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What does the Baltic Dry Index drop say about?The fact that 2020 could be the year of the beginning of the global recession or even the crisis has been talked about and written about. But after the United States and China entered into the first phase of the agreement, the conversation calmed down a bit and investors calmed down. The coronavirus epidemic has revived old fears. We offer to look at the current situation in the world economy and its prospects through the prism of an original and very interesting indicator characterizing the state of economic activity - Baltic Dry Index. The Baltic Dry Index (BDI) is a trade index that reflects the cost of transporting dry goods (coal, ore, grain, etc.) by sea along twenty major trade routes. That is, unlike most classical macroeconomic indicators such as GDP or industrial production, which state what has already happened and, as a consequence, are very late in their signal function, this Index allows real-time monitoring of economic processes (more specifically, demand for raw materials). An important feature of BDI is the absence of a speculative component in it, that is, it is not subject to fluctuations in investor sentiment or emotional capital inflows/outflows. Trade is limited only to member companies, and only those participants who have real cargo or have shipped to transport these goods provide contracts. That is, BDI gives an undistorted view of reality, which is very rare in the modern world. So, over the past six months, the Baltic Dry Index has dropped from 2500 to 400. That is, it has lost about 80% of its value. This means one thing: the demand for transportation of raw materials is falling, which indicates a decrease in production as a whole. The index demonstrated its predictive abilities in 2008 (BDI collapsed then by more than 90%, giving a signal about the approaching global financial crisis). How to make money on this information (meaning the fall of the Baltic Dry Index over the past six months, more than 5 times, that is, 80%)? The most obvious option, promising maximum profits, are sales in stock markets that are overheated to the impossible. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDXShort
by Trade24Fx
“Minsky moment”: the bubble is about to burstWe continue to collect all sorts of signals about the onset of an imminent apocalypse on world stock markets, and especially the US stock market. We already wrote about the inversion of the yield curve, the favorite Buffett indicator, Schiller indicator, Hindenburg index, and Titanic syndrome, as well as other specific and not very metrics. Today we’ll talk about another interesting concept - the Minsky moment. This concept was proposed by Hyman Minsky in the 1920s when developing the theory of economic cycles. In his opinion, periods of continued growth in stock markets end in acute crises. This is due to the fact that investors, accustomed to a constant increase in prices, lose caution and start buying stocks with borrowed money, which provokes an extremely rapid growth of the stock bubble. And if one part of borrowers is able to refinance their debt, then the other part repays debts only due to rising prices in the stock market. Accordingly, as soon as rampant growth in the stock market ends, such borrowers have to get rid of shares in order to pay off their debt obligations. Since there are a lot of borrowers of this type in the midst of price bubbles, such actions lead to a stock market crash. Actually, this moment of time is called the “Minsky moment”. What do we have today? How much have investors played and buy with debt funds? One of the options for determining the level of lending to investment activity is the analysis of “free cash”. In periods of high speculative activity, investors prefer to borrow money, respectively, they have a negative cash balance. So, starting in 2013, the cash balance of investors in the US stock market is negative. At the same time, the size of the negative balance fluctuates around historical highs and exceeds the values that were 3-5 times during the dot-com bubble and the global financial crisis. Such a high level of debt has never been in history. Accordingly, when the “Minsky moment" comes, the fall will be very loud. The reasons for what is happening on the surface: Central banks have made access to credit resources so cheap that this has led to a massive influx of borrowed speculative funds into the stock markets and the formation of price bubbles on them. Recall that since 2007 the balance of the Central Banks has increased from $ 5 trillion to $21 trillion at the current time. Guess how much capitalization of the global stock market has grown over this period of time? In 2007, it was about $65 trillion, and in 2019 amounted to $85 trillion. In fact, the growth is entirely due to the expansion of the Central Banks. The IMF recently issued a global warning of prohibitively high levels of debt and a slowdown in global economic growth. That is, by and large, stated the ideal conditions for the emergence of the "Minsky moment". The only thing that keeps markets from falling into the abyss now is an unbridled belief in further growth, even though there is no reason for this. But faith is a very unreliable foundation. Any doubt in the bright future will bring down the dam of faith and panic waves will flood the markets. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market grew by an average of 7-8 times (and some issuers showed growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDXShort
