Sentiment Speaks: It's Time To Challenge What You Think You 'Know' About The Stock Market

Recent price action

The S&P500 dropped from the resistance region I had cited, and provided us with the minimum 30 point drop I was looking for (we dropped 34 points from the prior all-time high). As we caught the lows last week in real time, the market is trying to push up towards our next higher target in the 2611SPX region.

Anecdotal and other sentiment indications

I know I am not the traditional author you come across here on Seeking Alpha. Most others will provide you with traditional notions of the stock market based upon rationalities. So, many authors will suggest that we “cannot separate public policy and geopolitics from the markets,” they will focus on “market valuations,” they will claim that “fundamentals do not support this rally,” and will provide you with many, many other reasons as to why they have continually believed that this rally would never happen.

Yet, they have been left on the sidelines, scratching their heads for the last year and a half, as the US equity markets have rallied over 45% since February 2016.

I mean, think about all the reasons they have put before you over the last year and a half regarding the imminent risks facing the stock market, which they have lead you to believe will stop the market in its tracks. I have listed them before, and I think it is worthwhile listing them again:

Brexit – NOPE

Frexit – NOPE

Grexit – NOPE

Italian referendum – NOPE

Rise in interest rates – NOPE

Cessation of QE – NOPE

Terrorist attacks – NOPE

Crimea – NOPE

Trump – NOPE

Market not trading on fundamentals – NOPE

Low volatility – NOPE

Record high margin debt – NOPE

Hindenburg omens – NOPE

Syrian missile attack – NOPE

North Korea – NOPE

Record hurricane damage in Houston, Florida, and Puerto Rico – NOPE

Spanish referendum – NOPE

Las Vegas attack – NOPE

And, each month, the list continues to grow.

Yet, the same authors you have read for years just continue to repeat their mantras that we “cannot separate public policy and geopolitics from the markets,” they continue to focus on “market valuations,” and they continue to claim that “fundamentals do not support this rally.”

Einstein was purported to suggest that insanity is doing the same thing over and over while expecting a different result. But, you see, in the stock market, there is a bit of a difference. Just as trees do not grow to the sky, the stock market will not rally indefinitely. So, we will eventually see a bear market. Then, the broken clock syndrome will prove these authors to be “right,” rather than simply insane, and we will hear it from them incessantly about how they tried to warn us. Yes, warn us indeed.

Now, that does not mean we should expect analysts to be right all the time. Clearly, I was expecting the set ups we have seen in the metals market to spark a big rally in 2017, but when we broke upper support back in September, it caused me to turn quite cautious until 2018. But, the difference is that I use an objective methodology that listens to what the market is saying rather than trying to force a predetermined linear perspective on the market.

And, that is the issue with most of the bearish presentations you have read for the last year and half about the stock market, while they claim they are simply “opening your eyes to the inherent risks in the stock market.” Let me ask you a question: Is there anyone reading this article that believes the stock market does not have risk at all times? I will not belabor this point, but, needless to say, these bearish presentations couched as “risk awareness” is not based upon objective perspectives on the stock market.

My friends, look at the events I have listed above yet again. None of them (nor ALL of them cumulatively) have been able to put a dent in this market advance over the last year and a half. So, rather than view the market from a perspective of insanity, maybe one should come to the conclusion that public policy, geopolitics, market valuations, or fundamentals are really not what drive the stock market. Clearly, we have seen that none of this has mattered one iota. So, maybe we need to consider that there is a stronger force at work which overrides any of the traditional perspectives you were lead to believe drives the market?

Bernard Baruch, an exceptionally successful American financier and stock market speculator who lived from 1870– 1965, identified the following long ago:

All economic movements, by their very nature, are motivated by crowd psychology. Without due recognition of crowd-thinking … our theories of economics leave much to be desired. … It has always seemed to me that the periodic madness which afflicts mankind must reflect some deeply rooted trait in human nature — a trait akin to the force that motivates the migration of birds or the rush of lemmings to the sea … It is a force wholly impalpable … yet, knowledge of it is necessary to right judgments on passing events.

Price pattern sentiment indications and upcoming expectations

The upcoming week is rather simple, and centered around the 2572SPX region. As long we hold over the 2572SPX early in the coming week, we are on our way to the 2611SPX region.

However, if we break down below 2572SPX early in the coming week, it opens the market up to another decline which will revisit the 2520-2550SPX support region before we finally rally to the 2611SPX region.

The Market Pinball Wizard

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Housekeeping Matters

For those looking for accurate insight into various markets, including VIX/VXX, FOREX, Dow Jones, etc., I also HIGHLY suggest you read Michael Golembesky’s work on Seeking Alpha.

