Stock Market Investing, Stock Market Timing, Uncategorized

FOMO!

FOMO! It’s the Fear Of Missing Out. Feeling it yet? Our oil is all the way back up to $36.33, from $26.05, since February 11. Nearly 40% in, like, 3 weeks! Why? Merely perception. The perception that oil supplies will come down, and oil demand will go up… and, somewhere the two will meet and attain unto some kind of equilibrium. But, at this very moment, the world is still awash in oil, and storage space is literally running out.

The OPEC meeting called for last month, to ostensibly freeze production at January’s record high level, hasn’t even met yet. Iran, after having sanctions lifted by Prez Obama in January, is saying that they are going to bring 1 million barrels to the market. Oil output is, even now, some 1 to 2 million barrels a day above demand. U.S. rig count is down considerably, but production cut has not been great. Price really needs to attain unto, at least, $45 is my understanding, in order to stave off the debt reaper of high-yield corporate ‘junk’ bonds set to default in the multiplied billions in this year.

Add to the above, that stocks have rallied some 10% in these past 3 weeks, and every technical overbought indicator is on full alert, and every market technician that draws lines of overhead resistance and moving averages are seeing that we are there! The there of when it should really become difficult to advance any further. The very appearance of things, in relation to these moving average lines says that this is the very earliest stage of a Bear Market. The very appearance of the volume bars involved in this rally says it has been suspect, as they have not been tall, like ‘real’ rallies have.

The one thing that I’ve been jumping up and down on is what the analysts’ consensus of forward-looking earnings estimates for all the S&P 500 has been doing. It’s still declining, and just since the end of ’15, has been steadily falling to a place where it is now off all of 8.44%! This just can’t continue! The slope of descent is beginning to slow, and my data is likely about 2 weeks old, by the time I get to see it. But still!

If I may add to that; how many people work for S&P 500 companies? Doesn’t most of America work for small businesses? A look at the same EPS line for the S&P 400 Mid-Cap Index is off 9.6%, after peaking August 3rd. The S&P 600 Small Cap Index EPS line topped out late October, and has plunged 15.3%. Finally, the Russell 2000, another small cap index saw its EPS line peak August 3rd, and it has declined since by, get this now, 22.8%!!! Is anyone else crying the sky is falling?

All the truly big volume spikes for the past 10 months are RED in color, not green. The entire market process since at least late-April of last year, has been that of topping. And all those estimate cuts have been coming on ever since. I’ve seen that price typically precedes estimates, both up and down. Those closest to the ‘action’ commence to sell before the analysts even get an idea that all is not well, and commence to cut. Prices have been falling, and estimates have been tumbling.

Every appearance to date, is that of a Bear Market rally. I suggest you not succumb to FOMO. If it’s a Bear, it will confirm here at about its own down-trending 200-day moving average, and commence another leg down. So, it’s time for this Bear to show its claws, or for the wounded Bull to get back up on all 4 hooves. We’re here, now into the first week of March, and the estimate cuts have been non-stop since the year started… they must, or only recession could be coming upon us. What’ll it be? I think we shall soon see. I’ve sold off a lot, as I would rather be safe now, rather than sorry later.

Here’s to your successful investing,
Harold F Crowell

I know. I used to write that it was always only about the safe-growth of our portfolio dividend income, but as we discovered, and I wrote about last month. We don’t have to have it anymore, and so, we do not need to have to endure the stress of a Bear Market. We can avoid all that, and not miss our retirement income goal! That’s when safety became of greater concern to us.

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3 thoughts on “FOMO!

  1. Harold,
    I have to agree, that I have FOMO. But you continue to make a compelling case regarding caution and protection as the market continues to move up.

    Am I mistaken, or did metals loose some of their correlation to energy in January?
    If the market is going to take a tumble, it would seem that some protection could be had in either buying metals. (although their RSI appears to be above 64)

    Or, if you are trying to make some short term money could you buy puts in XLE, or those large drillers that have experienced gains recently. In looking at their RSI, Some appear to have an RSI well over 80.

    • Allen,

      First, I’ll apologize. I am no trader, and so I don’t look to exploit anomalies, or technical extremes to the upside. There’s a very old trader’s expression that the markets can remain irrational longer than you can remain solvent. Simply meaning, you can find every ‘reason’ that some market should be going one way, when you can plainly see it is going the other, so you try to position yourself on the other side, only for it to continue in the direction it had been… ’til it takes you out. I don’t do any of that. When I think it’s being totally irrational… it’s best (for me) to just step aside, and not lose. That’s what I have done at this point. Metals deserve a breather at this point, but, just as our stocks appear to have only just entered a Bear Market, so, too, the metals appear to have just commenced a new Bull Market. Both will confirm in the relatively near future… and, we will then know. I’m not trying, at this point, to make any short-term money. I’m in capital preservation mode, and think I’ve pretty much gotten out, well within 10% of the top. Wall Street will cal it a bear when everyone still in is down by 20%. I render reasoned opinion here, and try to act intelligently upon it. If you agree, do likewise… but, my best advice would be, if you’re going to try to position yourself on the opposite side of a current trend, wait for that trend to break first! Thank you for writing, Harold

  2. Sam Mentesana says:

    Hello Harold,

    First off, thank you again for all you do for your followers like me. I met you when you came and talked at our VectorVest Users group meeting last May in Kansas City. Any way, I know your situation with V.V., and I can appreciate your position. For such an optimistic guy, you really turned bearish this year (as I did). If you still use V.V. you know that this week gave a confirmed up signal and every thing in V.V. is looking amazingly bullish! This has me completely confused and I feel like a “deer in the headlights” and I just don’t know what to do, so I don’t do much. I have some small bearish positions on currently that are getting crushed, but like you, I believe the market still has much room to go down, and no real reason to support the past couple weeks gains. How do you feel about the current V.V. view with everything looking great for the current market? I’ve been trading for about 10 years and I don’t think I have ever been more confused with the market. Thanks for sharing your broad market thoughts and reasearch.

    Kind regards, Sam Mentesana On Mar 5, 2016 2:35 AM, “Elite Wall Street Investor” wrote:

    > ForeverKingdom posted: “FOMO! It’s the Fear Of Missing Out. Feeling it > yet? Our oil is all the way back up to $36.33, from $26.04, since February > 11. Nearly 40% in, like, 3 weeks! Why? Merely perception. The perception > that oil supplies will come down, and oil demand will go up.” >

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