by Trade24Fx
Who buys the US stock market?Now it’s hard to find a respected analyst or economist who, honestly, will recommend buying stocks and predicting a rise in stock prices. The scale of its overbought by almost all key metrics is overwhelming, and this is against the backdrop of the coronavirus epidemic, which literally destroys the global economic system from the inside out (breaking supply chains, closing production facilities in China, closing sales outlets and warehouses in China, and a sharp decrease in demand from China for almost everything, etc.). But prices in the world's leading stock markets continue to rise. Means, someone buys quite actively. A logical question arises: who is this? Super-professionals like Buffett either went to the cache or generally frankly short. The most obvious option, at least from the standpoint of the strength of their influence on the market, is institutional investors. One of the largest representatives of this group of participants in the US stock market is pension funds. Their assets are measured in trillions of dollars, so they can definitely move the market up. But the fact is that pension funds are managed by responsible professionals who understand the scale of the inflated bubble and therefore have been reducing the share of investments in the US stock market for several years now. Sovereign funds with assets under $ 10 trillion could be a great candidate. But they just prefer private investment (private equity), rather than the purchase of publicly traded shares. Recently, quantum funds and high-frequency trading funds have been gaining more weight in the US stock market (according to various estimates, their assets are 1.2-2 trillion). But these funds are extremely unreliable allies in the market. The specificity of their algorithm is such that from the camp of bulls they can very quickly overrun to bears. Hedge funds with their 770 billion assets under management are another potential candidate. But recall that hedge funds can both buy shares and sell. That is, they can turn over from purchases to sales at any time. Which again makes them unreliable allies. An important driver of US stock market growth in recent years has been the Americans themselves (households). But this led to the fact that the structure of their assets began to resemble very much the one that was on the eve of the collapse of the dot-com bubble and the global financial crisis. Currently, the share of investments in stocks by households is about 34%. There was more only on the eve of the global financial crisis (36%) and just before the collapse of the dot-com bubble (37%). So their potential for further increase in demand is doubtful - there are too many shares in the portfolios of Americans. Who else is left? Well, for example, the companies themselves. The volume of buybacks of own shares by American corporations over the past few years has exceeded $2 trillion. And here on the horizon of the US stock market, there is a very serious threat. The fact is that the volume of share buybacks in 2020 is planned to be at least 2 times less than in 2019. That is, the main buyer in the US stock market is losing half of its demand. In total, the main drivers of US stock market growth over the past 10 years have completely or almost completely exhausted themselves. Buyers are no longer left and any serious sales volumes will bring down this colossus on clay feet. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market grew by an average of 7-8 times (and some issuers showed growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
TVC:NDQShort
by Trade24Fx
2
Oil: Daily Continuation or 4 Hour Exhaustion?My opinion on Oil has stayed the same: I am bearish because there is a supply glut and also the world is slowing down. However, there are many reasons for oil to be propped up, due to the fact that US banks were forced to lend to oil/shale companies when oil dropped last time in order to prevent lay offs. Oil being propped for not just oil companies but also for banks who now have a large exposure to energy. Ironically, the oil markets seem to be the only markets currently that are adhering to fundamental analysis and have true price discovery. Of course calculations of future Chinese oil demand is being factored in the price as the CCP have shut down cities and also highways which of course impacts oil demand. The daily charts shows the break and close below he 52 zone and now we have had the retest. Once again, yes you can enter now with a better risk vs reward to the downside BUT the probability will not favour you as much. The real retest signal is when we form a lower low which CONFIRMS the lower high which would mean a break below 49.40. We could very well go to 45.00. On the bullish case, oil downtrend has been extended and it seems we may be making a pattern perhaps a double bottom. What it is telling us is that it may be difficult to make another lower high (with a lower low). A break above 52 would be the key trigger. On the fundamental side, we must factor in yield. Funds are in a position where they need to make yield and both stocks and bonds are at or near all time highs. This is when looking for "value" comes in. Funds may think this energy sell off is over extended, and just to make yield, oil and energy look attractive at these levels compared to everything else in the market. This is the type of crazy macro environment we are in, and can boost energy.
