Bull Market Shows No Signs of Letting Up

Mike Turner |

Wall Street Bulls EyeI'd like to see a show of hands for the next 3 questions:

  1. How many of you think the market is going to move a lot higher before it moves a lot lower?... Ok... let me count... keep your hands up until I get the count... got it. You can put your hands down.
  2. How many of you think the market is going to move a lot lower before it moves a lot higher?.... Oh... a few more hands on this one... Joe... did you vote twice already?... Ok, put your hands down.
  3. Ok... last question... How many of you don't have a clue where the market is headed? Wow... That's an overwhelming majority I see out there... so many, I'm not going to even try to count. You can put your hands down; even those of you who voted all three times.

Take a look at the "Current Consolidation" chart, below right.

With the exception of some rather significant turmoil in 2010 and 2011, the market has been in a raging bull cycle since March of 2009; and showing no signs of letting up.

Putting some money into the DIA on March 10, 2009, would have netted you a cool 250%+ return in just 4 years as the DJIA has moved from 6,547 to 14,974. Some of you, from the hands I counted above, think this raging bull market will continue a lot higher before moving a lot lower. As long as the Fed continues to pump trillions of Dollars into market liquidity, that is not a bad bet. But... nothing goes straight up forever.

I often ask the above 3 questions to live audiences when I speak at investment conferences and meetings around the country. I will, most likely, ask a similar set of questions at the upcoming Wealth Building Symposium in Las Vegas in about 10 more days. One question that I often ask as a follow-up is..."Of those of you who raised your hand that you 'don't-have-a-clue' where the market is headed, do you have a significant portion of your investable net worth in the market right now?" Invariably, 99% of the respondents will raise their hands again. The obvious, rhetorical question is, "Why would you have a lot of your investable net worth in a market with no idea where that market is headed?"

Quote worth Quoting Again
"If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."... Thomas Jefferson

I certainly have a clue about where the market is headed in the very near term. Keep in mind that just because I "have a clue" does not mean that I "absolutely know" where the market is headed. Here are my clues:

  • The Fed has said it is going to continue for the foreseeable future to back-stop liquidity in the market to the tune of $80 billion per month. This is creating an asset and commodity bubble situation, but that is good for us stock market investors, for the time being.
  • Europe's fiscal cliff issues have been resolved, for the moment, simply by printing more Euros, backing off of austerity, and blindly assuming that 'all-will-be-well-tomorrow' as they blithely sing, "Tomorrow" from the Annie musical.
  • Full employment used to be 4% unemployment... now, it looks like the financial change-agents of political propaganda (and, you know who they are), are gradually getting everyone used to thinking that 7% unemployment is the new goal for full unemployment. And, the labor participation rate that has plummeted under the current Administration is no longer the fault of George Bush, but is the fault of the Baby-Boomers as they quit working en mass. I'm sure there are a lot of newly retired 65 year olds, but I rarely meet one. So... the economy is, indeed, improving; according to the new, new definitions of economic growth. We have outcome-based education in this country... why not outcome-based economics, too?
  • Being the dutiful mind-numb robots that we are, we are also to believe that inflation is benign; even though we are printing fiat dollars by the trillions and no hope of finding a way to retire the national debt. I heard a liberal on Fox news say this morning that the debt, as a percentage of GDP is actually decreasing, meaning that our country is headed in the right direction with regard to the nearly $20 trillion in debt owed by every taxpayer in the US, which pretty soon, will be fewer than 50% of the population. Common sense tells us that the market should be adversely reacting to all the debt and the fact that interest rates will rise in the future, making the likelihood of managing that debt virtually impossible... but, common sense does not apply right now. As such, this debt thing is a non-issue.
  • Israel is attacking Syria. Syria is using weapons of mass destruction on its own people. Our President is telling us that the Boston bombing was only a 'self-radicalized', one-off event... sort of like the "workplace violence" killings at Fort Hood. If we just ignore the facts and the bad guys, they won't bother us. No... these are not market-roiling events either.

So... nothing in the global or domestic economic future looks to adversely impact the market... at least not for the next few weeks.

I am a very long-term investor... one week at a time. And, this coming week looks like a good time to put more money to work in the market (for a very few weeks) and that's what I plan to do. But, I do plan to keep my positions mostly small. I am not ready to short yet... not because of the 'facts' listed above, but because my time-cycle probability forecasts are, for the most part, becoming more bullish than bearish. I'll expand on this observation when I record my market commentary tomorrow afternoon.


Best Practices Webinar This Coming Week...

This Thursday, May 9th, I will be hosting a CycleProphet "Best Practices" Webinar at 4:00 Central Time. This will be a two part educational presentation designed to show you the power of the CycleProphet tools and some different ways you can utilize them for your own personal trading.

During the first presentation, Will Turner will show you how he combines the stocks with the best fundamental and technical scores to manage the "Top 15 Portfolio". He will give you both his entry and exit strategies that are simple and powerful.

During the second presentation, Tom Meyer will show you my methodology to pick the best stocks and ETFs using the combination of Market Forecaster, Equity Analyzer, and Equity Forecaster.

