Whole Lotta Bear Markets Goin’ On
Here is an interesting look at a number of markets that have been through crashes over the past 6 months.
We hear so much about the big name stocks and how much they impact the broad averages but it is important to see what is actually happening in smaller sectors. With this many sectors losing dropping this fast there are a lot of people out there that are losing a lot of money…
Click here to visit the Dollar Collapse website where this was posted.
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The Dow and S&P 500 have fallen by around 10% since August, which in normal times would be hardly worth mentioning. But below the surface, in what used to be the market’s hottest sectors, much more serious damage is taking place.
Biotech, which had an epic bull market during the era of QE and the Affordable Care Act, had begun to crater even before Hillary Clinton proposed price controls for pharmaceuticals. Last week it went straight down.
Solar stocks had a quiet bull market that accompanied the technology’s emergence as heir apparent to fossil fuels. But now they’re quietly crashing:
Junk bonds, which are essentially the equities of highly-leverage companies (because they turn back into equity when the bonds default and reluctant creditors are forced to take ownership of the junk issuers) have tanked in the past few months and are now far below their 50 and 200-day moving averages.
One group that isn’t plunging is the gold miners. But that’s mainly because they had their crash while everything else was still rising, and are now at historically cheap levels. Here’s an ETF that tracks the junior gold mining stocks:
What does it mean when several high-flying sectors crash all at once? If history is still a reliable guide (a big if in today’s manipulated world) it means the internal structure of the market is deteriorating much more quickly than the behavior of the Dow and S&P 500 seem to imply.
When stocks in general catch up to the carnage in yesterday’s hot sectors, we’ll get something a lot more extreme than a simple correction. And when that happens the odds of the Fed raising US interest rates drop to zero.
I am a very amateur technician, but my charts are telling me that this will be a substantial bear market, rather than just a short, quick correction, as longer term (weekly) momentum (long term MAC d) have had the death cross, for all of the major indices, including the Dow Industrials, transports, and the S&P 500. I think that Doc is leaning in that direction, and that might be what the gold miners are telling us as well. So likely, Cory, you may well be right that we will go into 2016 and have QE 4 brought on before too long. BTW I enjoy your commentary and your guests, and am a regular daily listener on my commute home. Keep up the good work. Also, give Al my regards as well.
OFF TOPIC: Pope FRancis and RC Church.
I was surprised and dismayed by Pope Francis.
First, let me state, I am not a Christian.
What upsets me is the fact that the Leader of the Roman Cathatholic church appeared to have made a pact with the Devil, in the form of the Castro Brothers in Cuba.
Specifically in regard to The Ladies in White of Havana, although the Pope invited the Ladies in White to the Papal Nuncio, when the Ladies in White arrived at the Nuncio, they were all arrested by the Castro Regime. 142 catholics were arrested and another 200 more catholics and others who were human rights dissidents were confined to their homes.
The Pope was silent on the issue.
(Reminds me of the actions of the Roman Catholic Church during WWII.)
The leader of the Ladies in White is a most devout catholic named Berta Solaire who had been invited to the papal mass, but when she complained to the arresting authorities, the papal spokesmen claimed “to not deny that the Ladies in White were invited”, but would not say anything negative about their arrests.
Glad you see, for yourself.
pick up a copy FAST FACTS ON FALSE TEACHINGS..by Ron Carlson and Ed Decker
As an equalm opportunity offender, let me expressed my disgust at the United Nations.
This is an organization which was founded in 1945 to reduce war, increase democracy and further human rights.
In fact, it appears to me to have developed priimarily into a platform for Dictators, Despots, and Tyrants.
Just look at the first three speakers on Monday:
The Leader of Iran, Putin of Russia, Raoul Castro of Cuba.
Iran, a country without democracy that kills Christians, homosexuals, other dissidents and oppresses women.
Putin, a person of $40 Billion net wealth obtained by theft and coersion; a person who is known to assasinate newspaper reporters who have wriitten adverse opinions. Cuba, a country that has repeatedly stomped on Human Rights and as far from Democratic as a Communistic Dictatorship can be.
Equal and express…..Sorry……almost no sight today.
After attacking Physical on Monday, not attacking yesterday, I see London is attacking again today.!!!
The making of the US Constitution…..interestring…….a Miracle.
UUP has been unable to close above the 50 MA since 8/18 and the “death cross” is coming…
http://schrts.co/BC3ozK
HYG is not looking good at all:
http://schrts.co/HkJeAA
GREG MANNARINO ……..at usawatchdog. CRASH COMING, in the stock market.
Maybe I am out of my mind. At this stage, I don’t see a probability of DOW crashing in a significant magnitude. There is massive support by money printing in the last few years internationally. There is also a real likelihood of QE4.
Greg says……..Short APPLE…………….
for that I agree. They have trouble in China since they are being beaten by lianXiang and Hawei in that market and even kid’s phone XiaoMi. It happens to be their most profitable market. They blew it by repeatedly hurting the pride of their consumers. Huawei Cell phone is beautiful and powerful. I saw it last year and quite shocked by it. Chinese youth worship Apple and it started to fade. And they seems to have some problem with Chinese government as well even it is produced there. I don’t feel Apple gets better products to expand their market share. Just my two cents and I am not Apple expert.