TVC:USOIL
by Uncharted-FX
Time to fear gravity: EV/sales metricWe continue to collect signals in favor of the imminent start of a correction in the US stock market and the collapse of the bubble on it. CAPE (or Schiller's indicator), Buffett's favorite indicator, Hindenburg’s exchange and Titanic’s syndrome, inversion of the yield curve and much more. In addition to the above unorthodox methods, there are also traditional metrics such as P/E, EPS, BVPS, etc.). For example, P / E is now an average of 18.4 in the market. That is, for every dollar of profit investors are willing to pay 18.4 dollars. This is a lot. Last time there were so many on the eve of the collapse of the dot-com bubble. This is also confirmed by the PEG ratio (Price/earnings to growth). Another classic investment metric is the EV / sales (Enterprise value-to-sales) ratio. This metric shows the ratio of the value of the company relative to its annual revenue. The median value of this indicator is one of the most reliable indicators of market overvaluation/undervaluation since the current market capitalization and the company's debt are taken into account in the calculation method. So the current Enterprise value-to-sales values for the SP500 index are 3.6. This is almost double what it was at the peak of the dot-com bubble. Note that when the dot-com bubble collapses, the Nasdaq index lost about 80% of its value. Recently, the markets lacked a reason to start a correction. The coronavirus epidemic is just perfect for the role of a trigger that will trigger the start of a sales wave. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Considering that in recent years, shares of technology companies in the US stock market have grown on average 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDXShort
by Trade24Fx
10
CHINA INJECTS $174 BILLION OF LIQUIDITY ON FEBRUARY 3 - BUY!!!Like we've been posting, the China flu is nothing but a scare tactic by the FAKE NEWS! With the State of the Union address coming within a few days, GOLD is down and the economy is BOOMING! President Trump will not let the US Stock Market Crash so forget about it folks. Short sellers will continue driving this market higher as they are forced to cover. Earnings recently out tell a big story, the US economy is growing like a wild grape vine! Get in now and ride the markets up to 50,000 If Amazon is added to the DOW stocks, you are looking at a stock market blowing past 30,000 Don't be on the side lines of the BOOMING Trump Economy!
NASDAQ:AAPLLong
by UnknownUnicorn3159981
WATCH OUT - POTENTIAL BLACK SWAN EVENT - VIRUS ATTACKA 'black swan' event is something out of the blue - that creates systemic risk. The 2019-nCOV (virus) is potentially one such thing. The markets have not been prepared for this - at all. Could it be the pinprick that pops the 'tech bubble' that influences markets globally? The shock waves of this itty bitty virus are totally unexpected. I go into some price action in the last few days, on the DJI and explain some of the dangerous features of nCOV. China has basically been quarantined by the international community. This is certainly not good news. It's an unofficial quarantine. Lots of nations have limited contact or isolated China in various ways. The virus is one of the most spreadable in history of all viruses but with a low lethality. That means millions of people could be infected but only about 2% killed by it. And that means the death toll could be serious over weeks, months or years. There is no treatment at this time and no vaccine. Even if a vaccine is developed, vaccinated the whole world is not a workable option. In addition the wide spread of the virus means that it can mutate - rendering any vaccine developed, as ineffective. The next big question is when will this quarantine on China be lifted. It could take months, or probably years - depending on what the nCOV virus does next. There is chatter in the blogosphere that the FED will come to rescue the markets from the virus.. like pfffft! The FED has a lesson coming to them. Disclaimer : This screencast is not intended to advise on taking a position in the markets or making transactions. If you lose your money in the markets, kindly sue yourself.
