When it's too obvious, it's obviously wrong.
In early May it was 'obvious' (wink wink) that the market will crash, or at the very least correct.
For some strange reason, the media turned inexplicably bearish.
Yes, the Nasdaq (QQQ) underperformed, but even with the Dow Jones (DIA) and S&P 500 (SPY) trading within striking distance of their all-time high, the financial media churned out headlines like these:
- MarketWatch: “Risk of 20% correction highest until October” – April 30
- CNBC: “This chart says we’re in for a 20% correction” – May 1
- CNBC: “This chart is ominous for S&P” – May 1
- Bloomberg: “The next liquidation crisis: What are the signals?” – May 5
- TradingFloor.com: “A deep correction’s on the horizon” – May 5
- CNBC: “I’m worried about a crisis bigger than 2008: Dr Doom” – May 8
- SeekingAlpha: “Economic hurricane season is approaching” – May 10
- MarketWatch: “Stocks are telling you a bear market is coming" – May 15
- Bloomberg: “Tepper: ‘Hold cash, market’s dangerous’” – May 15
Those are just a small sampling of headlines I’ve collected. As bearish headliners literally littered the front pages of newspapers and home pages of website, it became clear that this is bullish for stocks.
Here are some of my commentaryies' headlines:
- iSPYETF: “Expecting ‘sell in May and go away’ pattern? – Prepare for Surprise” – May 1
- iSPYETF: “Too many bears spoil the crash (or correction)" – May 6
- iSPYETF: “3 Reasons to expect the May blues … But not yet” – May 9
- iSPYETF: “Fed funds rate suggests S&P 500 rally” – May 13
- iSPYETF: “Contrarian take: Did doomsday prophets scare the bear?” – May 16
The emergence of doomsday prophets was unfortunate, as it ‘jinxed’ my 2014 forecast for a May correction made in the 2014 S&P 500 forecast (published January 15).
My April 30 Profit Radar Report update stated that: “I get suspicious when our carefully crafted outlook becomes the trade of the crowd and a crowded trade.”
The May 4 Profit Radar Report was more specific: “The ‘chart detective’ inside of me favors a shallow dip to 1,874 – 1,850 followed by a pop to 1,915 for the S&P 500. Historic price patterns suggest a breakout to the up side with the possibility of an extended move higher.”
The S&P 500 has now reached the 1,950 target level shown in the January 15 Profit Radar Report. What's next?
A detailed S&P 500 forecast update is available here:
Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.
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