Warning Signs 01 (Oct 08 - Feb 15)

[winston]

Before You Buy Stocks Today, Read This... By Jeff Clark

Wall Street's "fear gauge" flashed a sell signal at the end of May.

But since then, the stock market has continued to work even higher. The S&P 500 hit a new all-time high last Friday. And some folks might be wondering if the sell signal is a bust.

It's not.

As you can see from the following chart, the Volatility Index ("VIX") once again closed below its lower Bollinger Band last Friday…

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Once the VIX rallies and closes back inside its Bollinger Bands, it'll generate another broad stock market sell signal. That will be its second sell signal in about two weeks.

And this time, a couple other indicators are shouting "sell" as well…

Below, you can see the percentage of S&P 500 stocks trading above their 50-day moving averages (DMAs)…

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This chart is one way to measure overbought and oversold conditions. The range is from zero to 100. Anything above 80 is considered overbought. On Friday, this indicator closed above 88 – its highest reading since just about this time last year… right before the S&P 500 declined 5% in about a month.

This means that in the short term, the broad stock market is vulnerable to at least a mild pullback.

Also, consider this chart of the Bullish Percent Index ("BPI") for the S&P 500…

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The BPI measures the percentage of stocks that are trading in bullish technical patterns. It's another way to measure overbought and oversold conditions. Generally, any reading above 80 is considered overbought.

The index closed above 80 yesterday. It's overbought. And it suggests investors ought to be cautious here.

As I mentioned two weeks ago, it's not time to put on aggressively short trades yet. The momentum is still on the side of the bulls. The market needs to fall and then bounce to form a lower high before we can get bearish.

But this also isn't the time to be plowing a bunch of new money into the stock market.

Stocks are overbought. They're extended to the upside. With the two recent sell signals from the VIX and the warning signs from other indicators, now is the time to be cautious.

The market is ripe for at least a short-term decline. Any further gains from here are likely to be given back.

Investors should get a better chance to buy sometime in the next few weeks.

www.growthstockwire.com

[winston]

Top strategist Sonders: Get ready… a correction is coming

Source: Bloomberg

http://thecrux.com/top-strategist-sonde ... is-coming/

[winston]

by behappyalways:-

"It looks like a peak": Robert Shiller's CAPE is waving the caution flag
http://finance.yahoo.com/blogs/daily-ti ... 53218.html

[winston]

This could be the most important pattern in the stock market now by Chris Kimble

Happy times are here again and the financial crisis seems like a distant memory, at least judging by record highs on the U.S. stock indexes.

But is everything really hunky-dory? I might be crazy, but some interesting patterns I’ve noticed in consumer confidence and the velocity of money suggest perhaps not.

The Federal Reserve and other central banks with their economic stimulus have thrown an epic bash in global financial markets, but not everyone is clapping along with the party music.

Check out the long-term chart below from Doug Short that plots out consumer confidence and the velocity of money. For those not fluent in economist-speak, Investopedia defines the velocity of money as the rate at which money in circulation is used for purchasing goods and services, and the measure helps investors gauge how robust the economy is.

You’ll notice that consumer confidence is creating a series of lower highs over the past 14-years and the velocity of money is hitting the lowest readings in history. Meanwhile, in U.S. stocks, the Dow Jones Industrial Average has rallied to the top of a so-called megaphone pattern.

For me, the bottom line is that the Fed seems to be having a positive influence on stock prices, yet the average American isn’t feeling so buoyant. Do consumers really trust what is going on in the stock market?

Former Fed governor Kevin Warsh and hedge fund icon Stanley Druckenmiller in a recent WSJ op-ed wrote about what they call the asset rich, income-poor economy:

“The aggregate wealth of U.S. households, including stocks and real-estate holdings, just hit a new high of $81.8 trillion,” they said. Yet the Fed’s unprecedented stimulus “provides little solace for families and small businesses that must rely on their income statements to pay the bills. About half of American households do not own any stocks and more than one-third don’t own a residence”…

Source: See It Market

http://thecrux.com/megaphone-this-could ... arket-now/

[winston]

These Signs of Market Trouble Are Looming By Michael E. Lewitt

"Markets are priced to perfection.

Signs of late-cycle behavior and thinking are abundant.

The latest example came from BMO's strategist Brian Belski, who published a report arguing that the bull market in stocks will continue for another ten years with annual gains of 10.5%.

This is the type of report that appears at market peaks. Despite the fact that it was dressed up in statistics and produced by a respectable brokerage house, this isn't a serious piece of research; it is nonsense and anyone who takes it seriously and invests based on its conclusions deserves the losses that will follow."

Source: Money Morning

http://moneymorning.com/2014/07/10/thes ... dium=email

[winston]

This Guy Just Issued A Major Warning… And I Am Listening To Him

By Michael Snyder

Source: The Economic Collapse Blog

http://www.thetradingreport.com/2014/07 ... ng-to-him/

[winston]

This could be the most ominous sign for stocks since the bull market began

Main Street and Wall Street are moving in opposite directions.

Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over.

About $100 billion has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months, according to data compiled by Bloomberg and the Investment Company Institute.

Source: Bloomberg

http://thecrux.com/this-could-be-the-be ... in-stocks/

[behappyalways]

Two signs a market crash is coming
http://finance.yahoo.com/news/two-signs ... 48885.html

[winston]

Is This The Final Warning?

By Mac Slavo

Source: SHTFplan.com

http://www.thetradingreport.com/2014/07 ... l-warning/

[winston]

This “divergence” almost always leads to a sell-off in stocks. It’s happening again right now. by Tom McClellan

The Fed is still pumping liquidity into the banking system, albeit at diminished rates, and the large cap indices are still showing no signs of trouble, with the DJIA making higher highs and higher lows.

But when price indices make higher highs and the NYSE’s A-D Line refuses to confirm, that condition usually leads to a meaningful selloff. That is the condition we are seeing right now, with a classic looking A-D Line divergence.

I should emphasize that this short term divergence is not the same as what we have seen at major price tops like 1987, 1990, 1998, and 2007, when the A-D Line peaked several months in advance of the final price highs.

The current divergence is of a shorter term nature, and merely worth a more minimal price correction. If we do not see a higher A-D Line a few months from now, we can start to worry about the longer term implications of a larger divergence, but it would be premature now to jump to that conclusion.

Still, it is troubling to see this sign of liquidity problems developing at a time when the Fed is still pumping money into the system. It makes us wonder what will happen when the Fed shuts off the flow completely, which is scheduled to happen after October 2014.

Source: Chart in Focus

http://thecrux.com/this-divergence-almo ... ening-now/