Assumption Is The Mother Of All F*** Ups

The state of today's market is very well known to attention paying market participants or bears. So much so that most investors would argue that it is incredibly easy.

The FED and other central bankers around the world have pumped a tremendous amount of "out of thin air" money into the system, leading to speculative run ups in nearly all asset classes. With most spectacular gains occurring in the stock market. This is very well summarized by the chart below. 

What's more, most investors today would argue that the fact that Central Bankers have been so successful in the past can only lead to one conclusion. They will not let this market implode, no matter how high the valuation levels get. Also know as, buy the dip.

Not only that, should a correction occur, the FED will immediately flood the system with QE 4 and negative interest rates. Leading to yet another massive run up in all asset classes. This is the view expressed here.....

When This Debt Bubble Bursts, Central Banks Will Turn to Money Printing... Again

And today, we find out that once again, derivatives are at the root of the current bubble (debt). And once again, the Central Banks will be cranking up the printing presses to paper over this mess when the stuff hits the fan. Already, Central Banks are printing nearly $180 billion per month in QE. When the next crisis hits, it’s going to be well north of $250 billion if not $500 billion per month. This is going to send inflation trades, particularly Gold, through the roof.

And that is exactly what most bullish investors are banking on today. 

Yet, as the article states, "Assumption Is The Mother Of All F*** Ups"

Meaning, just because the scheme above worked nearly flawlessly in the past, doesn't mean it will not backfire in the future. That is the primary point I wish to drive home.

Let me give you an example. Let's assume recession hits and the S&P drops 25%. The FED announces rate cuts and QE 4. Yet, the bond market doesn't respond. Instead, yields and the dollar surge higher. Game over and checkmate. Any such collapse would simply accelerate lower.

Impossible? Again, don't think in a linear fashion most investors apply today. 

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

Valuations, Central Bankers & Investor Sentiment

The chart above is rather self-explanatory. GDP expectations, in additions to earnings, haven't moved very much off of 2016 lows. All while the stock market is up 30%+.

What gives?

Well, as the chart above shows the likes of Janet Yellen have pumped $3 Trillion of freshly printed green into the stock market and/or the Economy. To save the day, to avoid the collapse, etc...

Which brings us to this little problem........

Ummm, 30.65.....are you f$#(ing kidding me? That's the highest valuation level in history if we adjust for 2000 lack of tech earnings distortion. This is insane. Mind you, the median is around 15-16 and that would cut most indices in half. And that's assuming the market doesn't overshoot on the way down.

But worry not my friends........ 

Wait a second....is that bullish or bearish?

Record 65% Think Stocks Will Rise Over Course of One Year: Did the Bell Just Ring?

Considering all of the above it would easy to come to a conclusion that we are in the midst of a massive financial bubble that is about to go "Poooof". However, an immediate conclusion is often not a correct one.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

Daily Stock Market Update & Forecast – September 18th, 2017

- State of the Market Address:

  • The Dow finds itself back above 22,000.
  • Shiller's Adjusted S&P P/E ratio is now at 30.65 Now at arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
  • Weekly RSI at 71.28  - neutral. Daily RSI is at 70 - neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 18,000 today (on weekly).
  • Weekly Stochastics at 87 - overbought. Daily at 98 - extremely overbought.
  • NYSE McClellan Oscillator is at +37. Neutral.
  • Volatility measures VIX/VXX remains at suppressed levels Commercial VIX long interest remained the same at 75K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning back to net neutral. Short interest has shifted slightly lower during the week. For now, the Dow is 7X, the S&P is at 3X, Russell 2000 is 3X net long and the Nasdaq are net neutral. That is a substantial short position against the market.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


Jim Rogers: Trump’s Trade War With China Will End The US As We Know It – Worst Collapse Ever Will Hit Very Soon

This just about says it all....

'A US trade war with China will end US monopoly on global financial system’ – Jim Rogers

 If they put sanctions on China in a big way, it brings the whole world economy down. And in the end, it hurts America more than it hurts China because it just forces China and Russia and other countries closer together. Russia and China and other countries are already trying to come up with a new financial system. If America puts sanctions on them, they would have to do it that much faster and in the end America will lose its monopoly on the financial system, which will hurt America more than anybody.

