Bill Walbrecher Blog

Stock Market Pullback Underway

2020-09-08T12:34:00.000-07:00

The NASDAQ has been bearing the brunt of the current decline because it led the way up. The index was previously the high flying technology shares which carried the index higher creating the false impression the entire market was rallying against a declining economy.

Technicals and AI indicate the market could decline into October. This is impart playing catch-up as the damage to the economy is very real. Add that the trade war with China and the pressure for companies to replace China in the supply chain is a major disruption to the economy which will be felt over many years.

A closing below 27525 in the Dow will signal a broader correction is underway.

Caution is the watchword.

R.I.P. Eric William Walbrecher

2020-06-20T10:32:00.000-07:00

My son died three days ago. He was my main man.

I already miss him with a depth and intensity unlike anything I have ever known. I will love him forever.

“There is a sacredness in tears… They speak more eloquently than 10,000 tongues… of overwhelming grief… and unspeakable love“.

A Stock Market Crash is Imminent

2020-06-12T16:07:00.000-07:00

If you are a trader or an investor you most likely know stocks have been surging higher the past few months. Thursday, the benchmark S&P 500 Index plunged 5.9%. It was the biggest one-day decline since the March crash.

Note that when price gaps up to a new high, and then gaps back down shortly after, a relatively rare pattern usually forms known as an island top that tends to occur at the end of a strong move, often signaling near-term exhaustion in trend. Bottom-line, the S&P and the Dow have formed four-day island tops. This is an ominous sign.

There is a very high probability that at least a short-term correction is now underway.

Under the bullish scenario, the broad market will likely retrace anywhere between 30% to 50% of the recent rally before resuming its uptrend. Under a bearish scenario, markets are likely headed for a “test” of the March lows at a minimum.

Translation: It is time to hedge your stock positions and/or move your cash to safety.

Take Profits

2020-06-06T15:07:00.001-07:00

Folks, Friday was take profits day. If you did not take profits, it is time to lighten your stock positions.

Think about it, protests in the streets, American cities on fire and more than 30 million people unemployed. At the same time, the gap between Main Street and Wall Street is larger than ever.

We have a Presidential election later this year that will be critical for the future of the equity markets. Risks include even higher unemployment and a correction of equity markets greater that the stock market crashes in March of this year.

The current P/E on US stocks is in the top 10% of its history. The US economy in contrast is in its worst 10%. In addition, everything is uncertain, perhaps to a unique degree. Markets have historically loved fat margins, low inflation, stability and, by inference, low levels of uncertainty. There are no certainties but there are probably still some better and safer places to put your cash than the stock market.

Be safe and remember that cash is a trade.

Gold is the Hot Trade!

2020-05-17T15:10:00.004-07:00

Money printing by central banks has rekindled interest in one of the oldest stores of wealth. Money managers and investors piled into gold this year and the price action accelerated after the stock market crash in March along with the looming threat of inflation.

On a technical basis, gold should test 1798 this week and a closing above that in May suggests a June high, then a pullback before a strong rally into the first quarter of 2021.

Stock Market Decline Ahead

2020-04-19T07:13:00.001-07:00

Last week, most of the economic data reported was the weakest in US history. Be prepared for a stock market decline just ahead that could test the lows as the markets have gone up to far to fast.

Do NOT Be Fooled

2020-04-06T15:13:00.000-07:00

While today's rally in the Dow was impressive do NOT be fooled. It is very possible that a high might be in place for the week. If so, expect a decline into the end of the month and a retest of the lows.

Gold

2020-04-03T18:49:00.000-07:00

Heads up! The South African gold refinery has stopped shipping gold to London because of a lack of commercial flights. This has contributed to the disruption that is upending the physical bullion market.

Caution: A correction could be coming just when the gold bugs expect a rally.

Dow Futures Down 1000 Points

2020-03-08T19:18:00.000-07:00

Tonight the Dow futures are down more than 1000 points as investors brace for an economic fallout from the coronavirus.

Granted the last 3000 points down have been scary for investors and many have lost money, but a correction was long overdue. If stocks in your portfolio are below intrinsic value do not panic. Remember markets peak when investors are incredibly happy with their investments and when they believe nothing can go wrong. And markets bottom when investors are incredibly fearful about their investments when they believe nothing can go right.

Basically, price fluctuations have only one significant meaning for true investors. They provide them with an opportunity to buy wisely when prices fall sharply and sell wisely when they advance a great deal.

No one knows for sure how far stocks will fall. But, technical support for the Dow is the 21000-23000 range. If the Dow breaks 21000 then the correction will be much deeper.

View the current selling as an opportunity to buy stocks on sale. And remember that Warren Buffett famously said to be fearful when others are greedy and to buy when others are fearful.