During both presentations, I will be answering your individual questions online in real time.

Seating is limited, so be sure to register (it's free) early. To register, you can follow this link. Even if you are unable to attend the live Webinar, please register and we will send you a link to view the recorded Webinar at a time that is more convenient for you. This 'Best Practices' training webinar is valuable to all traders/investors; whether they are subscribers to CycleProphet or not. Invite your friends or your trading club. This is NOT a sales presentation... it is a pure training event. Everyone will learn something in this Webinar that will help with trading and investing in the stock market. We look forward to having a large group on-line with us this coming Thursday!


The Bull/Bear and Oscillator Report...

Each week, our computer programs compile the total number of equities in our database (over 6,000) that are issuing new "Alerts" for this coming week. The Alerts can be any one of the following:

  • BUY - This means the status of the equity last week was "OUT" and this week, the weekending closing price moved high enough above my 10-week, time-shifted, moving average to trigger a "BUY". Click Here for this week's STRONG BUYS, or Click Here for this week's BUYS.
  • OUT - This means the equity stopped out by triggering a long-position stop-loss where the equity was sold, or it triggered a short-position stop-loss where the short position was covered.
  • SHORT - This means the status of the equity last week was "OUT" and this week, the weekending closing price moved low enough below my 10-week, time-shifted, moving average to trigger a "SELL SHORT". Click Here for this week's STRONG SELLS, or Click Here for this week's SELLS.

A running total of these new conditions (BUY, OUT, SHORT) is kept on a weekly and monthly basis. We have found that an analysis of these data provide a reasonably consistent view of short term (upcoming week) and longer-term (next few weeks) of the market, as follows:

  1. First of all, the ratio of new Short Sell Signals (red line in the Turner CrossOver Oscillator, below) is an excellent indicator of overbought or oversold conditions. Oversold means the market will have a tendency to move from a downward trend to an upward trend.
  2. We have also found that the total number of Short Sell Signals compared to the total number of Buy Signals is a reasonably good indicator of investor sentiment. The more Short Sell Signals, the more bearish the sentiment. The more Buy Signals, the more bullish the sentiment. This investor sentiment analysis is generally more valid for the upcoming week.
  3. The Composite (black) line is produced by subtracting the total number of Buy Signals from the total number of Short Sell Signals. Charting this total over time and observing how the red line crosses the black line, often provides an excellent early warning of a market correction.

These data elements, along with charting the trend of the S&P 500 provide the basis for the brief forecast provided in these weekly Reports. It is important to understand that this analysis is based solely on a technical analysis and anecdotally-derived historical observations of these data. I write the weekly forecast based on my observation of the data and the Oscillator chart. Time-cycle data are NOT explicitly included in this analysis.

 

The investor sentiment Bull-to-Bear ratio continues to support a move higher in the market in the near term with 2.5-to-1 ratio favoring of the Bulls.

The black line (Composite of Signals) looks to have bottomed and is now moving in a Bullish direction. Likewise the red line (New Short-Sell Signals) has reversed course and is now headed lower, indicating sentiment is becoming more Bullish.

It is interesting that the time-cycle probability forecast charts have become split again with the S&P and Russell 2000 indicating near-term Bullishness, while the DJIA and Nasdaq are near-term Bearish. A split-decision is to be taken as a warning that no clear direction is being forecast and as such risk is elevated if a strong position is taken either way.

The market continues to be resilient, possibly because it is being artificially propped up by all the liquidity being dumped into financial institutions by global central banks.

It is too risky to stay out of this Bull market but staying in this market carries a lot of risk as well. Staying small... selling premium... hedging long and short positions... keeping stops as tight as practically reasonable... all good strategies in this market right now.

 

Turner Bull/Bear Forecast
For the Upcoming Week
Investor Sentiment Weekly Forecast
The Turner Bull/Bear Forecast™ provides a one-week directional forecast on the market, with [-5] being the most Bearish and a [+5] being the most Bullish. This is predicated on the ratio of number of new Buy Signals to the number of new Short Sell Signals for the previous week. The assumption is investors are becoming more Bullish the more lopsided the ratio becomes in favor of new Buy Signals; and the converse is true; the more lopsided the ratio becomes in favor of new Short Sell Signals, the more Bearish investor sentiment.

 

 

Turner CrossOver Oscillator
The Turner CrossOver Oscillator™ provides an indication of the over-bought or over-sold condition of the market. The red line (New Short Sell Signals) shows a technical direction and strength (or lack thereof) of investors to push stock prices lower, triggering new Short Sell Signals. The higher the Short Sell Signals line, the more Bearish the market. The black line (Composite of both Short Sell and Long Buy Signals) is the combined impact of both the new Short Sell Signals and the new Buy Signals and is an indication of the degree of oversold or overbought condition of the market. Buying opportunities exist when the Composite of Signals line is moving higher. The higher this line moves, the more Bullish the market. Market bottoms are represented by a change in direction of the Composite of Signals line from moving lower to moving higher. Market corrections become much more likely when the Composite of Signals line crosses the Short Sell Signals line from below the Short Sell Signals line to above the Short Sell Signals line. The market is represented by the green shaded area.

