It is amazing to read assertions from the Fed and others that the stock market is nowhere near being in a bubble. Several aspects of the financial environment are actually so extreme as to be unprecedented. Some indicate a bubble, and others a bubble in trouble.
Below are eight indicators we are watching closely, among others.
1) Record debt in U.S. dollars
Total dollar-denominated debt peaked at $52.7 trillion in early 2009. At the end of Q1 2015, it stands at $59 trillion, an unprecedented amount.
2) Margin Debt at All-Time Highs
Never have more trading-account owners owed so much money, and never have they had such a low level of available funds from which further to draw.
3) Stocks Are Overvalued (based on dividend yields)
The Dow's annual dividend payout has been less than 3% for 235 out of the past 246 months. Prior to the bull market that started in 1982, the longest duration under 3% was just one month, at the top in 1929.
4) Fund Managers Are Maxed Out
The percentage of cash in mutual funds has been below 4% for all but one of the past 70 months (a period of nearly six years). Prior to this time, the longest such duration was only nine months, a streak that ended in October 2007.
5) Stocks are at a Triple Extreme
Previous triple manias occurred in 1901/1906/1909 and 1965/1968/1972, and both led to severe bear markets. This one is even bigger and has lasted longer.
6) Stocks Rose on Low Volume for Six Straight Years
Such a thing has never occurred before -- one year, maybe, but not six.
7) Unprecedented Divergence Among Major Indexes
On May 20, we published an interim issue of The Elliott Wave Theorist to tell subscribers:
Today something amazing happened: The Dow Transports closed at a 6-month low on the same day that the S&P 500 made an all-time intraday high. I doubt this has ever happened before.
The Dow Theory non-confirmation between the Dow Industrials and Transports is now [more than] six months old. This big a divergence, for this long a time, is very bearish.
8) Advisor Bearishness at 38-Year Low (optimism near record high)
The 30-week moving average of the percentage of bears among stock market advisors is at a 38-year low. (Investors Intelligence data is inverted to show optimism.)
Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at www.jimwyckoff.com Click on image below to enlarge
See on the daily bar chart for the U.S. dollar index that prices are in a four-week-old uptrend and have just hit a six-week high. The greenback bulls are back in business. That's an underlying bearish development for most raw commodity futures markets, including crude oil.. Stay tuned!
6:00 AM CDT - MBA Mortgage Purchase Index
8:00 AM CDT - FHFA Housing Price Index(May)
9:00 AM CDT - Existing Home Sales(Jun)
9:30 AM CDT - API & DOE Energy Stats
2:00 PM CDT - Dairy Products Sales
2:00 PM CDT - Cold Storage
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly
9:00 AM CDT - Leading Indicators(Jun)
9:30 AM CDT - EIA Gas Storage
3:30 PM CDT - Money Supply
FN: Aug Crude Lt(NYM)
9:00 AM CDT - New Home Sales(Jun)
2:00 PM CDT - Cattle On Feed
LT: Aug 2,5,10 Year Notes Options(CBT)
Aug Bonds Options(CBT)
Aug Canola Options(CBT)
Aug Corn Options(CBT)
Aug Wheat Options(CBT)
Aug Rough Rice Options(CBT)
Aug Oats Options(CBT)
Aug Soybeans,Soymeal,Soyoil Options(CBT)
7:30 AM CDT - Durable Goods-Ex Transportation(Jun)
7:30 AM CDT - Durable Orders(Jun)
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!