If it uses a nuclear option for sanctions, it will hurt America much more than will hurt North Korea, it will hurt America much more than it will hurt China, Russia and everybody else. It will force the rest of the world to find an alternative to the US financial system. If he does that, it is going to cause a lot of turmoil in the world financial economy and in the end it is going to hurt America more than it is going to hurt anybody else.

We are probably going to have a global economic problem, maybe even crisis, in the next couple of years. This may be one of the things that start it. There is always something which starts a crisis. If America does something like this, this could be the thing that did it. In 1929, it started when America started a huge trade war with the rest of the world and the economists said, “please, this is a mistake,” but America did that anyway. And then we had a great collapse and The Great Depression of the 1930s.

Mr. Trump has been saying for over a year, two years, that he was going to start a trade war with China. He was going to put very high tariffs on Chinese goods. In his mind, he wants to do it, he is ready to do it. Some of his advisers are very much in favor of a trade war. It may very well happen. If it happens, it is going to be very bad for the world and it is going to be worse for America than for other people.

The Only Two Charts Investors Should Worry About NOW

The long-term US Dollar chart above is rather self explanatory.  Over the last few weeks the USD took out some very important support levels at around $94 and $92. We wrote about it in our subscription service.

What does that mean? 

Well, technical analysis suggests the USD will re-test prior long-term resistance (upper red line) before resuming its uptrend or bouncing higher. That line is sitting today at around $82. Suggesting the USD might fall another 10% before hitting any sort of a support. Plus, we all know President Trump hates the Dollar and wants it lower.

Why is that important? 

Well, many investors would argue that lower Dollar leads to higher earnings for multinationals. And higher earnings, of course, lead to higher stock prices. At the same time, the bears would argue that stocks cannot go much higher because valuations are already stretched to their absolute max. No matter what the earnings do.

Now, to chart number two. 

Original source Fed to take historic leap into the unknown

The Federal Reserve is set to take a leap into the unknown next week by beginning to sell some of the roughly $3.7 trillion of bonds and mortgage securities it amassed during the financial crisis.

Unprecedented. Historic. Has never been done before. Borderline criminal.

It is no secret that coordinated worldwide FED buying of stocks, bonds and who knows what else is the only reason we find ourselves in today's predicament. What predicament? Massive valuation bubbles in nearly all asset classes.

The question becomes, if the central bankers are the buyer of last resort, and have been for close to 8 years, if they begin to sell, who will buy?

The answer is......NO ONE with a brain. 

So, the USD is telling us that the stock market might surge higher based on lower dollar and higher earnings. Yet, Janet Yellen is suggesting that the FED is about to dump a whole lot of overvalued paper on the market. Leading to what could be a massive sell-off.

So, which one of these two distinctly different outcome will fire off???

That is exactly what we discuss here based on our mathematical and timing work. Please Click Here to learn more. 

Trade Of The Day – OIL

It appears, at least for the time being, that OIL (CL) is attempting to break above its short-term resistance level located at around $50. If so, bulls should anticipate a run up to a much more important resistance level located just above $60. At the same time, OIL is just as likely to test major support.

In our premium section we discuss two very important levels in OIL and what breaking them would mean for the commodity. Most importantly, learn why OIL is likely to drive both bulls and bears up the wall for the foreseeable future. Which has been the case thus far.

To find out what OIL will do next and when, please Click Here. 

Trade Of The Day – Junk Bonds (HYG)

Despite the stock market surging to all time highs, high yielding junk bonds haven't done as well. That is certainly a curious matter. In our membership section we explain why and what is likely to happen next. More importantly, we have clearly defined entry/exit points on both the short and long side.

To find out what HYG will do next and when, please Click Here. 

Explaining Today’s ‘Jacked Up On Steroids’ Bull Market

It is no secret that the stock market is historically overpriced. So much so that I have argued we are experiencing the highest valuation levels in history. Higher than 1929, 2007 and even 2000 (if we adjust for lack of tech earnings). Prior smaller peaks of 1937, 1966, 1972, 1987, etc.... don't even come close.

This is best illustrated by the Shiller's Adjusted P/E Ratio below. 

So, what gives?

