Bullish Sentiment Extreme

U.S. Stocks: Here’s a Big Sign That “Sentiment Cannot Get Much More Extreme” The stock exposure of the most bearish active investment managers is revealing Relatively few investors want to bet against the stock market rally. As a Feb. 18 financial article says (CNBC): Short interest in the market has fallen to near-record lows. Indeed,… Read more Bullish Sentiment Extreme

Margin Call Tsunami

Why Next Wave of Margin Calls Will Be FAR More “Disruptive” Than in 2000 or 2007 “Can investors afford to borrow anymore?” Financial history shows that every bear market has been followed by a bull market and vice versa. So, the current bull market will end sooner or later. The prior two bull market tops… Read more Margin Call Tsunami

Contrarian Trade Failed in 2020

Here’s Why Blind Contrarianism Failed in 2020. There is only one instance when the investing crowd is right. Yes, there are many times when the market’s Elliott wave structure suggests that an investor should take a position “against the crowd,” or put another way, be a contrarian. Prime examples are at market bottoms and tops.… Read more Contrarian Trade Failed in 2020

Smart Money vs Dumb Money

Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? When one of these groups acts, “the odds become high for a change of trend” It’s useful to know who is doing what in particular financial markets. You’ll find out why as we proceed, however, let’s first start off with some basic background… Read more Smart Money vs Dumb Money

Put/Call Ratio at 20 Year Low

This Stock Market Indicator Reaches “Lowest Level in Nearly 20 Years” Here’s what happened “the last time the 10-day put/call ratio made a lower extreme” After a big trend reversal, it’s not unusual for the correction to retrace much of the initial sell-off or rally. Thus, many investors are fooled into believing that the old… Read more Put/Call Ratio at 20 Year Low

Why Non-Confirmations Matter

When a trend is strong, related markets tend to move in unison. However, when a trend is near exhaustion — a bullish or bearish trend, “non-confirmations” often occur. A non-confirmation occurs when one market makes a new high (or low), but a related market does not. As cases in point, our November Global Market Perspective… Read more Why Non-Confirmations Matter

Is Gold at a Top?

Gold and Silver: Pay Attention to This Noteworthy Record High Here’s what usually occurs in related financial markets when “big changes in social mood are afoot” Related financial markets tend to move together. For example, gold and silver. Or, consider stocks. When the Dow Industrials are up on a given trading day, the NASDAQ is… Read more Is Gold at a Top?

Buying the dip?

Stocks: Why “Buying the Dip” is Fraught with Danger Investors know that the main U.S. stock indexes have tumbled very quickly. On a historical basis, some may not realize just how quickly. A March 23 Marketwatch headline referred to a “mind-bending stat”: The S&P 500 has dropped 30% from peak to trough faster than any… Read more Buying the dip?