Stock Apocalypse Now?

An impending stock apocalypse appears to be the meme de jour of 2015.

Bullion.Directory precious metals analysis 8 January, 2015
By Terry Kinder
Investor, Technical Analyst

The stock apocalypse is a bit like Monty Python’s Spanish Inquisition…nobody will be expecting it…

Any stock apocalypse, like the biblical one, will likely take the public largely by surprise. Not necessarily in the sense that it is unanticipated, but the timing will not be known. Obviously, if the timing were known, people would get out of harms way, but they don’t and that’s what helps create the panic.

There are actually some solid reasons to believe the stock apocalypse won’t happen now.

The Decennial Stock Cycle

Years ending in 5 tend to be the best years for stocks out of any year within each decade. According to Time-Price-Research since the decade of the 1830’s, the stock market has went up 15 times and down only 3 times in years ending in 5. That’s up 83% of the time vs. down only 17% of the time for an average gain of 21.47%. Some people, such as Harry Dent, believe this pattern has to do, in part, with the cycle of technological innovation.

The Presidential Cycle

Another cycle that appears to influence stock prices is the presidential cycle in the United States. Seasonal Charts has a good chart demonstrating the cycle here. Time-Price-Research also has a chart showing something similar here. Again, Harry Dent has pointed out the same thing – typically the third year of a presidential term, regardless if it is the first or second term, is generally the best year for stocks within the cycle. In this case, 2015 is effectively the third year of Obama’s second term, which would normally point to the stock market moving higher.

The Case for the Stock Apocalypse

Do you prefer financial gloom and doom and just can’t wait for the stock apocalypse? If so, there are two forecasters – one living and the other dead – who point to the possibility of a panic in 2015. Martin Armstrong has been speaking about what he calls the Big Bang 2015.75 extensively. This doesn’t appear to be solely a stock apocalypse or panic to me, however, from how he describes it. It appears to be a loss of confidence in governments, which is a solid reason to buy and hold physical gold and silver.

Time-Price-Research points out that W.D. Gann’s Financial Time Table pointed to 2015 as a panic year. Gann was one of the finest stock pickers and forecasters in history so I wouldn’t want to bet against his forecast, despite the fact it was made many years ago.

Chiming in for the Bearish Case for Stocks in 2015

David Hickson, founder of Sentient Trader, which utilizes Hurst Cycle Analysis to help forecast prices wrote:

And there finally is the answer to our question: we expect the bull market to continue until about March 2015 (where the first peak of the 18-month cycle is likely to form). There will be another run up which will complete in about October 2015, but it is unlikely to exceed the earlier peak.

S&P500 vs. Crude Oil Prices

Another interesting idea is that there is a ten-year lag between crude oil prices and the Dow Jones Industrial Average (DJIA). If this is true, then the bull market in stocks won’t top until 2018.

This idea of stock prices lagging oil was further fleshed out by Time-Price-Research, only utilizing the S&P500. Incredibly, the price of oil, shifted 10-years ahead, signaled Tuesday January 6th as the point where the S&P500 would bottom. In fact, the S&P500 dipped to 1,996.12 on January 6th and has since climbed to over 2,060.00.

Of note also is that the oil price shifted ahead 10-years indicates March 20th as a pivot high point, which matches quite nicely with what David Hickson of Sentient Trader pointed out using Hurst Cycle Analysis. Unfortunately, the chart from Time-Price-Research does not go until the end of the year, so we can’t compare what they are saying to what Hickson has said about about stocks running up until October. It’s also worth noting that Hickson’s idea of stocks moving higher into October of this year falls into the time frame of 2015.75 written about by Martin Armstrong.

Not Enough Stock Apocalypse for You?

Well, perhaps we shouldn’t refer to it as part of the stock apocalypse, but Uri Landesmann, president of Platinum Partners LLP, forecasts that the S&P500 will correct 15%.

I believe there is going to be a major correction in the stock market sometime soon, although it is very difficult to predict the timing. While I like the market, longer term I do not think the bull market will be over until we get to the 2300-2350 level on the S&P 500. To my mind, we could correct, possibly dramatically, between now and then to possibly go even as low as 1725 which would be fairly radical 15% correction, I really do believe that is possible and could happen fairly soon.

Bottom line: Like Monty Python’s Spanish Inquisition, nobody will be expecting the stock apocalypse when it arrives. That’s why it’s important to hedge your bets with precious metals.

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