Hey Peter. thanks for the super interesting info. Labor Day also kicked off the decline last year in 2020 from the unstoppable Aug rally. Interesting. Have a great weekend :-)

Thank you, Peter. Great update. You were right about the rally narrowing. And, the risk is much higher than any potential reward. FYI...for anyone interested, here is the link to Hussman's latest comments. Very useful info but as Peter has said it's to be used to compare with the past and to understand that the risk has been shifting to the extremes. https://www.hussmanfunds.com/comment/mc210808/

Last updated 3 years ago

Peter do you really think the Fed will allow a huge market selloff? I think that’s the difference with the current market

Peter, Please tell me if I am off base. The Shiller CAPE Price ratio has been argued to be a slightly better indicator of an overvalued market. https://awealthofcommonsense.com/wp-content/uploads/2021/08/Screenshot-2021-08-10-125014-768x558.jpg According to the chart, we are still way overvalued, more than 1929 but not quite as much as in 2000. My gut tells me we go to 5000+ before we go down a lot. Ellott Wave would agree as well as macro strategists It would make more sense to me if we had one more shallow correction that gave one more loop to make it up to 5000, then all hell will break loose near end of year. When JNK/TLT vs Time tags the upper trend line and yields start going up. I would imagine as this happens your downside projections may get more consistently longer term.

Optimus said:

Thank you, Peter. Great update. You were right about the rally narrowing. And, the risk is much higher than any potential reward. FYI...for anyone interested, here is the link to Hussman's latest comments. Very useful info but as Peter has said it's to be used to compare with the past and to understand that the risk has been shifting to the extremes. https://www.hussmanfunds.com/comment/mc210808/

Good info, thanks

One more thing, the 55 day Fibonacci days from peak is scary but so very accurate. I truly believe that is how this one will play out. Only time will tell.

I believe the first crash in 1929 into October 29, 1929 was 55 CALENDAR days, and then the final bottom at the 55 trading days. Also in 1987 the market peaked on August 25 1987 and crashed on October 19, 1987, which was 55 calendar days. I think we have to pay attention to both the 55 calendar and trading days.

Last updated 3 years ago

I hate to fall into my own bias, but this survey of AAII investors just came out last week and it's another indicator of so many folks being too cavalier out there.

September 2, 2021:
"AAII Sentiment Survey: Bullish Sentiment Rises to a Two-Month High of43.4%." This is above the average bullish sentiment of 38% and is a contrarian indicator.

Last updated 3 years ago

Optimus said:

Thank you, Peter. Great update. You were right about the rally narrowing. And, the risk is much higher than any potential reward. FYI...for anyone interested, here is the link to Hussman's latest comments. Very useful info but as Peter has said it's to be used to compare with the past and to understand that the risk has been shifting to the extremes. https://www.hussmanfunds.com/comment/mc210808/

Hussman comments/ overvalued stance is at least 14 months old. Look at the chart, right after recovery in Apr/May 2020 it showed " way overvalued". So, until we actually break a moving average to the downside, it means very little for timing a selloff. Shorting has been very costly. Same at the bottom, stocks are cheap, get cheaper and then you run out of money buying at still cheaper prices.

daniel039209 said:

Optimus said:

Thank you, Peter. Great update. You were right about the rally narrowing. And, the risk is much higher than any potential reward. FYI...for anyone interested, here is the link to Hussman's latest comments. Very useful info but as Peter has said it's to be used to compare with the past and to understand that the risk has been shifting to the extremes. https://www.hussmanfunds.com/comment/mc210808/

Hussman comments/ overvalued stance is at least 14 months old. Look at the chart, right after recovery in Apr/May 2020 it showed " way overvalued". So, until we actually break a moving average to the downside, it means very little for timing a selloff. Shorting has been very costly. Same at the bottom, stocks are cheap, get cheaper and then you run out of money buying at still cheaper prices.

Yes, I know. Price is the signal that matters. Some of his funds returns have been just terrible (Hussman's own Growth Fund (HSGFX) is down 17.34% over the past 5 years. How did he do that?). I read Hussman's commentary once in a while just to stay grounded and humble. As Peter reminds us Hussmann's insights are very interesting and will be the reason when we have a protracted bear market.
BTW, many of us who are new to Peter's service do not realize that Peter has indicators which would have turned on if the market were to accelerate up (I am thinking of the CI NCI ratio he tracks; I wonder if he has other which are for short-time frame orientation). The fact that he hasn't mentioned those ones just means the risk is much higher to the downside in the current market and the real risk for buy-and-holds is that the loops will eventually end badly. My point is that it's wrong to think of Peter as a perma-bear; it's the cyclical significance of 2021 that one should be cautious about.

Last updated 3 years ago