While I’ve been out of the “prognostication racket” for a few years now, I do still share my financial market and economic observations with my clients and friends via this blog. Like any good weather person, I fully expect it to rain on some sunny outlooks of mine (and vice versa).
Before “retreating” to just being the insurance spoke on a wheel that provides an alternative to traditional financial planning process, I managed to soundly beat a “broken clock” in recognizing major turns in key financial markets for over three decades.
Foreseeing the 87 crash and stating the day after it, that the stock market would be back to new, all-time highs within two years, is what led to my being called the “Wall Street Whiz Kid” by Steve Crowley, the then-Business Editor for the television show, “Good Morning America”. I spoke with Steve on his radio show not too long ago:
I was blessed in early 2000 to speak of yet another major top about to come spiraling down; but it was two other calls of mine – turning very bearish before the financial crisis in 2008, and turning very bullish literally within a day of the bottom of the stock market afterward, that allowed me to be truly considered something much more than a broken clock advisor.
Those, who have followed me over some, or all, of the past 33+ years, know that I have personally made and lost millions in profits. I did this not only once, but twice. Yes, I really am human and I had to “pull a Fonzie” more than once on market forecasts. I may have been a legend in my own mind many moons ago, but thanks to my Christian walk, I came to finally realize that only God knows the future.
To call oneself a “whiz” implies a talent that neither I, nor anyone else, can continually maintain. I now make my observations with the best of intentions, but only after having put my pants on one leg at a time and carry a grain of salt in both hands.
With that in mind, I now believe the U.S. stock market is in its most precarious position since I first entered Wall Street in March of 1984
A Parabolic Arc has formed in the DJIA and S & P 500.
“Parabolic Arc chart patterns are generated when steep rise in prices are caused by irrational buying and intense speculation. Parabolic Arc patterns are rare, but they are reliable, and they are generated in mega bull trends. These patterns trend gradually making higher highs and lower lows in the beginning stages but can be volatile in the exhaustion and reversal stages.
Irrational buying in the public generates a strong rally to push prices vertically, followed by a steep sell-off. Examples of these market types are the NASDAQ bullish markets during 1990–2000 (retraced 80%) and Gold prices from 2000–2011 (retraced 62%).
Parabolic Arc is a reversal pattern and has a very predictable outcome. Although they are predictable, they are relatively difficult to trade since the market sentiment is bullish and may be relatively tough to point reversals to trade. Most Parabolic Arc patterns have a significant correction of 62–79% of its price rise from the top.” (courtesy of stocktwits.com)
I started the New Year by suggesting strong consideration to use these first few weeks of the New Year to lower equity exposure by at least 50% (if one had at least 10 years until needs for capital in stock market) and up to 90% reduction (if within a couple of years of absolute need of entire current principle). This, of course, is to be first discussed in detail with the Registered Investment Advisors on our team as I am not one of them. Because of this Parabolic Arc formation, history strongly suggests while we could still run straight up some more, in the end, most, if not all the gain (and then some), can be lost.
At the risk of being called the “Fizz Kid” and Whiz Kid becomes little more than an ancient memory, I just want you to know there’s plenty of room to join me:
I purposely turn down most media interviews, but there still remains one person I would eagerly speak with, Neil Cavuto. He and John Crudele of the NY Post are the only two financial journalists I fully-value these days. Most others have caved to the whims of the “Don’t Worry, Be Happy” crowd on Wall Street and are mostly just avenues for the “Talking Heads” to peddle their wares.
Worthy Articles To Ponder:
- Perfect Storm
- Reminiscent of the run-up to the global financial crash of 2008.
- Investor Cash Just Hit An All Time Low
- Imminent Market Crash Signal Was Just Triggered
- What Could Possibly Go Wrong?
- The Coming Crash Will Be Like 1987…But Worse
- Massive scandal is brewing at the FBI
- Why We’re Underestimating American Collapse
- Bitcoin and blockchain’s broken promises
- The Tax Cut Myth
And please allow me to leave you with one chart that gets to the heart of this blog posting:
The S & P 500 is the most overbought in its history!