Discretionary Trading
Now Reading
The Eternal Bull Market?
51

The Eternal Bull Market?

by The MoleJuly 6, 2017

I launched this blog back in August of 2008 right at the cusp of what many bears still regard as the entry opportunity of a generation. And I don’t think that would be very far fetched as it may be many more years until we ever see a large scale market correction resembling that of 2008 again. For the record, I for one wouldn’t terribly mind seeing a continuation of this bull market. Unlike many of the doomsayers du jour yearning to see the world burn I do not want to see the United States undergo another economic depression. And clearly the Fed has proven that it will do whatever it may take to prevent just that from happening. 

But there are early signs of trouble as many financial institutions apparently seem to have learned exactly nothing from the burst of the real estate bubble and proceeded to inflate the automotive market in exactly the same fashion. As a result off-lease supply more than doubled since 2012 and is expected to rise another 25% over the next 2 years. Auto loans terms are at a record 69 months now and outstanding balances continue to climb.

32% of subprime auto related asset-backed-security (ABS) deals are deep subprime (average FICO < 550) in 2016 vs. 5% in 2010. Car inventories are at record highs with 2016YE unit inventory 10% than the previous year and trending higher in 2017. New car prices are falling as car manufacturers can’t put sufficient asses into seats with a seasonal adjusted annual rate (SAAR) in unit sales of about 16.5 Million. Finally car rental companies are also feeling the pinch and are facing stagnant growth due to the rise of ride sharing and other transportation options. It’s a tough market for car manufacturers and it doesn’t look like it’s going to get any better anytime soon.

2017-07-06_AZO

AZO shown above may have been one of the first dominos to fall but I don’t believe it’ll be the last one. What is happening right now in the automotive sector is only a symptom of an overall disease which was effectively incubated by permitting the financial institutions responsible for the 2008 crash to be made whole courtesy of the American tax payer.

I’m showing you this chart for another reason however. The gap I pointed at is what we used to call back in the days the ‘point of recognition’ and the ensuing 750 retest near that 100-week SMA was one the bears should have paid attention to.

2017-07-06_corrections_monthly

What they however keep on watching is a raging bull market in equity indices which thus far shows little signs of weakening. Since I launched this blog we had only seven occasions in which equities closed lower more than one month in a row. And the bear really didn’t show its teeth on more than three occasions, e.g. summer of 2011, in late 2015, and in early 2016.

So when I look at the short term panels today and only sense complete confusion then I must simply defer to the long term view and assume that any dip lower will most likely turn out to be a buying opportunity. What we have not seen over the past nine years is a true ‘point of recognition’ in which buyers are completely overwhelmed and selling panic sets in. AZO is a great example of just that and it doesn’t require an extended tape reading course to recognize the true signs of a market that is rolling over. Detach yourself from the daily noise sometimes and just look at the long term perspective to revert to a sense of clarity.

Some Long Term Perspectives

2017-07-06_EURUSD

EUR/USD is a chart I’m not too happy about as you can imagine. It’s currently scraping the upper range of a weekly falling pennant which could easily turn into a triple bottom. And that in turn may propel us as high as 1.20 or even beyond. Given that Draghi is now determined to tighten and the Fed is once again pulling back the die seem to have been cast.

2017-07-06_bonds_ZB

Bonds are once again falling hard and are probably squeezing a lot of participants who interpreted the previous few months as a bonafide break out formation. In general there are only two ways of trading bonds in a QE environment: Very short term or very very long term. I’m thinking of grabbing a few long term positions if, and only if, the ZB descends all the way to about 149 where I think it would have a real chance of plotting a long term low.

2017-07-06_USDJPY_update

Quick update on USD/JPY – it seems to be hanging on and I’m tightening my stop a little to lock in a bit under 2R in profits. She seems to be taking her merry time and the weak USD right now ain’t helping of course.

evil_separator

It's not too late - learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don't waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • Mary

    TSLA is also stinking up the joint …

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    The assumption that a rising (bull) market is good, is bad.

