SuttonWatch.Net: U.S. Stock Market - Are There Any Real Bears Left?

Most major U.S stock market indices posted record highs last week, including the Russell 2000 Index of small-cap stocks which lagged the overall market for most of August.

While some technical analysts are pointing to relatively low volume as a reason to be skeptical of this latest advance into record territory, one observation is abundantly clear and without reservation: Bearish traders and investors have been mauled because there have been no meaningful corrections in the stock market since Donald Trump was elected President in November of last year!

Those is the bullish camp are apparently "fearless" right now, and not even hawkish rhetoric from the U.S. Federal Reserve in recent weeks can get them to sell their precious stocks! The Fed is now indicating that it will begin to liquidate its $4.5 trillion balance sheet in October, hike short term interest rates again in December, and then hike interest rates three more times next year! Wow!! Some uninformed Wall Street pundits are actually now claiming that these normally bearish pronouncements are actually bullish for the stock market! While I have to give the bulls credit for hanging tough here, I will NOT buy into the idea that liquidation of the Fed's balance sheet is bullish for stocks, and I will definitely not buy into the idea that 4 expected interest rate hikes over the next 14 months is bullish for stocks!

Besides the argument that stock prices may be over-valued on a historical basis, is there anything that can even be considered remotely bearish right now?

Potential "black swans" on the international front look more than interesting to me here. The German election results this past weekend MUST be considered negative for the European Union given the German AfD extreme right wing party's surprisingly strong performance at the polls (+13.5% of the vote). In Spain, despite Madrid's complete lack of sponsorship, the Catalan separatist movement looks bound and determined to move ahead with an October 1st Independence Referendum. While I doubt there will be a civil war, this CAN'T be good for Spain! And largely under-reported is tomorrow's independence vote by Iraq's Kurdistan region. Unlike in Spain, there is no guarantee that civil war won't break out again in Northern Iraq as Kurds fight for their independence! The Trump Administration is actually talking about the possibility of breaking the Iran Nuclear Deal (as negotiated by President Obama). This may result in catastrophic consequences. Of course, I haven't even mentioned that small problem on the Korean peninsula, where Kim Jong-un, the Supreme Leader of North Korea, has threatened to set off a hydrogen bomb in the Pacific Ocean and maybe even launch a nuclear preemptive strike against Guam!

Closer to home, the negative price action in the following key stocks last week could be considered support for any bearish case in the U.S. equity market immediately ahead:

Tesla (TSLA) -7.6%

Apple (AAPL) -5.0%

Amazon (AMZN) -3.2%

Johnson & Johnson (JNJ) -2.3%

Microsoft (MSFT) -1.2%

FaceBook (FB) -0.6%

Nasdaq-100 (NDX) -0.9%

Weekly chart sell signals were triggered by my computer trading system at Friday's close in NDX, TSLA, MSFT, JNJ, IP, and PG.

Monthly chart sell signals were triggered by my computer trading system in ORCL and XLU (Utilities ETF).

Monthly chart buy signals were triggered in the 10-year T-Note Yield and also the 30-year T-Bond Yield (see charts below).

Bottom line: The next major move in the U.S. Stock Market will be to the downside! Higher short term interest rates, pressure on corporate profit margins, renewed recessionary fears, and less accommodative central bank monetary policies on a global basis will contribute to the end of this incredible bull market in stocks that has now lasted 8 1/2 years!