With the S&P 500 trading above 2,000 for the first time in history, today’s chart provides some perspective to current rally by plotting all major S&P 500 rallies of the last 82 years. With the S&P 500 up 91% since its October 2011 lows (the 2011 correction resulted in a significant 19.4% decline), the current rally is slightly below average in magnitude above average in duration. In fact, of the 23 rallies plotted on today’s chart, the current rally would rank 7th in duration.
Notes:
– A major stock market rally has been defined as a S&P 500 gain of 30% or more (following a correction of at least 15%).
– The S&P 500 was not adjusted for inflation or dividends.
– Selected rallies were labeled with the year in which they began.
– There are 252 trading days in a year (100 trading days equal about 4.8 calendar months).
David Stockman for the past couple of weeks has been focused on how the ‘indexes’ are rigged by the Fed. And they’ve been rigged for a number of years. See:
The rigging includes not only the Fed having a ‘put’ in the market but also rigging the corrections on a fairly consistent basis. I.e., it is so bad that they correct or allow the market to correct so that insiders can jump in and jump out…yep, it’s really that bad.
I suspect the big name analyst like Hussman, Faber, Peter Schiff and particularly Harry Dent have been such disasters is that they either didn’t know, didn’t recognize or refused to recognize this reality. They fought the Fed and no matter how much we may abhor the Fed, you fight it at your peril.
So we’re dealing, I guess, with a ‘financial command economy’ and we have been for a long time. Charts are now only useful if they can track the ‘rigging’. What happened in the past is obviously always interesting but Fed rigging is the world we live in now.
Erasmus,
I can’t speak to some of the guys mentioned, but I can tell you as a follower of Peter Schiff that he has consistently said he believes stocks will remain elevated as long as the Fed is inflating. He simply believes that there are better valued stocks with lower P/Es and higher dividends overseas. That’s where his money is – in addition to the mining shares, of course.
Schiff and Faber both said together in November 2012 and again in November 2013 that the market would fall by 25%. Check it out. That doesn’t sound to me like he’s been consistent on the maket being elevated….on the contray he’ been a roaring bear in one of the great bull markets…as has Faber.
Super wrong in 2012 and so far wrong again on his call in 2013 with only a few months left in 2014. Schiff’s performance from the crash has been horrific. Maybe someday they’ll be right but someday ain’t good enough if you handle client money.
Icahn, Soros, Druckenmiller, And Now Zell: The Billionaires Are All Quietly Preparing For The Market Drop
Submitted by Tyler Durden on 09/03/2014 15:03 -0400
“The stock market is at an all-time, but economic activity is not at an all-time,” explains billionaire investor Sam Zell to CNBC this morning, adding that, “every company that’s missed has missed on the revenue side, which is a reflection that there’s a demand issue; and when you got a demand issue it’s hard to imagine the stock market at an all-time high.” Zell said he is being very cautious adding to stocks and cutting some positions because “I don’t remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people’s thinking.” Zell also discussed his view on Obama’s Fed encouraging disparity and on tax inversions, but concludes, rather ominously, “this is the first time I ever remember where having cash isn’t such a terrible thing.” Zell’s calls should not be shocking following George Soros. Stan Druckenmiller, and Carl Icahn’s warnings that there is trouble ahead.
Billionaire 1: Sam Zell
On Stocks and reality…
“People have no place else to put their money, and the stock market is getting more than its share. It’s very likely that something has to give here.”
“I don’t remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people’s thinking,” he said. “If there’s a change in confidence or some international event that changes the dynamics, people could in effect take a different position with reference to the market.”
“It’s almost every company that’s missed has missed on the revenue side, which is a reflection that there’s a demand issue,” he said. “When you got a demand issue it’s hard to imagine the stock market at an all-time high.”
He also lamented about how difficult it is to call a market top. “If you’re wrong on when, that’s a problem.” His answer: “You got to tiptoe … and find the right balance.”
“This is the first time I ever remember where having cash isn’t such a terrible thing, despite the fact that interest rates are as low as they are,” he added.
On Obama and inequality…
“Part of the impact of these very, very low interest rates is that we’ve creating this disparity. The wealthy are benefiting from government policy and the nonwealthy aren’t,” he continued. “So we have a president who says we’ve got to fight this disparity and we have a Fed who’s encouraging it everyday.”
On Tax Inversion…
“This is both legal and accepted. If the government doesn’t like the result, change the law,” he said. “You have to have a rational tax policy.” He said the top tax rate should be changed and the U.S. should not tax worldwide income.
Zell also said it’s unfortunate that “this inversion thing has been captured as a political, electioneering item.”
Source: CNBC
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Billionaire 2: George Soros
Soros has once again increased his total SPY Put to a new record high of $2.2 billion, or nearly double the previous all time high, and a whopping 17% of his total AUM.
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Billionaire 3: Carl Icahn
Ironically, Carl Icahn – poster-child of the leveraged financial engineering that has overtaken US equity markets on the back of Central Bank largesse – told CNBC that he was “very nervous” about US equity markets. Reflecting on Yellen’s apparent cluelessness of the consequences of her actions, and fearful of the build of derivative positions, Icahn says he’s “worried” because if Yellen does not understand the end-game then “there’s no argument – you have to worry about the excesssive printing of money!”
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Billionaire 4: Stan Druckenmiller
Simply put, Druckenmiller concludes, rather ominously, “I am fearful that today our obsession with what will happen to markets and the economy in the near term is causing us to misjudge the accumulation of much greater long term risks to our economy.”
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And here the BIS explains broken markets so easily, even a Janet Yellen can get it:
Financial markets have been exuberant over the past year, […] dancing mainly to the tune of central bank decisions. Volatility in equity, fixed income and foreign exchange markets has sagged to historical lows. Obviously, market participants are pricing in hardly any risks.
Growth has picked up, but long-term prospects are not that bright. Financial markets are euphoric, but progress in strengthening banks’ balance sheets has been uneven and private debt keeps growing. Macroeconomic policy has little room for manoeuvre to deal with any untoward surprises that might be sprung, including a normal recession.
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So now we have a quorum of billionaires and the BIS all flashing warning signals…
As a thousandaire I’m going heavy into precious metal….especially loadable lead.
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Sentiment has reached an extreme as Bears according to Investors Intelligence fell to the lowest level since 1987. The markets persistent grind higher is a constant pain for any bear. The few that remain are the classic perma-bears and adjusting for them we are near rock bottom for bears. The history of Sentiment reminds us that it’s more dangerous to have an evaporation of bears compared to a plethora of bulls.