 


Closing Remarks...

Starting just a week from this coming Tuesday, we will be hosting our first ever "Wealth Building Symposium" that includes CycleProphet Users meetings, lots of training sessions and a Sabinal money management session. Please let us know (if you haven't already done so) if you plan to attend. There is no cost to attend the Symposium. It will be held at Caesars Palace.

Below is the current schedule:

Wealth Building Symposium for 2013
Sponsored by CycleProphet, Inc. and Sabinal Capital Investments, LLC
Tuesday, May 14
8:30a - 10:00a CycleProphet Users Group Meeting -- This session is for CycleProphet subscribers, but is open to anyone interested in CycleProphet. This session is intended for a high-level discussion of the CycleProphet tools and how best to use them. An in-depth Q/A session is included. This session is conducted by Mike Turner and staff.

11:00a - Noon Wealth Building by the Numbers -- This is an in-depth overview of the CycleProphet System and how we recommend that users get the most out of the rules, tools and strategies. This session is conducted by Mike Turner.

12:30p - 1:30p The Top 15 Portfolio -- How to build and manage a portfolio using the stocks with the highest rated fundamentals and technicals. In this session, Will Turner, will teach attendees how he manages the Top 15 Portfolio and take questions regarding any aspect of this type of portfolio management. This session is conducted by Will Turner.

2:15p - 2:45p Wealth Building by the Numbers -- This is Mike's Money Show presentation where he provides an overview of CycleProphet and the Wealth Building Symposium.

3:15p - 4:00p Using CycleProphet to find the best trades -- This is an in-depth review of stepping through all the CycleProphet tools to find the best trade. This session is conducted by Tom Meyer.

4:15p - 5:00p The CP Trades Portfolio -- In this session, attendees will learn Mike Turner's approach to trading the CP Trades Portfolio and how it is different from his Sabinal One Portfolio, This session is conducted by Mike Turner.

5:15p - 5:45p The Top 15 Portfolio -- This stage presentation is a brief overview of how CycleProphet is used to select entry and exit strategies for positions in the Top 15 Portfolio. This session is conducted by Will Turner.

Wednesday, May 15
8:30a - 10:00a CycleProphet Users Group Meeting -- This session is for CycleProphet subscribers, but is open to anyone interested in CycleProphet. This session is for those users who were unable to attend the May 14 Users Group Meeting and is intended to be a high-level discussion of the CycleProphet tools and how best to use them. An in-depth Q/A session is included. This session is conducted by Mike Turner and staff.

10:30a - 11:30a A Woman's Guide to Wealth Building -- This is a session primarily for women who may, for the first time, be faced with managing the investable funds as presented by a woman who has had to deal with just such a situation following the death of her spouse. This session is presented by Jan Rushing and assisted by Mike Turner.

Noon - 1:00p Building a Winning Portfolio -- In this session, Mike discusses his approach to building a world-class portfolio. He describes how he maintains his Sabinal One Portfolio, including how he selects equities for long positions and how he uses inverse ETFs for bear trends in those same positions. This session is presented by Mike Turner.

1:30p - 2:15p Using Fundamentals and Technicals to Trade Profitably -- In this session, Will reviews and demonstrates the power of Equity Analyzer and how a simple approach that uses scores and changes in scores can produce very favorable results and many winning trades. This session is presented by Will Turner.

2:30p - 3:15p What's the Probability of Trading Success? -- This is an in-depth review of the math and science behind the probability forecasting algorithms used in Equity Forecaster and Market Forecaster. If you like math and cyclical thinking, you do not want to miss this session. This session is presented by Mike Turner.

3:30p - 4:15p Using CycleProphet to find the best trades -- This is an in-depth review of stepping through all the CycleProphet tools to find the best trade. This session is conducted by Tom Meyer.

4:30p - 5:30p Wealth Building by the Numbers -- This is an in-depth overview of the CycleProphet System and how we recommend that users get the most out of the rules, tools and strategies. This session is conducted by Mike Turner.

Thursday, May 16
9:00a - 10:00a Mike Turner's View of the Market Reserved for Sabinal clients and those interested in becoming a Sabinal money management client. In this session, Mike walks the attendees through his take on the market and how and why he is currently positioned in the Sabinal One Portfolio.

10:00a - 11:30; The Sabinal One Portfolio Reserved for Sabinal clients and those interested in becoming a Sabinal money management client. In this session, Mike reviews each of the positions in the Sabinal One Portfolio and whether he is playing a long trade or a short trade and why or why not. Intensive Q/A is expected.

Noon - 1:00p Open Q/A with Mike Turner -- Reserved for Sabinal clients and those interested in becoming a Sabinal money management client. In this session, Mike will open the floor to any/all questions concerning his money management strategies and the Sabinal One Portfolio.


Equity Forecaster and Market Forecaster Update in Progress...

We have updated Equity Forecaster this weekend. You will note that your list of prior forecasts is empty; a casualty of the update process. Also, you will note that there will be some discrepancies between the probability forecasts of Equity Forecaster and Market Forecaster. This is due to the fact that Market Forecaster has not been updated yet, but should be within the next 24 hours.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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