    I for one, welcome our Venezuelan Socialists overlords. (NOT)
    https://news.vice.com/wp-content/uploads/2017/06/Venezuelan-Stock-Market.png

  • Tomcat

    In a stupefying act of trying to outsmart the market, even though I have been a long term bear Musk enterprises, I flipped from short to long yesterday. As you can tell, that didnt work out well for me.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I told a coworker jokingly to sell, sell, sell (Monday).
    He was a deer in headlights.

    https://uploads.disquscdn.com/images/8a610c03b3296abc0c036a50e1c4d178528822bf1307223d03a87ee8ae1b2f82.png

  • Tomcat

    BTFD then?

  • OzarkHillBilly

    My assumption here is that money is flocking to perceived safety and value. Got to do something with your bolivars before they are worthless, as capital/currency controls limit your options.

  • OJuice

    /GC is showing some early signs of potential as well.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    it’s a tricky situation. numerically, yeah – definitely richer.
    purchasing/buying power? debatable.

    I heard about capital controls over a decade ago. I should have saved the article. The stranger was a genius in foresight.

    *Nothing new under the sun*

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • ridingwaves

    Mole’s point of recognition correlates with loss of weekly bullish trend as noted on top of chart
    the support lining up with 510 green line target had me giddy along with descending bearish trend line…now all the big houses are downgrading….support of green line holds and it could be a good rebound play….10.88 trailing PE…
    https://s2.postimg.org/hcd6di1g9/AZO_lens.png

  • ridingwaves

    it’s really going to fly when the fed stands pat in Sept…might as well let it play out until late July per chart before taking entry…

  • ridingwaves

    no reason it can’t find support at 250…GS has target of 180, they maybe front running this move…

  • OJuice

    Good point. Odds showing pretty low though Sept. http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    low 503, last 512.
    507 good enuf. LOL

    but seriously, I would rather go long beyond the support, hoping for a snap-back.
    notice I said hoping. If you can sit at the screen all day, or predetermine your setup and then go surfing…(then) YOU’RE Da’Man.

  • ridingwaves

    already moved on….
    OCUL
    AVEO
    MEIP

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    pharma sub $5 stocks?

    I’d rather swim with the sharks.

  • ridingwaves

    geez, almost up 15% on bottom 2, looking for entry on OCUL
    since I surf OBeach where sharks roam….can’t get tubed if you don’t paddle out….damn desert dweller…

  • http://evilspeculator.com Sir Mole III

    Wow didn’t even see that – that is looking like bonafide panic selling. Not the end of it either – there will be a bounce but I expect to see it near 250.

  • OJuice

    Just took a closer look at the picture on the header bar. Pretty funny. I wonder if the guy pushing the bull head plows over any little kids, to make the experience authentic.

  • ridingwaves

    those gaps from Mar are glaring…

  • ridingwaves

    241 spy seems uber important

  • Mark Shinnick
  • Mark Shinnick

    Tic tic tic on Heavens Door :)

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I’m not seeing it.
    That Gartman soltice call however….

    {GG ducks}

    https://uploads.disquscdn.com/images/2e69bbbbde434d17d34d812a31c2e79e9a31d100ab96e6c859e85c7602aebdf7.png

  • http://evilspeculator.com Sir Mole III

    How’s my crew??

  • ridingwaves

    some buyer stepping in to keep it there, using hourly….

  • http://evilspeculator.com Sir Mole III
  • Mark Shinnick

    When that happens to me, I can at least marvel at the awesome timing :)

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I see it now. Hour to close.

    https://uploads.disquscdn.com/images/1be206d34dbcf212965d586fd011b45eabc5912491bbd8e52b9694f3735007a9.png

    I know Mole’s Zero is the one to watch.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Naz leading to the downside (%-wise)

    Actually, it’s Russell ! by a nose. (broad market)

  • OzarkHillBilly

    Just waiting for the market to tell me when to take some profits.