WARNING

2020-02-26T05:53:00.000-08:00

Folks, mostly due to the coronavirus, we are in uncharted waters not to mention the Dow is down over 5% for the year. Technical support in the Dow is 25741. A break of this level would warn that a sustainable decline ahead becomes possible.

Protect your capital.

CAUTION

2020-02-04T19:43:00.003-08:00

Technicals and timing models warn that a turning point is due this month. CAUTION is the watchword. Protect your capital.

RIP Kobe Bryant

2020-01-26T12:25:00.002-08:00

A Correction is Coming

2020-01-13T12:40:00.001-08:00

The markets continue to push higher, but there are signals that a correction is imminent. There is too much optimism among investors which is a negative signal not to mention a market cycle change is due this month. Add the VIX aka the fear index refuses to make a lower low which is another concern. Whenever the top comes after such events, market declines can be brutal. The most likely scenario for now is that a correction in the magnitude of 5% to 10% will come soon.

If you are long stocks, it is time to raise some cash by selling partial positions with the intent to buy again at lower prices. Going forward, value stocks will likely outperform growth stocks. Important to note that history indicates the later stages of the bull market can last for years.

Top Iranian General Killed in US Airstrike in Baghdad

2020-01-02T23:12:00.002-08:00

Tonight, precious metals and mining stocks are rising in what should be a dramatic rally. There may be a short-term corrective decline over the next week followed by more upside.

At the same time, the US Long Bond is finishing a bullish declining wedge, suggesting bonds will rally sharply over the coming months.

These markets will be safe havens to park cash as the stock market begins what should be a lengthy decline in stock markets.

Heads Up!

2019-12-29T09:36:00.000-08:00

Downgrades on U.S. leveraged loans are picking up, a sign of fragility in the booming corporate debt market.

wsj.com/articles/lever… "Majority of downgraded loans from business-equipment & services providers as well as health-care, the largest segments in leveraged-loan market."

Noteworthy

2019-12-23T08:08:00.001-08:00

Complacency in the stock markets is rampant now as anxiety was exactly one year ago.

Financial Crisis

2019-12-14T06:54:00.000-08:00

It now appears that US stock markets could rally into January/February before a sharp drop due to serious problems, primarily in Europe.

Caution is the watchword as the business cycle has simply turned down in multiple European economies. There is now $17 trillion of negative-yielding Euro debt compared to just over $20 trillion of US debt. A close below 3074 in the S&P and December 2018 lows of 2361 will come into play.

DJI

2019-11-23T07:52:00.000-08:00

A close below support in the DJI at the 27570 level would likely spark a nasty correction trapping the bears before a strong move to the upside shortly thereafter.

PANIC

2019-11-13T21:19:00.000-08:00

The Fed is panicking (printing at a rate of more than $1trillion per year of overnight repo transactions collateralized with US government debt occurring every day) BECAUSE the global financial system and economy are unstable. This massive debasement is the primary reason why gold and silver will go higher.

2019-11-11T11:48:00.000-08:00

Do Not Follow the Crowd!

2019-10-06T09:04:00.000-07:00

The risks in today's economy are elevated. Try to cut out the short term noise and focus on the long-term powerful trends... demographics, misallocation of capital, over indebtedness, and the China showdown. Do not follow the crowd and do not gamble with your wealth.

Meanwhile, mark your calendars for October 10 and 11 when Chinese Vice Premier Liu He will be in the US trying to hash out a trade agreement.

Flight to Quality

2019-10-02T09:57:00.000-07:00

Demand for US Treasuries and other safe havens are on the rise as the DOW is down 598 points as of this posting. Keep in mind that the flight to quality is the tendency of investors to flee to safer investments during heightened economic uncertainty.

Caution is the watchword as risk of recession in 2020 looms large.

Why Gold?

2019-09-19T11:10:00.000-07:00

Besides being a hedge against $14 trillion of global debt trading with a negative yield, gold also trades inversely to political uncertainty not to mention that current levels of uncertainty are beyond extreme.

We also have drone and proxy wars going on in the Middle East and it is hardly likely that we have seen the last chapter in this story.

While we have had a steeping of the yield curve, the 3-month/10-year curve is still negative and ditto for the fed funds/10-year spread. This suggests that recession risks remain elevated and the Fed has overtightened even with the 25bps cut this week.

Bottom-line, gold is going higher.

ARMCO

2019-09-16T10:36:00.000-07:00

ARMCO said it needs 48 hours to assess damage to its operations.

POTUS said he cannot go to war with Iran suspected of supplying the drones without Congressional approval so the United States is on hold for now.

Hold onto your hats on this roller coaster.

Fact

2019-09-07T06:00:00.000-07:00

August was the fifth month of 2019 that insider selling topped $10 billion. The only other times that has happened was 2006 and 2008, the period before the last bear market in stocks.