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Eliades: 'Most Overvalued Market in History Faces Hell of a Bear Market'


Tuesday, 13 November 2018 03:57 PM

StockMarket Cycles Editor Peter Eliades warns “the most overvalued stock market in history” is facing “one hell of a bear market.”

“We are facing what I would consider, and a lot of good value people consider, to be the most overvalued market in history,” Eliades recently told Fox Business Network.

Although the S&P 500 and Dow Jones industrial average hit historic highs early this year, Eliades thinks the NYSE Composite is the most important index, Fox Business Network explained.

“That only has not gone above the January high but it now has a series of lower highs and lower lows – and that’s the definition of a bear market,” he said.

And if you think the worst is behind us, he warns that it actually may be yet to come for battered and bruised investors.

“As it turns out on the seasonality basis, which we look at as technicians, this period from October of the midterm presidential election through June of next year is the most favorable period within the four-year presidential election,” he said.

After that we could see a “severe” bear market.

“I’m looking for at least as bad of a decline as we saw from 2007 to 2009 which was in the minus 55% category,” he said. “I think we are facing that realistically and perhaps even worse than that.”

Not everyone is as pessimistic about the future of U.S. markets.

CNBC's Jim Cramer predicts that the stock market could surge to new record highs but the Federal Reserve must pause its plan to continuously hike interest rates.

With midterm election uncertainty over, the market "can get on with other worries," the "Mad Money" said on CNBC.

"If there's anyway, anyway that [Fed Chaiman] Jay Powell says, 'You know what, we got to wait and see,' we could have the rallies of all rallies," Cramer said. "But he has to green light us."

However, the Fed hasn't given any indication it plans to change its plan to hike rates.

The Fed last week left its key policy rate unchanged but signaled that it plans to keep responding to the strong U.S. economy with more interest rate hikes. The next rate hike is expected in December, the Associated Press reported.

The Fed left its benchmark rate in a range of 2 percent to 2.25 percent. A statement it issued Thursday after its latest policy meeting portrayed the economy as robust, with healthy job growth, low unemployment, solid consumer spending and inflation near the Fed's 2 percent target.

Despite a U.S. trade war with key nations, weaker corporate investment and a sluggish housing market, the Fed is showing confidence in the economy's resilience. To help control inflation, it has projected three rate increases in 2019 after an expected fourth hike of the year next month.

Energy companies led a late-afternoon sell-off on Wall Street Tuesday after U.S. crude oil prices had their biggest drop in more than three years. Investors are worried about the possibility of rising oil production out of the U.S. and OPEC, the Associated Press reported.

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StockMarket Cycles Editor Peter Eliades warns “the most overvalued stock market in history” is facing “one hell of a bear market.”
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Tuesday, 13 November 2018 03:57 PM
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