The guys behind our call and our chart of the day agree: This market’s in deep trouble. Of course, it’s been in deep trouble for the past 43 record highs this year, so it’s easy to see why bulls roll their eyes any time a top-caller makes headlines.
For them, however, Sven Henrich of the Northman Trader blog had this nugget of wisdom to impart: “An extreme market that only becomes more extreme is not any less extreme, it is just more extreme,” he says. “As no risk is apparent, these extremes are then dismissed as the new normal.”
But the new normal won’t be normal forever, and Henrich sounds the alarm in our call of the day, using the latest Hollywood retread to bang home his point.
“Central bankers have flat-lined risk, and investors have crossed to the other side expecting nirvana and free money forever,” he says. “So far, so good it seems. Just remember in ‘Flatliners,’ the allure of nirvana turned into a running nightmare.”
So when does our “nightmare” begin?
The answer may lie in this chart.
“It will get tested again. Currently the trend line is barely 2% below current prices, and it is rising steeply,” Henrich says. “When price breaks below this line, it’s time to return to real life.”
Of course, he is well aware bear warnings tend to fall on deaf ears when they’ve been this wrong for this long.
“That’s what bubbles do,” he explains. “They blow past anyone’s expectations, they make believers of the unbelievers, make bears look like idiots and the most reckless look like geniuses.”
This isn’t the only chart investors may want to pay attention to. Our chart of the day (see below) has a technical take on why there could be a reckoning ahead.
Meanwhile, stocks are looking at more gains and more potential records.
Key market gauges
Stocks are barely budging this morning, although they are leaning higher on both the Dow
and the Nasdaq
are up, too, keying off some fears of renewed U.S./North Korea tensions. WTI crude
is flat, but Brent
is mostly higher. Asia markets
ended the day mixed, with the Shanghai Composite
up 1.3%, but the Hang Seng
See the Market Snapshot column for more.
has been making a break for the $4,600 level, though it’s back below that now. The Zero Hedge blog used this chart to illustrate the rebound:
The Stock Board Asset blog says investors are getting sucked into the stock market despite all the warning signs — specifically, the warning sign that the S&P 500
ratio is flashing right now. Look at the chart:
“The REAL test for sustained market euphoria is now occurring, as the ratio probes a two-decade ascending diagonal (red) line responsible for past market tops,” the trader/blogger writes.
“After 8-9 years of a central bank induced bull market, and pushing +2,803% gains from lows, investors are making the fatal decision to get back in, as the final stages are here explained in the ratio.”
Behavioral economics pioneer Richard Thaler, a professor at the University of Chicago, has won this year’s Nobel Prize in economics. Here are six books that he recommends.
North Korea tensions are back on the radar in the biggest way. After President Trump said “only one thing will work” against Pyongyang, his counterpart Kim Jong Un called his nuclear program a “treasured sword.” And a Russian lawmaker says North Korea is ready to test a missile that could reach the west coast of the U.S.
Harvey Weinstein on Sunday got the boot from the company bearing his name amid those nasty allegations of sexual misconduct. And now the Democrats whom he funded are scrambling.
Data-center group Switch
was falling in premarket after a 23% surge on Friday in its trading debut.
How did the Trump kids turn out to be so “fabulous?” Ask their mother, of course … she tells us all about it in her new book.
$5 million — That’s how much the Las Vegas shooter earned in 2015, mostly from gambling, according to a report from NBC News.
Read: Vegas police describe harrowing entry into killer’s room.
Some laughs through the pain, thanks to this tweet:
Congratulations to Freidrich Nietzsche on his new role as CNNs weekend push notification editor!! pic.twitter.com/0hXUSy9WZd
— Joe Bernstein (@Bernstein) October 8, 2017
Also, Vegas turned the lights out last night on the one-week anniversary of the tragedy:
The marquees of the Las Vegas Strip go dark in a show of unity and strength for the victims and their families. #VegasStrong pic.twitter.com/dz8T3Oytvz
— Vegas (@Vegas) October 9, 2017
“It’s a shame the White House has become an adult day-care center. Someone obviously missed their shift this morning” — a weekend tweet from Senator Bob Corker, after Trump criticized him for suggesting there is “chaos’’ in the White House.
Chaos? In the White House?
Corker wasn’t finished. In an interview Sunday, he warned that Trump and his recklessness could pave “the path to World War III.”
Banks are closed today in observance of Columbus Day. No economic data of note, either.
Later in the week, we’ll get FOMC minutes and initial weekly unemployment claims. The consumer price index hits Friday, and we’ll hear from Fed Chair Janet Yellen next weekend when she speaks at thee G30 International Banking Seminar in D.C.
A fire is burning in Napa, with some San Francisco smelling the smoke.
Hope everyone in #NapaCounty can get to safety. You can smell the #napafire in #SanFrancisco tonight. https://t.co/ETjuyOiT3U …
— BC Wildfires App (@BCWildfiresApp) October 9, 2017
The “very fine people” returned to Charlottesville.
Prison life is “not that awful” for Martin Shkreli.
Jerry Jones threatens to bench players who disrespect the flag, and just how much did Mike Pence’s NFL walkout cost taxpayers?
Weinstein’s media enablers? The New York Times is one of them.
The White House is putting a high price on the “Dreamers” deal
Ralph Nader on how buybacks “parasitize” the economy.
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