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Moraif: Dow Still Falling to 11,500

“The market may be finally realizing that there are limits to what the Central Banks are able/willing to do to keep this gravy train going. On Friday we saw the Dow drop 394 points on the HINT that we may be coming to an end to the stimulus both here and in Europe. …

“Without the confidence that the market has in continued support from monetary stimulus, investors would have to look at the fundamentals for comfort. Unfortunately, the economic data for August did not look that good. …

“If the market were to take out the effects of the “Government Infusion Bubble”, I believe that the market would fall into a bear. …

“The longer it takes, the worse the final bear market will be, in my view. I see little reason to change my Fearless Forecast of Dow 11,500 [in 2016]. I believe it is a matter of when not if.”

— Excerpt contributed by Jason Kelly

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Z-val: Ken Moraif
Via: Money Matters
Date: 9/10/16
Disposition: Short-Term Bearish
Dow Jones Industrial Average on 9/9/16: 18,085
Dow Jones Industrial Average on 12/30/16: TBD
Change: TBD
Judgment: TBD

Z-val definition and more forecasts in The Z-val Zone.

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Singer: Breakdown Will Be Intense

In a cheerless missive to investors, Paul Singer at Elliott Management warned that the bond market is broken and that once central banks lose their ability to prop it up, the crash will be big. This is a recurring bearish argument, but always popular.

Singer says now is “in many ways the most peculiar period we have faced in 39 years. … Everyone is in the dark. Experience doesn’t count for much, and extreme confidence may be fatal. … the ultimate breakdown (or series of breakdowns) from this environment is likely to be surprising, sudden, intense, and large.”

— Excerpt contributed by Jason Kelly

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Z-val: Paul Singer
Via: Zero Hedge
Date: 8/18/16
Disposition: Medium-Term Bearish
S&P 500 on 8/18/16: 2187
S&P 500 on 2/17/17: TBD
Change: TBD
Judgment: TBD

Z-val definition and more forecasts in The Z-val Zone.

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Faber: S&P to Crash 50%

Marc Faber said on CNBC’s Trading Nation that the stock market could “easily give back five years of capital gains, which would take the market down to around 1100.” Getting to 1100 from the S&P 500’s Friday, August 12, 2016 close at 2184 would require a 50% crash.

It’s not clear what has Faber so bearish in this latest warning from him. When pressed for reasons, he said “you never know exactly why this will happen” and added that recent gains are unsustainable. Finally, he elaborated: “The fact is, the market hasn’t really been driven by genuine buying, but by stock buybacks, takeovers and acquisitions, and market leadership has been narrowing. It’s not that many stocks that have been making new highs. It’s quite a narrow group of stocks that have been very strong.”

— Excerpt contributed by Jason Kelly

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Z-val: Marc Faber
Via: CNBC
Date: 8/9/16
Disposition: Short-Term Bearish
S&P 500 on 8/9/16: 2182
S&P 500 on 11/9/16: TBD
Change: TBD
Judgment: TBD

Z-val definition and more forecasts in The Z-val Zone.

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Gundlach: Sell Everything

Noting the recent run-up in the benchmark Standard & Poor’s 500 index while economic growth remains weak and corporate earnings are stagnant, Jeffrey Gundlach, the chief executive of DoubleLine Capital, said stock investors have entered a “world of uber complacency.” …

“The artist Christopher Wool has a word painting, ‘Sell the house, sell the car, sell the kids.’ That’s exactly how I feel – sell everything. Nothing here looks good,” Gundlach said in a telephone interview. “The stock markets should be down massively but investors seem to have been hypnotized that nothing can go wrong.”

— Excerpt contributed by Jason Kelly

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Z-val: Jeffrey Gundlach
Via: Reuters
Date: 7/29/16
Disposition: Medium-Term Bearish
S&P 500 on 7/29/16: 2174
S&P 500 on 1/27/17: TBD
Change: TBD
Judgment: TBD

Z-val definition and more forecasts in The Z-val Zone.

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Kelly Letter Doubles S&P 500

The Kelly Letter‘s automated system is winning again.

Through last Friday’s close, here’s how the three tiers of The Kelly Letter have performed so far this year, compared with the S&P 500:

+11.4% Tier 2
+6.3% Tier 1
+4.1% Tier 3
+3.6% S&P 500

The letter’s overall performance is precisely twice the S&P 500’s, up 7.2% compared with the index’s 3.6%.

The letter never forecasts. Instead, it runs proven automated systems that react to price changes alone. No emotion or guesswork. This approach puts it ahead of the market and way ahead of supposedly smart money managers, who fall victim to worries and gut feelings and other thoroughly disproven approaches to investing.

According to last week’s US Investment Policy Committee Notes by S&P Global Market Intelligence:

US equity markets continue to befuddle a majority of domestic money managers. S&P Global Market Intelligence’s Mutual Fund Research Group reported that only 437 (21%) out of 2,053 large-cap fund share classes equaled or beat the 3.57% total return of the S&P 500 year to date through May 31. Large-cap growth funds on average lost 0.98% YTD, while large-cap value and large-cap core funds rose 3.4% and 2.4%, respectively.

The underperformance of large-cap core funds was wider than the cost of the fund’s expense ratio, highlighting poor stock selection. Uncertainty and potential underperformance will probably continue as investors battle head-wind worries about the Fed’s rate hike, Brexit, China’s slowing growth, and the upcoming political conventions.

Here’s a thought, pros: Stop guessing and start automating. Accept that you have no idea what effect any input will have on the financial system. Those head-wind worries are just the ones of the moment, preceded by similar ones and to be followed by others. The coast will never become clear, yet truly smart participants win over time, and you could become one of them by letting go of your ego and allowing price action alone to determine what you do next.

Switch to The Kelly Letter and enjoy life!

Join me to stay ahead of the market, while also staying calm. Automation that uses price action alone runs circles around everything but dumb luck.

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