When Morgan Stanley’s Adam Parker had a notable change in heart earlier in the year when he turned from a raging bull to a muted bear, it unleashed a series of odd letters to MS clients such as this one from April where “In Bizarre, Schizophrenic Note Morgan Stanley Compares Rally Chasers To “Cockroaches”, followed by an angry noted aimed at “Fake Contrarians Who “Only Care About Price”, culminating with a letter in July in which he feared becoming the “counter-indicating idiot.”  

Well, several months later, with the central banks refusing to allow his bearish narrative to manifest itself, this morning Parker flip-flopped again, and once more threw in the towel, this time reverting back to his old bullish ways, when overnight he released a note titled.….continue reading HERE

…related Michael Campbell on: Complexity Failure Crisis & Panic

originally published on September 1,  2016, 6:53 AM:

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is now neutral, following S&P 500 index breakout above last year’s all-time high:

Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral

The U.S. stock market indexes lost 0.1-0.3% on Wednesday, extending their short-term consolidation, as investors continued to hesitate following June – July rally. The S&P 500 index remains relatively close to its recent new all-time high of 2,193.81. The nearest important level of resistance is at around 2,190-2,200. On the other hand, support level is at 2,160-2,170, marked by short-term local lows. The next support level remains at 2,150. Will the market continue higher? Or is this some kind of a topping pattern before downward reversal? There have been no confirmed negative signals so far:

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Expectations before the opening of today’s trading session are positive, with index futures currently up 0.2-0.3%. The main European stock market indexes have gained 0.1-1.1% so far. Investors will now wait for some economic data announcements: Initial Claims, Productivity number at 8:30 a.m., Construction Spending, ISM Index at 10:00 a.m. The S&P 500 futures contract trades within an intraday uptrend, as it retraces its yesterday’s move down. The nearest important level of support is at around 2,160-2,170. On the other hand, resistance level remains at 2,175-2,180, marked by some recent local highs, as we can see on the 15-minute chart:

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The technology Nasdaq 100 futures contract follows a similar path, as it retraces its recent decline. The nearest important resistance level is at 4,800 mark. On the other hand, support level remains at 4,760-4,770, among others, as the 15-minute chart shows:

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Concluding, the broad stock market continues to trade within a short-term consolidation, as the S&P 500 index remains relatively close to last month’s record high. Will it continue its long-term uptrend following few-week-long fluctuations? Or is this a topping pattern? We still can see overbought conditions accompanied by negative technical divergences. Therefore, we continue to maintain our speculative short position (opened on July 18th at 2,162, S&P 500 index). Stop-loss level is at 2,210 and potential profit target is at 2,050 (S&P 500 index). You can trade S&P 500 index using futures contracts (S&P 500 futures contract – SP, E-mini S&P 500 futures contract – ES) or an ETF like the SPDR S&P 500 ETF – SPY. It is always important to set some exit price level in case some events cause the price to move in the unlikely direction. Having safety measures in place helps limit potential losses while letting the gains grow.

Thank you.

Over a third and growing quickly. That’s the share of the market that’s now comprised of blind sheep passive indexers. That much passive money is nothing to sneeze at. Call me old-fashioned, but I was originally led to believe that…

….continue reading HERE

…related:

Marc Faber Rings the Alarm Bell, Predicts a 50% Near Term Correction in Stocks

Nassim Taleb, of “Black Swan” fame, was asked, “What are the biggest risks out there right now?” He replied:

The fact that the world, as a result of quantitative easing, has seen an asset inflation that benefited the uber-rich, and that nothing has been cured. One cannot cure debt with debt, by transferring from private to public sectors. The markets will ultimately crash again, although this time it will hurt a lot more people.

Taleb suggests investors ought to be “tail hedging” their portfolios as a result. So ‘what is tail hedging?’ you might ask. The “tail” part of it simply refers to the ends of a normal, bell-shaped distribution curve. These represent events in the market that very rarely occur. In this case, it refers to a stock market crash.

…read more HERE

related: Marc Faber Rings the Alarm Bell, Predicts a 50% Near Term Correction in Stocks

The SPX has completed its’ “Broadening Topping Pattern”
…the next trend is DOWNWARDS! (says Chris Vermulen M/T Ed)

The current pattern is suggesting that a significant top is at hand. I fully believe both in patterns and indicators and right now the current pattern is suggesting that a significant top is at hand.

My cycles are suggesting a potential “Black Swan” event, in multiple indexes, which are “imminent”.  The SPX may have made its’ last challenge of the upper trend line of its’ ‘Broadening Top’. On Friday, August 19^th, 2016, it closed beneath its’ ‘Cycle Top’ resistance at 2185.38.  The SPX has fulfilled all of the fractal requirements necessary for a completed “corrective” uptrend. The uptrend from 1810 has been in a “corrective phase”. The next wave down will be an impulsive wave.

The large divergences which I have been viewing, in my proprietary oscillators, are most real and accurate and once the selling begins, the momentum should quickly move to the downside.  The current market is being supported by a lack of sellers, more so than aggressive buying.  With investors still thinking that there is nowhere else to place their money, they appear to be content with leaving their money at “risk on” assets, within a market that is pushing all-time highs.  This type of “mentality” usually leads to large losses, rather than big gains.  There is just no opportunity for growth in the SPX!

Investors have become complacent with the current rally.  They listen to and believe what the FED has been saying regarding interest rates and they have come to believe that everything about this market depends upon the FED. I do not believe that to be the case.  I believe that the FED is or should I say will be irrelevant in due time!

The Bank of America Merrill Lynch reports that its’ clients (institutions, hedge funds and private clients) who have sold stock for all but 2 to 3 weeks, during all of 2016, have once again sold $1.9 billion of US stocks while the SPX was hitting new highs.  Institutional clients led the sales due to poor performance.  It has been the retail investors that have been flooding into the market while anticipating a massive breakout and rally.

The big and smart money continues to build up massive short positions. George Soros has become more bearish on equity markets, nearly doubling his short bet against the SPX, following similar moves by Jeffrey Gundlach, Carl Icahn and David Tepper. According to his 13F filing, Soros now owns roughly 4 million ‘put options’ on shares of the SPY.

We are presently living on borrowed time and vast amounts of borrowed moneys. This is a period of time of “unprecedented economic upheaval” which was caused by ‘financial engineering’ by governments and their Central Banks. It’s a slow-motion catastrophe, where as we are living today at the expense of tomorrow. The FEDs’ balance sheet has more than quadrupled since the Crash of 2008.  This is unprecedented:

Keep in mind, that most of these highly successful investors mentioned above also predicted other major market moves if you look back through the years. Their huge bets and called typically play out, but I do find most of them jump the gun a little early (many months in most cases). Reason being, they understand how and why the markets move, and because they do, they know when various markets are nearing a major turning point.

The catch, with trying to time these major multiyear market reversals is that all investors around the world (all market participants) buying/selling habits need to stall out and reverse direction for the new trend to take hold. This always seems to take longer than we expect, but these highly successful investors along with myself feel this bull market in stocks is about to come to an end.

Conclusion:

The next stage will become a vicious deflationary cycle in which prices and growth “crash and burn”. Prepare for another massive wave poor earnings, job layoffs, and falling stock prices.

Over the past 500 years, or more, whenever deflation emerged, price of gold gained and always gained big, in terms of purchasing power and I don’t feel this time will be any different.

There will be many ways to profit from all of this, precious metals is just one of many awesome opportunities unfolding for myself and subscribers to enjoy.

My ETF Trades: www.TheGoldAndOilGuy.com

Chris Vermeulen