  • Tomcat

    One of things I hate the most, is trader’s who don’t have the balls to stand by their calls. I used to follow this guy – perma bear, who most of you have probably heard, Doug Kass. I actually happen to follow both perma bulls and perma bears, just to see how far they are willing to sell their BS. Well, this guy has a conviction list of trades/predictions (well he calls them investments but thats another story) for the coming year (2017). At the top of that list he called for shorting $TSLA which happened to be around $200 then. As stated below, I have been a long term non-believer of whatever Musk sells so I just happened to agree with his call. Well a couple of months in, after the stock had a huge run, I simply asked him whether he was still short TSLA (mind you before that message we had some really good/friendly exchanges on Twitter). His response was that he was never short TSLA and he never recommended it. Realizing I was dealing with a troll, I moved on, even though I must admit that I looked at his previous tweets to remind him (he had removed all of them – there were several as I recall as he felt pretty strong about his call). A few days later, someone else added a screenshot to that thread with him making that call. He blocked/muted us both that day.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • ridingwaves

    Mole jinxed bull market with today’s post…

    GS considering hiring hitman to find him and seek toll!

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    is he traveling!?
    ;-D

  • kudra

    Doug Kass. ha! zero $ to be made with that dude. Our own Riding waves is 100x better than that jerkoff.

  • ridingwaves

    no, he doesn’t have to now..he’s beating inflation right there via post vs travel costs….if he writes another bullish post tomorrow, maybe we see 2390…

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    INTC,
    failure on follow-thru today, triple bottom.
    somebody put this dog down.

    https://uploads.disquscdn.com/images/0723785ae331a5e2cf667fcca05edb8ec8f99c230cc9ba6a4caa70a74ee46c0e.png

    (I have no positions)

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Best to ignore any and all pied-Pipers mate.

    I understand the integrity part.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Market Closed.
    time to go home? are you kidding me? – you have to plan for tomorrow.

    QQQ’s
    could turn up overnight, right here, right now.

    Or, a little more downside, just to scare the children.

    https://uploads.disquscdn.com/images/cd18a7b0571e794662ddd2ec64b67dbd218572bbb0cf1078a44bd25f34b54992.png
    -GG

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    gives new meaning to “sit tight, be right”.
    LOL.

  • Mark Shinnick

    ….so, he creates false written records to defraud clients. Doug Kass…. got it !

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://evilspeculator.com Sir Mole III

    I could be – what is worth to you guys? 😉

  • http://evilspeculator.com Sir Mole III

    I never removed a single post or tweet that wasn’t a clear error or duplicate. Simply because my calls are my calls, period. There is already too much historical revisionism and it’s certainly not something we should ever do as traders. Mistakes and bad calls are healthy, they remind us where we are in the pecking order of things. Which is way way down at the receiving end.

  • http://evilspeculator.com Sir Mole III
  • https://scottphillipstrading.com/trade-setup Scott Phillips

    The vast majority of internet pundits either don’t trade at all, or trade with tiny accounts, or trade non-systematically by the seat of their pants, or don’t keep records.

    You should savagely remove all such people from your internet feeds (email, twitter, blogs whatever) as they are useless. No skin in the game.

  • https://scottphillipstrading.com/trade-setup Scott Phillips

    It’s just pure inflation. Inflation adjusted it looks terrible. Denominated in USD looks even worse.

  • https://scottphillipstrading.com/trade-setup Scott Phillips

    A gap n go at the start of the move is a clear sign of people wanting out of the hamster wheel

  • https://scottphillipstrading.com/trade-setup Scott Phillips

    As a general rule you should only short weakness.

    Trying to time a top in strong stocks is usually a combination of ego, and hating on successful stocks (like with bitcoin, most people who missed out can’t wait for it to crash)

    To find your list of potential shorts, rank the stocks in a given sector. Take only the WEAKEST and then find your chart patterns from there :)

    The problem with shorting strong stocks is there is built in buying pressure in a pullback, which is not immediately obvious from the chart, lots of sideline bulls.

    Long before enron cratered it underperformed it’s peers in the industry. Same with virtually any other stock which loses 80% of it’s value.

  • OzarkHillBilly

    If I happen to see a call from one of these dudes, I might note it, but you’re absolutely right, many of them are thin-skinned media whores who are never held accountable.