interest rates is basically giving people no many alternatives, its making it hard for people to go elsewhere. The US seems to be the best value for asset investing right now around the world.
Fear was riding high in the late 1990s, just like it was in August of this year. “The Asian crisis was in full swing and U.S. stocks seemed expensive. Investors thought this was surely the end of the boom,” Everyone was predicting in the late 90's But of course they were wrong, and the tech world went nuts in the next few years. so we could be looking at that sort of opportunity today,” Potentially this could be like late 1998 — all over again — in U.S. stocks. So if that is the case, we say "Let the good times roll"
Also, check out our OTHER CHARTS HERE on why we think the stock market still has some value left in it.
It seems our predictions lately have been right on track. Now we are not saying that the that market right here is just going to keep going up to the moon, for the next 3 years. No way are we here to say 'I TOLD YA SO' because, even though this year is almost finished, 2015 has been a very very difficult year to trade. The volatility this year has been incredible, so much so, lots of hedge funds have gone broke trying to BUY and HOLD this market, when the dips and rips are hundreds of points. Its been a difficult market environment for years now, and we do expect that to continue. Probably less volatile in 2016, but still its not going to be for the weak at heart or those with a pacemaker installed. LOL.
We can see that over the last 7 weeks, there has been money that was sitting on the sidelines, that is slowly pouring back into the market. This is large players with big hands, if you know what I mean. So it maybe a big hint that this rally we have just seen, is only just getting started, but we may need to take a bit of a rest first. Time will tell.
I cover more and more technical analysis ==> HERE in our VIP members section.
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