Why stock market analysts will be wrong about 2017
Were already a month into New Year and there has been an ample amount of sentiment data to suggest that investors, both retail and institutional, arent terribly enthusiastic on the stock market outlook for 2017. Dollar exchange rate to peso Granted that institutional analysts are still bullish, as per usual, but in the round table type opinion polls Ive seen theyve apparently lowered their expectations. Silver chart 1 year Everyone seems to be preparing for a somewhat disappointing year based largely on the assumption that after eight years of a bull market, surely another major rally is out of the question.
The decennial rhythm we discussed in an earlier commentary argues against these diminished expectations. Futures market wiki Indeed, seventh year of the decade tends to be one of unusual volatility for stock prices. Exchange rate pound us dollar While its true crashes, corrections and panics are quite common in the seventh year (e.g. Stock market futures September 1987, October 1997, February/August 2007), the seventh year also sees a pronounced tendency for sustained rallies in the first seven months of the year. Dollar to yen exchange rate today Accordingly, 2017 could be a year filled with tremendous opportunity for making money in the stock market in both directions.
For 2017, the 10-year rhythm equates to 2007. Euro to us dollar exchange rate today As you recall, 2007 was a momentous year characterized at once by great volatility alternating between great fear and euphoria. Canadian dollar indian rupee exchange rate It was the year that saw the last major stock market top and also the onset of the credit tsunami which overwhelmed the market the following year. Futures stock market definition If the decennial pattern holds true, 2017 should witness both a meaningful rally to new all-time highs as well as a decline of potentially major proportions. Love quotes for boyfriend tagalog In short, it could turn out to be a big year for the bulls as well as the bears.
As for the idea that the bull market is getting long in the tooth and has therefore exhausted its upside potential, consider that the previous two years could well be characterized as a stealth bear market. Binary quiz The major large cap indices essentially went nowhere in 2015-2016 while the Russell Small Cap Index (RUT) experienced a 25% decline. Euro to pound exchange rate forecast Thats a bear market by anyones definition.
Retail investors have also been quite pessimistic since 2015 in the overall scheme of things. Convert inr to usd From the start of 2015 up until the election, more than $200 billion was pulled out of U.S. Usd in euro rechner equity funds and ETFs, while a bit more than that was funneled into bond funds and ETFs. Idr to usd converter That two-year stretch of risk aversion, however, is apparently ending as investors have gradually embraced more risk tolerance since the election. Usd to rmb chart Since the election nearly $46 billion has flowed into U.S. Us stock market futures real time equity funds, while nearly $3 billion has left bond funds, according to money flow statistics.
The evidence strongly suggests that the past two years served the purpose of clearing out the excesses generated by the long-term bull market which began in 2009. Binary code translator to english In other words, the market is rested and ready to resume its potential as we head further into 2017.
Another concern among investors is that the rise in interest rates since last year could stifle the stock markets upside potential. Us dollar exchange rate indian rupee While its true that sustained periods or rising Treasury yields have often proved a hindrance to higher stock prices, there is an exception to that rule. What are stock market futures According to LPL Research, there have been 11 periods of rising interest rates (at least a 1% rise in the 10-year Treasury note) since 1996, each lasting an average of six months. Binary words During those times, the S&P 500 rose an average of 5.44%, thus proving that in the early stages of rising interest rates stocks and yields often rise simultaneously.
Were at a point in the long-wave credit cycle where interest rates are ready to rise after being depressed for years. Ucsd my chart According to K-Wave theory, after the 60-year economic cycle bottomed in 2014 we should see a gradual increase in rates as the economy recovers its former vigor. Text to number converter Of course this process will take a long time to complete possibly decades but were likely at a point in the newly formed 60-year cycle where even a temporarily sharp run-up in rates wont damage the economy or even necessarily hinder the stock market. 1 usd to ils In fact, rising rates at this point indicates increasing demand for credit and a corresponding improvement in the economy.
Following is a 10-year chart of the 10-year Treasury Yield Index (TNX). Exchange rate usd inr The double-bottom in the interest rate is clearly visible between the years 2012 and 2016. Decode binary I believe this marks the long-term low in interest rates for the previous long-term cycle.
As long as rates dont rise too high, too fast its very possible that stock prices will rise along with Treasury yields without much interference along the way. Usd mxn An added bonus to the rally in T-bond yields is that bond prices are now in a downward trend. Python example script This should serve to discourage investors who piled heavily into the bond market in the last few years. 1 usd to inr in xoom It should also cause them to look more closely at stocks as a long-term investment once again, especially as painful memories from the 2008 crash gradually wear off. Binary translator The underperformance of corporate debt vis-à-vis equities should also encourage investors to take a second look at the stock market. 100 usd to eur Below is the 1-year graph of the Dow Jones Corporate Bond Index.
The bottom line is that 2017 should see an increase in business activity across the board as the U.S. 99 usd returns to a normal business cycle after being artificially suppressed by the actions of central banks for years. Usd nzd exchange rate Moreover, the decennial rhythm suggests that except for a period of potential weakness in the August-October time frame, year 2017 will likely prove to be a memorable one especially from the standpoint of the upside potential in both the equity market and the U.S. Fundamentals of futures and options markets pdf 8th economy.
The moving average is one of the most versatile of all trading tools and should be a part of every investors arsenal. Famous quotes by famous people Far more than a simple trend line, its a dynamic momentum indicator as well as a means of identifying support and resistance across variable time frames. Eur usd rate It can also be used in place of an overbought/oversold oscillator when used in relationship to the price of the stock or ETF youre trading in.
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Clif Droke is a recognized authority on moving averages and internal momentum. Usd to inr exchange rate history He is the editor of the Momentum Strategies Report newsletter, published since 1997. Exchange rate ksh to usd He has also authored numerous books covering the fields of economics and financial market analysis. Gender roles in society today His latest book is Mastering Moving Averages. Exchange rate usd eur For more information visit www.clifdroke.com
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