Lastly, it seems that Seeking Alpha has changed the way they tag articles. So, while my articles used to be sent out as an email to those that follow the metals complex, they are now only being sent out to those that have chosen to “follow” me. So, if you would like notification as to when my articles are published, please hit the button at the top to “follow” me. Thank you.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Tech

The Creators of Some of Technology’s Most Addictive Features Think They’re Harming Us

More and more former Silicon Valley players are speaking out against the psychological tricks the world’s biggest companies use to ensnare the public, warning that they’re degrading mental health and political discourse. That includes some of the very designers and engineers who created the most addictive features of social media and smartphones, among them some of the designers of Facebook’s ubiquitous “like” button.

Writer Paul Lewis profiles these contrarian figures in a vital new feature for The Guardian. They include “Like” co-creator Justin Rosenstein, Rosenstein’s former Facebook coworker Leah Pearlman, and Tristan Harris, a former product designer who became an in-house ethicist at Google before taking his campaign public.

These whistleblowers cite specific tricks used in apps and interfaces to provide users with a rush of dopamine, pulling them back to their phones and other screens hundreds of times a day. Those include the triggering red color of Facebook notifications, autoplay features on YouTube and Netflix, and the pull-to-refresh mechanism of Twitter and other apps.

Some of the insider critiques would seem hyperbolic if they were coming from other sources. Roger McNamee, an investor in both Google and Facebook credited with introducing Mark Zuckerberg to Sheryl Sandberg, now compares those companies to “tobacco companies and drug dealers.”

James Williams, who built important parts of Google’s advertising business, now says the company’s attention-seizing methods are changing people’s brains by privileging “our impulses over our intentions.” He blames those changes for at least some of the shift of global politics towards anger and outrage, rather than debate.

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Even many techies who don’t openly critique their own products implicitly acknowledge they may be harmful. Lewis describes product engagement guru Nir Eyal giving a room full of designers tips on increasing productivity by avoiding the lure of their own products. Some top tech executives have even sent their own children to an elite school that bans screens, according to the New York Times.

Left mostly unspoken in Lewis’ story is that these impacts – just like those of of smoking – are likely to disproportionately fall on less privileged members of society. People with the resources and wherewithal to protect their attention will retain more of the critical thinking skills vital to real-world success, while those caught in the grind of daily survival are more likely to seek solace in the easy distractions of social media. The potential consequences go well beyond politics – other research has recently shown that tech addiction can lead to increased depression and risk of suicide among young people.

Both Williams and Rosenstein call for greater regulation of the techniques they helped pioneer, with Rosenstein characterizing them as “psychologically manipulative advertising.” Absent such regulation, the economics of attention make it unlikely that tech companies will change their ways, or halt their worst impacts. “The dynamics of the attention economy,” Williams tells The Guardian, “are structurally set up to undermine the human will.”

Tech

‘I Can’t Think of Anything More Exciting.’ Elon Musk Wants to Colonize Mars in 2022

Elon Musk is bullish about colonizing Mars, maybe even sooner than anyone thought.

Speaking at the International Astronautical Congress (IAC) in Adelaide, South Australia, Musk unveiled plans to launch SpaceX’s (spacex) BFR rocket and begin its Mars rendezvous by the year 2022, first sending two cargo missions to scout water sources and build a fuel plant. Then the city-building begins.

Musk said he’s “confident” the plan will be under way within five years.

“I can’t think of anything more exciting than going out there and being among the stars,” Musk said, adding that he thinks SpaceX has figured out a way to make it affordable by using revenues from the company’s satellite launches, service missions to the International Space Station and by making smaller, more efficient rockets that are mostly reusable.

Nine years after SpaceX’s first successful launch — its fourth ever — Musk said his engineers are now perfecting propulsive landing. He believes the BFR rocket can carry out missions to the moon and back without producing propellant, enabling the establishment of a lunar space station.

“It’s 2017, we should have a lunar base by now,” Musk said to applause. “What the hell is going on?”

For more on space travel, watch Fortune’s video:

Travel to and from Mars will, however, require a propellant production plant. Current rocket prototypes provide cabin space suitable for about 100 people per mission, he said. Following the two projected missions in 2022, Musk said SpaceX plans to send four more rockets to the red planet during the next available window in 2024. Once colonization is under way, then begins the task of “making it a nice place to be.”

Founded by Musk in 2002, SpaceX designs, manufactures and launches spacecraft and advanced rockets toward the ultimate goal of enabling human life on other planets.

But Musk, who also co-founded and serves as CEO of Tesla Motors (tsla), remains grounded in his ambitions. SpaceX could potentially change the way we travel around the globe, he said, making it possible to get anywhere on earth in less than hour. “If we’re building this thing to go to mars,” Musk asked, “why not go to other places on earth as well?”

Tech