FOREXCOM:US30Short
by Captain_Walker
2
How close is the US stock market to repeat 1987?On October 19, 1987, the United States stock market fell the most in its entire history. The Dow Jones Index lost almost 23%. This event went down in history as “Black Monday”. For traders and investors, this event became a kind of guideline when the situation develops according to the scenario “there is nowhere worse”. Formally, that Monday was not much different from any other day, that is, there was no super-event that would trigger that flash crash. The point is the general accumulated fatigue of the market, which has long been ready for it to breakthrough. And it burst through. The US stock market now in its state is somewhat reminiscent of the one that was on the eve of Black Monday. There are 4 key features of the US stock market in 1987: 1. The market has shown the strongest growth in recent years. 2. The market is euphoric. 3. Sharp drops in price dynamics became more frequent on the eve of “Black Monday”. 4. The negative effects of financial innovation. If you look at what is happening today in the US stock market, then with one degree or another degree of confidence, you can check the box at 1, 2 and 4 points. Point number 1. From the beginning of 1987 until August 1987, the Dow Jones Index soared 44%. At the same time, over the previous 5 years, it has grown by 265%. The Dow soared 44% from the beginning of 1987 to its peak on August 25, 1987. The Standard & Poor's 500 Index rose 265% in the five years ending August 1987, suggesting reinvested dividends. In 2019, the Nasdaq Index grew by 42%, while over the past 5 years, the growth exceeded 200% As you can see, the situations are very similar. Point number 2. Worse measurable. But in 1987, after decades of growth, it was believed that the stock market could only grow. To date, there are various metrics (for example, CNN's Fear and Greed Index) that allow you to quantify the level of greed in the stock market. So, by the end of 2019, the level of greed reached historic highs. Point number 4. In 1987, one of the reasons for the flash crash was the automatic execution of stop losses, which provoked a panic wave and significantly increased its effectiveness. The situation today looks many times more vulnerable. According to various estimates, up to 80% of transactions in the stock market are performed automatically (by computers). The total for a full analogy is lacking only strong downward movements. On the eve of Black Monday in 1987, the US stock market lost 10%, depriving investors of confidence in themselves and the market and creating the prerequisites for a full-fledged panic. Given that over the past couple of sessions, stock markets have dipped 3-4%, it seems that the circle is closing. Thus, the basic prerequisites have already been created. It remains to bring investors and traders to their senses and return them to the ground, and then a full correction will become inevitable. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDXShort
by Trade24Fx
Stock Markets OverviewWe have already mentioned that the S & P500 major rally started 57 weeks ago. From this rise, Japan, England, Australia, China, Hong Kong, India, Norway, Sweden, Singapore, Turkey, South Africa, Spain Exchanges We observe that the U.S Dollar based Indices on the terminal. But it should not be forgotten that: these countries should be directed to the S & P500 ascension continues, as exits can be to safe ports. The gold positions have not been resolved yet, and it does not seem easy to solve. Regards.
OANDA:SPX500USD
by Noldo
Perfect week to start salesThe upcoming week is almost perfect for the start of sales in the US stock market. At least in theory. In our previous reviews, we have already noted that fundamentally the US stock market is not only ready but also needs to be corrected. And only record greed, as well as the absence of the last straw that breaks the ridge of a camel, keeps it from falling. We received another confirmation very recently: the three-month correlation between the individual components of the S&P500 index and the index itself fell sharply, dropping to the lowest values ​​since October 2018. What does it mean? Recall that now the golden age is undergoing passive investment. Its most popular form is investing in index funds. This leads to a high level of correlation between the index and its components. So, a fall in the level of correlation suggests that investors no longer buy the market as a whole, but rather focus on the selection of individual stocks. This can be seen as a sign of early sales in the US stock market. At least at the end of 2018, this happened. To begin with, that the epidemic coronavirus in China and fears of its impact, and the uncertainty in their scope has finally brought down a peg or some bulls on world stock markets. What is the record for the pre-holiday period of China's stock market decline? The last drop, which will overflow the patience, may spill this week. The fact is that the reporting season in the United States is moving into an extreme stage. During the week quarterly reports will be published for 14 of the 30 companies included in the Dow Jones Index. In general, the list of companies that will publish their reports this week is impressive: Apple, Microsoft, Amazon, Facebook, McDonald’s, Coca-Cola and many others. In one of our previous reviews, we already noted that in the last 3 quarters the financial statements of US corporations are deteriorating and doing so rapidly. As a result, analysts predict not only a decrease in profit growth but also its decline. So far, reporting for the 4th quarter does not confirm this, but real heavyweights will report this week. In addition, companies in the financial sector have mainly reported so far, but it has its own specifics. If the analysts turn out to be right and the financial results turn out to be rather weak, this may very well provoke massive fixation of profits in the US stock market, which will be the beginning for the formation of a correctional wave. Then bears with short positions will connect, the first stops will start to work and the classic correction flywheel will unfold to full. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDXShort
by Trade24Fx
ECB strategy, record pessimism amid record greedYesterday, the ECB expectedly left the parameters of monetary policy in the Eurozone. This was predictable, so most were interested in the new strategy of the Central Bank. But Lagarde greatly disappointed the markets, saying that before November-December, one could not count on any clarity in this matter. Thus, the euro will not have to rely on support from the ECB in the foreseeable future. So the decline in the single European currency was quite natural yesterday. Not even Lagarde’s remarks on the fact that moderate growth was observed in the European economy did not help. In general, the euro continues to look attractive enough for sale. Increase pressure on the euro and sales in the EURJPY pair, which we recommended selling the pair when it was quoted above 122. PricewaterhouseCoopers recently announced the results of a survey of heads of major world companies. We have already analyzed the results of a similar survey from Deloitte and note that PWC confirmed the previous results: the business is experiencing record pessimism since 2009. Only 27% of company heads expect improvement in the economy. Most expect a slowdown in the global economy. Characteristically, the most pessimistic leaders in the United States. Which once again convinces us of the correct course on sales in the US stock market. Meanwhile, the fall of the Chinese Shanghai Composite Index by 2.8% on the last trading day before the lunar New Year, was the largest drop in eight months. Naturally, with such a level of pessimism, purchases of safe-haven assets look great. So today we will continue to look for points for buying gold and the Japanese yen. Again, the epidemic in China is in the process of development: the second large city, Huanggang (population about 11 million people), has been closed for entry and exit. Railroad interrupted with the city of Ezhou. Friday promises to be a rather volatile day. Data on business activity indexes for the Eurozone and selected European countries, as well as the UK and the USA, coupled with statistics on retail sales in Canada, practically guarantee that it will not be boring.
Short
by Trade24Fx
American Airlines: Buy opportunity on the 1W MA50 break out.AAL has completed 2 years since the January 2018 top. The downtrend since then has been non-stop and 1W even formed a Channel Down with the MA50 (blue line) acting as a Resistance and Lower High. With 1W however turning neutral (RSI = 49.107, STOCH = 47.539, ADX = 14.260, Highs/Lows = 0.0000) after finding Support at 24.70 (has been holding since June 2016) and even making a Double Bottom there, and the RSI on a bullish divergence, we are expecting a strong bullish break out once the MA50 breaks. We will buy on the break out and aim at the 1W MA200 (orange line). ** If you like our free content follow our profile (www.tradingview.com) to get more daily ideas. ** Comments and likes are greatly appreciated.
NASDAQ:AALLong
by InvestingScope
4
The most dangerous investing & the dot-com bubble 2.0One of the most prominent investors of the twentieth century, John Templeton in the distant 1933 called the most dangerous words in investing. They sound something like this: "this time everything is different." And although almost 100 years have passed since then, these words have not lost their relevance. They were said to justify the dot-com bubble: “This time everything is different. The Internet is super-technology and the purchase of shares in Internet companies is a win-win.” After the collapse of the bubble, Nasdaq lost 80% of its capitalization. They were said to justify the growth in the cryptocurrency market by thousands of percent: “this time everything is different. Cryptocurrencies and blockchain are a revolution in the world of finance and a new form of money is a more progressive form of money.” After the price bubble collapsed, Bitcoin lost 80% of its value. If you read the analysts who are predicting growth in the US stock market now, you can hear the same words: “this time everything is different. The era of cheap money will continue to drive stock prices up. ” But this already happened. Recall Japan in the 80s of the twentieth century. Flooding the country's financial system with cheap money has led to huge bubbles in the stock market, land, and real estate markets. After they burst the country for 10 years (the so-called "lost decade") could not come to their senses. Yes, and still has not fully recovered. People stubbornly do not want to admit that all the time they are repeating essentially the same mistakes. The inflation of the price bubble ends with its collapse - this is almost an axiom. Therefore, we urge our readers not to fall for one of the most dangerous misconceptions and not to believe that everything is different now. Just look at the list of the main drivers of growth in the US stock market (FAANG), again - before us is a dot-com bubble version 2.0. Belief in new technologies and startups has replaced faith in the Internet. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDXShort
