Equities' “Aura” is Powerful And Dangerous

January 11th, 2013
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Equities really are getting bullish now; they appear to be gaining a “can’t lose” or “can’t be touched” aura about them that is both very powerful and dangerous.  In reality what is occurring is that we have a lot of liquidity sloshing around that is finding its way into equities.  While the “going is great”, the money will keep flowing in, each trader afraid he/she will miss out on the spoils.  Fund managers chasing Beta are being ranked against their peers and are being forced to chase.

Follow up:

On the Daily Cycle chart I believe the equity Cycle is “recharging” in preparation for the next solid rally.  I’m not sure if they have consolidated those two massive days yet and the S&P is still a decent amount above its 10 and 20 day moving averages.  Short term movements are not what this service is about.  But it would be “my guess” that we see a pullback down to the 20dma that is followed by a solid 10 day rally up to the Half Cycle Top.

Click to enlarge

This expectation is predicated on the fact that both the Daily and Weekly Cycles still look great.  Both from a Cycles standpoint (timing) and from a technical picture, there just remains fewer reasons not to expect higher prices, at least in the short term.

The caveat of course are the Q4 earnings, this is the big wildcard for the Equity Cycle.  Big enough where Q4 earnings have the ability to force a Daily, Weekly and 4 Year Cycle Top right here!  To some extent “the street” is expecting some weakness, no doubt there.  But they have not “priced” any in, evident by the recent Cyclical Bull market highs.  It’s one of those situations where the bulls are in control, so even a decent earnings season will lift the market higher.  But a really poor showing and revisions to 2013 outlooks have the potential to really knock this bull down.

This as is an excerpt from Wednesday’s premium update published on Saturday (1.05)  focusing on Equities from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly, as well as real time trade alerts to profit from market inefficiencies.
They offer a FREE 15-day trial where you’ll receive complete access to the entire site. Coupon code (ZEN) saves you 15%.

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