Bear Market In The Offering?

January ‎10th, ‎2019

Join Chuck and Ken while they discuss the current state of the market on the Money Life Network.



Chuck:You know what that music means. We’re about to be talking to technical analysis today my guest Ken Berman, strategist at GorillaTrades and it’s But, I’ll tell you what, I’ll give you a little extra. They just put out their top three stock picks for 2019. Ken just issued it and he has said that if you go to GorillaTrades. com/topthree. You have to enter in your email address and your name but they’ll send you his top three stock picks report for 2019 and you could take a look at that and decide how you feel about those specific names. Now in this segment we don’t tend to talk specific names so much. We tend to look bigger picture but we’re looking at it first at least three technical leads if you get on the show before you know that he mixes both technical and fundamental analysis. Again, if you want to learn more about what he’s doing it’s on Twitter @GorillaTrades. Ken Berman welcome back to the show.
Ken:Thank you for having me back Chuck.
Chuck:We have started this new year with the market getting people nervous because well, we got November and December and well, October too. And, you know, the return of volatility and and other sorts of things, is that a bear market in the offing or is that a correction?
Ken:No matter what you are hearing right now in the media Chuck, we’re definitely not in a bear market, what I call a steep, we’ve experienced the past several months obviously left a market wounded from a technical perspective but despite the casting calls by those calling for a bear market. There is no evidence of a long term top. I mean look at historically. The rally from the last deep correction which was 2014, 2015. It led to a hugely overbought situation in the sentiment which was so bullish that the situation had resolved itself and it has done so. And I might add, it was the worst year last year for stocks in a decade. You see, the broadest trend-line, which I look, at is the monthly. It’s still intact. You know, I don’t see any bear market this point you know the volatility index it’s still around twenty and means the wall worry still in place. The rally the started for new years could be a durable one.
Chuck:Okay, so we could see a rally that lasts for a little while. What are the factors that you think are going to impact that and will they ultimately provide that rally will they change things up for you?
Ken:You know the next few months are going to be really important determining the fate of the small market and should be improving the market internals continue. Stocks could quickly rally back to all time highs. I mean, I would remind investors keep an eye on the Russell two thousand during times like this, especially. The Russell thousand is a great gauge  to the broader market. It usually leads the way higher or lower. It’s often considered the Canary in the coal mine for investors, per se. On the other hand, a weaker bounce, deteriorating internals could lead to lower, lower than we saw in December. And if so, then, we may see this bear market that some are talking about. But, if you want to give specific, the lows in the recent correction are very important support levels. So, I’m closely watching twenty five fifty to twenty six hundred in the S&P, twenty three five the twenty four in the Dow and sixty eight fifty to seven thousand the NASDAQ.
Chuck:With everybody talking about the bear market, you know, you seem more optimistic. You’ve laid out the parameters in the ranges here but you see more optimistic. If somebody wants to be optimistic with you what would they be focusing on?
Ken:Well, the market internals is in weak, in recent months, obviously. But, they start improve of the last few weeks and small caps they’re actually leading the rally the NASDAQ is performing very well despite as you know the weakness in one of its largest components, Apple. That said, however, you know only twenty two percent of stocks right now are above their two hundred day moving average. This has to improve in order to sustain a rally in the coming months. So, the negative sentiment, coupled with fed chairman Powell’s statement that the feds listening to the market. And that will be flexible with rate hikes and reduction balance sheet. Could ignite a sustain a rally in stocks. But, economic numbers, also look at those and they’ve been robust although we see some weakness in some forward looking measures like the ISM the PMI in the durable goods but with the labor market being so strong, consumer confidence so high. The consumer economy should remain healthy, while inflation, to me remains tame despite growing wages, thanks in part to the steep Illegible… the price of oil.
Chuck:So, as you put it all together, what are the developments the things that you are watching for the big picture, that could affect the market and have the the ability to maybe turn it one direction or the other?
Ken:So, the trade talks with China and the outcome in my opinion is the single most crucial development for investor sentiment the recent turmoil in both the US and China market so makes a compromise seem very likely to me, pretty soon too, I think. But, the continued Brexit saga, the weakness in the European financial system and escalation in the trade war, the sharp economic slowdown, overall risk factors here. If the fed continues with its rate hikes in the balance sheet reduction could lead off could lead to a huge sell off stocks. But, too me, upcoming corporate earnings could really provide a boost in most analyst I see our pricing in steep decline in profits. So, even a potentially weaker earnings season could be bullish. It could be. Investors should closely be monitoring the performance of the small caps and the high yield corporate bonds and then get defensive meaningful deterioration. But, for now, the bullish fight for me, justified for me.
Chuck:Okay, so, we’re staying bullish at least for now. Watching the trade talks in where they could go and this is definitely not a bear market. That’s the take from Ken Berman strategist at Gorilla Trades. It’s Gorilla Trades dot com. You want to take a look at his top three stock picks for twenty nineteen go to Gorilla Trades dot com slash top three. Ken Berman thanks as always for join us. We’ll talk to you again soon.
Ken:Thanks Chuck.
Chuck:That’s Ken Berman everybody. You can follow him on Twitter at Gorilla Trades. All right we’re heading for home on the January tenth edition of Money Life. Up next it’s the Money Life market call. We are talking stocks with Brent Wilsey, from Wilsey Asset Management. He’s a guy that relies very heavily on ratios and what have you to make his decisions. And we’ll find out what he’s thinking when we come back right after this message.
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