First, the sentiment..... Retail investors haven’t been THIS bullish since (gulp) you know when

Since February 2016, the overall index has soared 98 points, “the largest increase in the 20-year history of the index that is not a rebound immediately after a major drop in optimism.” This is the kind of move contrarians eat up.

“In 1999 and early 2000, high enthusiasm for stocks was a powerful sign the stock-market bubble was on its last legs,” Richter said. “Of course, no one can say how much higher their enthusiasm will surge this time around. Hype works, until it doesn’t.”

Buy High Sell Low.......Right?

Second, the driving force....Central Banks Have Purchased $2 Trillion In Assets In 2017

In his latest "flow report", BofA's Michael Hartnett looks at the "Disconnect Myth" between rising stocks and bonds and summarizes succinctly that there is "no disconnect between stocks & bonds."

Why? The best, and simplest, explanation for low yields & high stocks is simple: so far in 2017 there has been $1.96 trillion of central bank purchases of financial assets in 2017 alone, as central bank balance sheets have grown by $11.26 trillion since Lehman to $15.6 trillion. Hartnett concedes that the second best explanation is bonds pricing in low CPI (increasingly a new structurally low level of inflation due to tech disruption of labor force) while equities price in high EPS (with little on horizon to meaningfully reverse trend), although there is no reason why the second can't flow from the first.

And there you have it ladies and gentlemen. 

  1. The market is incredibly expensive. Record breaking expensive. Even if we take low yields into consideration.
  2. Idiot central bankers are terrified of what happens next. Instead of letting the bubbles deflate they have juiced them to unimaginable levels. And in nearly all assets classes.
  3. So much so that most retail investors now believe stocks will never go down. And even if they do it will be a BTFD situation.

We all have been here before and we all know what happens next.  It is different this time as so many believe? Perhaps, but if you truly believe that I still have some Pets.com stock to sell you.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

Weekly Stock Market Update & Forecast – September 8th, 2017

- State of the Market Address:

  • The Dow finds itself back below 22,000.
  • Shiller's Adjusted S&P P/E ratio is now at 30.17 Slightly off highs, but still.....arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
  • Weekly RSI at 63.84  - neutral. Daily RSI is at 48.58 - neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 18,000 today (on weekly).
  • Weekly Stochastics at 73.67 - overbought. Daily at 44.77 - neutral.
  • NYSE McClellan Oscillator is at +13. Neutral.
  • Volatility measures VIX/VXX remains at suppressed levels Commercial VIX long interest increased slightly to 75K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning back to net neutral. Short interest has shifted slightly lower during the week. For now, the Dow is 7X, the S&P is at 3X, Russell 2000 and the Nasdaq are net neutral. That is a substantial short position against the market.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


ELLIOTT WAVE UPDATE:

Since many people have asked, I will attempt to give you my interpretation of Elliott Wave and how it is playing out in the market. First, I must admit. I don’t claim to be an EW expert, but I hope my “standard” interpretation is of help.

Let’s take a look at the most likely recent count on the S&P.

Explanation:

Long-Term: It appears the S&P is quickly approaching the termination point of its (5) wave up off of 2009 bottom. If true,we should see a massive sell-off later this year. Did it already complete? Click Here

Short-Term: It appears the S&P might have completed its intermediary wave 3 and now 4. It appears the market is now pushing higher to complete wave 5 of (5). If true, the above count should terminate the bull market. Did it already complete? Click Here

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 


ATTENTION!!! Please note, we have moved most of our free editorial content to our new website MarketSpartans.com Please Click Here to view it.


Will Donald Trump Nuke This City In A Matter Of Weeks?

My stance is rather simple. I am as anti-war as they come with one notable exception. Only defensive wars must be fought. I hope the video below gives you a different perspective on Pyongyang. With most Americans unable to find North Korea on a map, it is important to see that North Koreans are not crazy animals who eat grass out of necessity.

It is important to understand that Mr. Trump is about to wage a nuclear war on a modern city for no apparent reason. Any analyst will agree that North Korea doesn't pose a direct threat to the US IF left alone. Perhaps that is the only way forward, leaving them to their own devices. Unfortunately, that doesn't help to sell weapons while maximize profits for the Military Industrial Complex.

Anyway, watch the video and come to your own conclusions. One thing is certain, Pyongyang looks much better than Detroit.