Tag Archives: Correction

If this a an average bear market we will se it bounce very soon

It has been a brutal stock sell off in December and so far in 2019, and MSM is telling you that we are officially in a bear market. It seems like the market is pricing in a recession, but it can be too early to say so.

The 10-year Treasury remain below 3 percent and the FED shouldn`t raise rates for the 10th time in 2019. If they push the hold button, I think the market will be happy and bullish again. Just look at the healthy job market and the strength of the U.S economy.

December 2018 was the worst December for the Dow since 1931, but if we avoid a recession I think investors are lucky to have a lot of cheap stocks. It is a China-U.S trade war, and the global economy is in a growth slowdown, but that doesn`t automatically mean recession.

We can see a support for the S&P 500 very soon, and this is also a point were investors pay for their insurance. And that is also a point were the bear market ends. Technical analysis tells us that if this is the right thing right now, a drop to around 2,300 points would likely spark a bounce from here.

Statistically, the average bear market stops right after, or right before it officially began. It remain to see that this is happening again. A closer look at the 48-month SMA, the market failed to bounce in August 2008 which led to the biggest drop since the Great Depression. The same happened in 2001.

Is this drop a new 2001 or 2008? If not, we can see a support just like it did in 1987, 1990 and 2016. The S&P 500 has lost 20,2 percent, and the Dow is down 19,4 percent, while Nasdaq is down 23,9 percent. The Russell 2000 is down 27,3 percent, so the coming days will be interesting. Anyway; this a great moment for day traders.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

Leave a comment

Filed under Stock market

The hottest stock market in the world

The stocks in Shanghai rebounded today, up +2,93% after a big drop yesterday. It was a global sell-off yesterday too, and many blame Shanghai for that. Others say Greece was the problem. The U.S stock market was about flat, but we saw a bigger drop in Europe, because Europe is the problem right now.

SSE

Shanghai index

The sell-off in Shanghai yesterday was huge, but necessary. Take a look at the index above. Shanghai have skyrocketed and a drop above five percent is healthy. I can`t hide the truth that Shanghai is the worlds hottest stock market right now.

The Shanghai stock market is up 35% for the year and the correction yesterday is the sharpest correction in five years, led by financials and energy. The Shanghai Index was extremely overbought. The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong also fell 4,6 percent.

Investors are optimistic about the prospects for further monetary stimulus to the economy and the valuation to the projected earnings had reached the top and peaked at the highest level since July 2011.

The authorities said the growth target for next year will be 7%, and that`s down from this year`s 7,3%. This is probably one of the triggers for the market correction yesterday, but I don`t think that is enough to alter investors bullish view of the Chinese stock market in the future.

The biggest loser yesterday was financial and energy stocks, but falling oil prices is bad for oil-exporting countries and company stocks around the world, but not for China. Oil-importing countries like China will benefit from the falling oil prices.

Take a look at the technical analysis of both Shanghai and S&P 500. Shanghai peaked in October 12, 2007, at 5,903. Now it is trading just below 3,000, which means this is probably just the beginning of a new bullish trend.  S&P 500 is at the all time high.

Some people see opportunities after a correction like yesterday, but others are full of fear. Shanghai is up 2,93% today.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Leave a comment

Filed under Emerging markets

Airlines hammered

Many investors are scared right now as it is time for Halloween soon, but Halloween is not the reason. It`s something worse; the stock market.  S&P 500 and Nasdaq had their worst weeks since May 2012, but I don`t think it is a big surprise for someone in the market as this is highly expected.

AA

Russel 2000 is in a correction territory and DJIA has dropped down about 200 points in four days in a row, and that has not happened in years. Last time we saw volatility like this was in 2011. Equities are a scary thing for investors right now, and that is not because of the coming Halloween.

S&P 500 ended at around the 200 MA and that will be a very important level to watch for in the coming days/weeks. SPX declined 3,1% last week and are now trading 5,6% below its peak of 2019,26 a month ago.

Many sectors are starting to be oversold and this is a good opportunity for many to pick up stocks. Take a look at the oil price, which is declining every day now, trading below $90. The surplus for many in this oil sector is good, so they don`t complain with a price below $90, despite an break-even at $92.

Other sectors will benefit from the declining oil price. American Airlines will benefit from reduced fuel costs and the stock looks cheap. Fuel is the largest expense line for American Airlines and a decline in oil prices will have a huge impact to their bottom line.

On December last year, AMR Corp merged with U.S Airways. They are now the world`s largest airline; American Airlines Group (AAL). The shares doubled since they merged, but the stock have had a pullback which makes it interesting for investors as the fuel cost are making it more profitable.

AAL has delivered great results, have good cash flow levels and their revenue are increasing. They have high-capacity and a strong pricing power, and are expanding its network to China. Those routes is one of the most profitable routes worldwide and they will start to compete with Chinese airlines.

With around $10 billion in cash and possible buyback program, the earnings per share will increase to new highs. The forecast for earnings is $5,21 per share, and with a buyback program, this stock looks undervalued, and EPS would strengthen.

The stock slid -7,15% yesterday and looks cheaper and cheaper every day. Another airline stock to decline was United Continental Airlines (UAL), down 7,29% yesterday. The market trend indicator gave us a bearish reading on stocks and that`s for the first time in some time. If we fall below 1,800 on the S&P 500, the war will be over and the bears are the winners. What  investors are doing now, is jumping from one sector to another.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

2 Comments

Filed under Stock market, Stocks

Rock`n Roll in the stock market. Fundamentals or Emotions?

Are stock markets falling because of the fundamentals or investors emotions? The one that is first to sell stocks is the small investors. You can see that if you look at the small cap index like Russel 2000. They started the downturn long time before S&P, Dow and Nasdaq.

SPX 13 October 2014

(Picture: S&P 500 Index)

The big ones are selling later, if they are selling at all? Big investors like Buffet and Icahn are holding their positions and pick up the stocks when it drops down. So are the big hedgefunds. This is simply because they have money, time and look at the fundamentals.

Apple Inc is now trading at around $100, and Icahn said last week that the stock is worth about $200. Of course he is not selling stocks. As an activist investor, Icahn have written a letter to Apple`s CEO Tim Cook.

Icahn told him to go for buybacks. Apple will launch their new Apple Pay in a few days, and that`s probably why Icahn is so positive on that stock right now. The big player will win, and the small one with bad nerves will lose, because the small one don`t know when to jump in again.

I think that many investors don`t understand the Apple hype, but I will not be surprised it Apple beats the 51,03M bar Apple have set for itself this year. The holiday season will take the level higher.

The Dow suffered last week and Nasdaq were particularly hard hit, down 2,33% on friday. The fear Index tells us that investors are terrified at the moment. Investors didn`t like the new data from Germany and Japan, and don`t know what to do about Fed`s plans to end its stimulus and their low-interest rate policies. This is why the market is volatile right now.

Big players are looking at the fundamentals. I think they will look for the biggest companies in the U.S, and third quarter earnings reports will come from Netflix and eBay on Wednesday. Google will come with their report on thursday. In addition; Chrysler will make its debut on the New York Stock Exchange.

It is when the big players start to sell that the stock market crash, and they are not selling right now. They are waiting. Swiss adviser Marc Faber has talked about a crash for over a year now. He says that we are in a gigantic financial asset bubble. Anyway; your strategy shouldn`t be to buy on top and sell at the bottom, so be cautious.

Right now, it`s all in a green territory in Europe. Buffet is buying stocks this week, and JP Morgan is bullish and say they don`t expect the market to drop down 10%. Trade what you see, not what you think. The market is volatile and will continue to be so for a while.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Leave a comment

Filed under Stock market