by Trade24Fx
1
Another metric predicts the stock market quick dropWe continue to collect signals in favor of the imminent start of a correction in the US stock market and the collapse of the bubble on it. CAPE (or Shiller's indicator), Buffett's favorite indicator, Hindenburg cancellation and Titanic syndrome, inversion of the yield curve and much more. We have already noted that classic investment metrics (such as P/E, EPS, BVPS, etc.) have long been a signal of a strong overvaluation of the US stock market. For example, P / E is now an average of 18.4 in the market. That is, for every dollar of profit investors are willing to pay 18.4 dollars. This is a lot. Last time there were so many on the eve of the collapse of the dot-com bubble. Today we’ll talk about another rather interesting metric. It's about the PEG ratio (Price/earnings to growth). This is an original approach to improving the classic P/E, proposed by Bank of America back in 1986. The essence of the indicator is that it eliminates the main drawback of the basic P/E indicator - delay. PEG adds a company’s growth factor to the calculation formula, which can radically change the calculation results and bring them closer to the real state of things. According to the classics, a company whose PEG = 1 will be fairly evaluated will be. Any value above 1 indicates an overvaluation of the market. So, according to Bank of America, the current indicator value is 1.8, which is the absolute maximum for the entire history of observations! Recall that the history of observations starts in 1986, that is, it is more than PEG on the eve of the 1987 flash crash, or the dot-com bubble, or the global financial crisis. As you can see, this value is almost 2 times higher than normal, and also 50% higher than its average historical value. Thus, the stock market needs a correction of 40-50% in order to come to a relative norm. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Considering that in recent years, shares of technology companies in the US stock market have grown on average 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDXShort
by Trade24Fx
1
Failed IPOs are growing and shows market problems2019 was a busy year for various IPOs. While most of the most anticipated placements, for example, Uber, Lyft, Pinterest, and many others could not meet market expectations. Uber entered the stock exchange in May, then its shares cost $45 apiece. Six months later, in early November, they are valued by the market at $27. 40% drop. Uber's main competitor in the U.S. market, Lyft, in March 2019, placed its shares on the Nasdaq exchange for $80. At the beginning of November, papers cost about $43, having fallen in price by almost 50%. Pinterest (social network for the publication and exchange of images). After the IPO, the stock price rose to $37, but by November fell to $19. Beyond Meat (the largest producer of vegetable meat). After the IPO, the stock price rose to $235, but by November quotes fell to $80. New York Peloton Interactive Inc (upscale exercise bikes). After stocks rose to $ 37, by December their price dropped to $ 26. SmileDirectClub (offer alternatives to classic orthodontic braces). Raised $ 1.35 billion during the IPO. But after that, the company's shares fell by more than 40% compared with the offering price. And this is only the most resonant cases in which at stake were billions of dollars. As a result, the percentage of failed American IPOs reached 80%. In modern history, this was only once - on the eve of the collapse of the dot-com bubble. Revalued IPOs usually occur at the end of a long bullish period when stocks generally become very revalued. This is because investors are finally losing touch with reality and are ready to buy shares on promoted stories instead of facts. Well, investment bankers take full advantage of this, selling companies to investors at inflated prices. This situation is another sign that the price bubble in the US stock market has reached its peak and is close to collapse. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
TVC:NDQ
by Trade24Fx
Nobel laureate indicator advises selling sharesIn one of our previous reviews on the bubble in the US stock market, we wrote about the record high values of the "favorite Buffett indicator" (the ratio of the country's stock market capitalization to its GDP). In principle, this alone is enough to think about selling stocks in the US stock market. But the real number of signals of the impending market crash is many times greater. Today we’ll talk about another very popular metric - the so-called Schiller indicator (CAPE). Note that Schiller is a Nobel laureate in economics and is considered one of the founders of behavioral finance. That is, his opinion is one of the most authoritative, at least in the academic environment. At one time, he developed an original metric to determine whether the stock market is overvalued or underestimated. We are talking about the Shiller P/E ratio (CAPE) indicator, which is the ratio of the market price of shares (or shares in the index) to the net profit of the company (companies in the index) over the past 10 years, adjusted for inflation. So at the moment, the Shiller P/E ratio for the S&P500 is 31.31 - one of the highest values ​​in the history of the US stock market. This is almost 2 times higher than the average historical value of the indicator. What is this talking about? That the market is overbought. This is confirmed by other metrics, starting from the Buffett Indicator, ending with the usual P / E for the S&P 500 (now it is almost 25, which is almost 2 times higher than the average historical value) and the ratio of capitalization to gross revenue (now this indicator is 2.37, which is an absolute record for all the time, even during the dot-com bubble, there was no such high indicator value). As you can see, for the metrics to return to their average values, the US stock market should adjust by 40-50%. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