Without Steve Jobs…….this company is going to be history ……. JMHO
Chinese……are to hung up on status………
BUT, then again I am not a girl………..
But, then again , so are the American women, ….hung up on status…….
Americans are far more practical than Chinese on status symbols. Chinese are terrible on this. Show off and waste money which they have saved by all other means.
They do like to take SELFIES..and pictures……..
Got to look good for the camera………. 🙂
It’s great to have an “insider” like Dragonite here to educate people like me about such differences. Thank you Dragonite.
AGREE…….first hand knowledge is good…………….
Hope I can share what I know, even it is not complete.
Thanks for the acknowledgement.
BTW, Chinese new status symbol is to get a diploma from Western universities. That is very costly. A lot of my class mates have sent their kids to US, Europe and Australia. You may long US universities.
Education cost is way out of hand………….A new survey out today….of 30,000 students say they do not mind the extra DEBT for a college education. The debt , is an average of $30k,…Dummies of Debt.
A 4 yr. college degree, is not worth as much today. You must now add another two years for a Masters…….and add some addition DEBT. TO THE PILE.
Thanks again Dragonite; keep it coming!
Junk Bond Market Imminent Collapse Threatens (Unwelcomed Big Rate Rises)
Clive Maund
September 29, 2015
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Everyone is so focused on looking at the Fed and whether or not it decides to raise rates by a puny 0.25%, that they are completely overlooking the fact it is the market’s role to set interest rates…and if the Fed is not up to the job, then the markets will eventually take over and do it in a manner that is likely to involve increases vastly greater than a mere 0.25%, which given the current fragile and extremely unstable debt structure, can be expected to have catastrophic consequences.
The chart for Junk Bonds looks terrible – and it is already right at the point of breaking down from a big top pattern. This frightening development doesn’t seem to have been noticed by many people, but it portends rising yields first on low quality debt that will lead rapidly to a severe credit crunch that will work its way back towards supposedly higher quality bonds and Treasuries, causing a bond market crash and rising rates at the worst possible time when the world economy is in the throes of a deflationary implosion.
Let’s now look at the long-term 8-year chart for the imperiously named SPDR Barclays High Yield Bond ETF, or in other words “The Junk Bond ETF”. On this chart we can see how, after rounding over beneath a big Dome Top, JNK is on the point of breaking down beneath key support at the lower boundary of the top pattern, which can be expected to lead to a plunge. On this chart, the drop of recent days doesn’t look at all dramatic, and furthermore we can see that it potentially has much further to fall – it could easily plummet back into the low $20’s.
On the 3-year chart we can see how JNK is right at the point of breaking down from its top pattern. On this chart it also looks like it is getting very oversold and like it could bounce back. Could it? – anything is possible and the Fed could suddenly defuse the situation temporarily by announcing QE4, but this would only buy time and JNK would later break down from this top pattern anyway. With everything unraveling fast globally, it is very possible that QE4 will quickly become an irrelevant act of desperation anyway, and have very little net effect. When looking at this 3-year chart, remember to refer back to the 8-year chart to remind yourself of the ominous big picture. A bounce here would be just a blip in the larger scheme of things, which portends sharply rising rates as the global economy goes down in flames like the Hindenburg.
If JNK does fall as far as this chart is suggesting is possible, interest rates will skyrocket and all hell will break loose involving widespread Sovereign defaults and bursting asset bubbles. The stockmarket losses up to this point will pale into insignificance compared to what could be coming. No-one will be interested in what the Fed says anymore, and they’ll be lucky if the press even bother to turn up for their meetings.
If this assessment of the outlook for Junk Bonds and debt generally is correct, then the most important thing that investors and ordinary citizens should do is to get out of debt or reduce it as soon as possible. Debt made sense during the “risk on” epoch when interest rates were kept artificially low for years, as you could borrow at very low rates to play various asset bubbles such as property speculation and stocks, but with this “golden age” looking set to come to an abrupt end, it’s time to liquidate and pay debt down before rates start to soar.
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Courtesy of Courtesy of http://www.clivemaund.com
For those who follow coal and understand MLPs, another trade is setting up in FELP (3.3 P/E & 28%+ Dividend):
http://schrts.co/4gp1eS
Claude Resources – Positioned To Perform
Summary
Gold prices are due for an upside correction.
However, even in the current environment, Claude Resources is not only performing, but excelling.
By any chosen metric, Claude is currently under valued.
I am not a gold bug by any stretch of the imagination; I understand that gold does not pay dividends, nor does it produce profits, and I realize that it is not necessarily a great inflation hedge (dependent upon the period of history you choose to isolate). However, I do subscribe to the fundamental laws of supply and demand – whether considering a basic material, a manufactured product, or a pet rock.
http://seekingalpha.com/article/3542626-claude-resources-positioned-to-perform?auth_param=oo4o3:1b0nqo2:3cac73dd85bae65aaf6427020e638b43&uprof=44&dr=1
I wonder how much further biotechs will fall before they have a significant bounce – whether they are still the darlings of the stockmarket.