NASDAQ:NDXShort
by Trade24Fx
2
77% of US CFOs consider stocks overvaluedThe reluctance to put up with obvious things does not mean that these things cease to exist. Accordingly, the reluctance of the US stock market to fall today does not mean that it will not collapse tomorrow. The fundamental basis for this has been formed for quite some time and everything rests only on the non-recognition of the obvious - the market is very overvalued and needs to be corrected. Investors can be understood because the beginning of the correction with a high degree of probability will provoke the formation of a full-fledged panic wave, which will turn this very correction into uncontrolled sales. If you ask almost any professional to honestly answer the question of whether the US stock market is overvalued, the answer in most cases will be unequivocal - "yes, it is." Actually, in today's review, we would like to present the results of a similar survey conducted by specialists of one of the largest audit companies in the world, Deloitte. Moreover, the survey was conducted not among traders or investors, that is, often biased respondents, but among financial directors of major US corporations. Essentially a survey of insiders. 147 CFOs from the USA, Canada, and Mexico from companies with an annual turnover of $3 billion and above were interviewed. So, 77% of respondents believe that the stock market is overvalued. In essence, the directors state that yes, their stocks are worth much more than they should be. Such an answer can only be explained by one thing - they could not give a different answer because of the evidence of the fact. At the same time, they expect a continued slowdown in economic growth in 2020 both in the United States and in the world. In general, the level of optimism of the directors surveyed is at the lowest level over the past 3 years. Another interesting fact that follows from the results of the survey is that American companies are not only aware of the problem, but are also actively preparing to deal with possible consequences: they reduce costs and optimize the number of employees. 82% of respondents admitted that they take preventive protective measures. Finally, we give one more fact. 97% of the CFOs of American companies believe that the economic downturn has already begun or will begin in 2020. Buying stocks on such a background is pure madness. But the main US stock indices, however, continue to update historical highs. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
TVC:NDQShort
by Trade24Fx
Nasdaq: Short term sell opportunity.The index is extending its bullish trend within the 1D Channel Up (RSI = 74.927, MACD = 135.620, ADX = 64.929, Highs/Lows = 106.5770). As you see this technical action is too close to the overbought zone. On top of that the MACD is converging and about to make a bearish crossover while the RSI is on a bearish divergence as it did on the last 3% drop in early December. Because of that we are expecting NDX to pull back towards the Channel's Higher Low trend line on another -3% decline. Our TP is 8,720. ** If you like our free content follow our profile (www.tradingview.com) to get more daily ideas. ** Comments and likes are greatly appreciated.
NASDAQ:NDXShort
by InvestingScope
1
New highs in the stock market promise only a tougher fallAttempts to grow the US stock market in 2020 are increasingly reminiscent of agony. The maximum in the history of the stock market US overvaluation, a sharp increase in the level of geopolitical tensions in the world against the background of US military confrontation between Iran and the threat of a global recession and a general deterioration in the world economy as the trade wars of the results - any of these factors would be enough to start a full-fledged correction in normal conditions. But this is not a complete list. Today we propose expanding it to further emphasize the inconsistency of what is happening. The increase in stock prices of companies, in theory, should be a direct result of improving their financial results. In theory, but not in practice, the exact opposite is happening here and now: the financial results of American companies are rapidly losing their upward momentum, but the growth in stock prices is accelerating. Here are a few numbers from Refinitiv data to confirm our words. The corporation’s profit from the S&P500 index in 2018 increased by 23%. Recall that in that year, the S&P 500 index fell by 6%. In 2019, profit growth was only 1.1%, but the S&P 500 index added 29%. That is, prices in the stock market are completely divorced from reality. When this was the last time (meaning the value of the forward PE indicator in the region of 18), the market corrected itself quite sharply (this was in late 2017 - early 2018). Considering how events are developing in 2020 (an armed conflict between the United States and Iran, which entailed, among other things, a sharp increase in oil prices, and hence an increase in the costs of US corporations), one can hardly expect a sharp improvement in the financial results of companies. Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to be corrected. And the scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).
TVC:NDQShort
by Trade24Fx
4