The stock market managed to break above its 61.8% retracement briefly yesterday.
From a technical analysis perspective, breaking above a 61.8% retracement usually means that the rally is no longer just a bounce but the start of something bigger.
However, for this to work out, we need stocks to break above the retracement and stay there. And as of this morning, this is not the case.
Today is key. The Fed has promised to keep rates at zero until the economy is back at full employment.
Trillions of dollars have been funneled into the financial system by the Fed and the Federal government’s stimulus package.
Unemployment numbers are horrific, but the pace of the claims is slowing.
Now is the time for the bulls to assert their strength and push the market above its 61.8% retracement with conviction.
This is particularly true given that it is the last day of the month and fund managers need to mark their holdings at the best possible numbers after a horrific March showing.
Will they do it?
If you’re sick of narratives and want to focus on how to actually make money from the markets, join our FREE e-letter Gains Pains & Capital.
The stock market managed to break above its 61.8% retracement briefly yesterday.
From a technical analysis perspective, breaking above a 61.8% retracement usually means that the rally is no longer just a bounce but the start of something bigger.
However, for this to work out, we need stocks to break above the retracement and stay there. And as of this morning, this is not the case.
Today is key. The Fed has promised to keep rates at zero until the economy is back at full employment.
Trillions of dollars have been funneled into the financial system by the Fed and the Federal government’s stimulus package.
Unemployment numbers are horrific, but the pace of the claims is slowing.
Now is the time for the bulls to assert their strength and push the market above its 61.8% retracement with conviction.
This is particularly true given that it is the last day of the month and fund managers need to mark their holdings at the best possible numbers after a horrific March showing.
Will they do it?
If you’re sick of narratives and want to focus on how to actually make money from the markets, join our FREE e-letter Gains Pains & Capital.
The market is now approaching “the line in the sand.”
That line is the 61.8% retracement of the March meltdown.
As Bill King has noted, a big problem with major market crashes is that they render most technical metrics useless. Put another way, whenever the market drops violently, things like relative strength, MACD, stop working as trading tools.
Case in point, stocks were already extremely oversold in late February 2020, but they dropped another 26% while RSI flatlined. Anyone who used RSI to try to pick a bottom in late February got destroyed.
For this reason, one of the few technical indicators that remain helpful after a crash are Fibonacci retracements percentages. These are based on the famous Fibonacci ratio (with the exception of the 0.5% which was simply added by traders for its predictive value).
From a predictive standpoint, historically, most major crashes see stocks retrace 61.8% of the initial decline before rolling over and crashing again. Put another way if stocks CANNOT break above the 61.8% retracement, they are doomed to crash to new lows. As such the 61.8% retracement is “the line in the sand.”
————————————————————
Get a LIFETIME Subscription to All Of Our Products For Just $5,000
An annual subscription (1 year) to all of our current newsletters costs $3,500.
But today, you can get a LIFETIME subscription to ALL of them, along with every new product we ever launch, for just $5,000.
As trader Xtrends has noted, during the Tech Crash the NASDAQ retraced 61.8% of the initial decline during a major bounce. It then stopped on a dime and rolled over to crash to new lows.
The same thing happened during the 2008 crash.
It’s now in the process of doing the same thing this month. Note that we are slightly above the 61.8% retracement today, but there are still two trading sessions left in the month.
On that note, if you’re worried about weathering a potential market crash, we’ve reopened our Stock Market Crash Survival Guide to the general public.
Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).
Today is the last day this report will be available to the public.
To pick up your copy of this report, FREE, swing by:
The market is now approaching “the line in the sand.”
That line is the 61.8% retracement of the March meltdown.
As Bill King has noted, a big problem with major market crashes is that they render most technical metrics useless. Put another way, whenever the market drops violently, things like relative strength, MACD, stop working as trading tools.
Case in point, stocks were already extremely oversold in late February 2020, but they dropped another 26% while RSI flatlined. Anyone who used RSI to try to pick a bottom in late February got destroyed.
For this reason, one of the few technical indicators that remain helpful after a crash are Fibonacci retracements percentages. These are based on the famous Fibonacci ratio (with the exception of the 0.5% which was simply added by traders for its predictive value).
From a predictive standpoint, historically, most major crashes see stocks retrace 61.8% of the initial decline before rolling over and crashing again. Put another way if stocks CANNOT break above the 61.8% retracement, they are doomed to crash to new lows. As such the 61.8% retracement is “the line in the sand.”
————————————————————
Get a LIFETIME Subscription to All Of Our Products For Just $5,000
An annual subscription (1 year) to all of our current newsletters costs $3,500.
But today, you can get a LIFETIME subscription to ALL of them, along with every new product we ever launch, for just $5,000.
As trader Xtrends has noted, during the Tech Crash the NASDAQ retraced 61.8% of the initial decline during a major bounce. It then stopped on a dime and rolled over to crash to new lows.
The same thing happened during the 2008 crash.
It’s now in the process of doing the same thing this month. Note that we are slightly above the 61.8% retracement today, but there are still two trading sessions left in the month.
On that note, if you’re worried about weathering a potential market crash, we’ve reopened our Stock Market Crash Survival Guide to the general public.
Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).
Today is the last day this report will be available to the public.
To pick up your copy of this report, FREE, swing by:
The market is now approaching “the line in the sand.”
That line is the 61.8% retracement of the March meltdown.
As Bill King has noted, a big problem with major market crashes is that they render most technical metrics useless. Put another way, whenever the market drops violently, things like relative strength, MACD, stop working as trading tools.
Case in point, stocks were already extremely oversold in late February 2020, but they dropped another 26% while RSI flatlined. Anyone who used RSI to try to pick a bottom in late February got destroyed.
For this reason, one of the few technical indicators that remain helpful after a crash are Fibonacci retracements percentages. These are based on the famous Fibonacci ratio (with the exception of the 0.5% which was simply added by traders for its predictive value).
From a predictive standpoint, historically, most major crashes see stocks retrace 61.8% of the initial decline before rolling over and crashing again. Put another way if stocks CANNOT break above the 61.8% retracement, they are doomed to crash to new lows. As such the 61.8% retracement is “the line in the sand.”
————————————————————
Get a LIFETIME Subscription to All Of Our Products For Just $5,000
An annual subscription (1 year) to all of our current newsletters costs $3,500.
But today, you can get a LIFETIME subscription to ALL of them, along with every new product we ever launch, for just $5,000.
As trader Xtrends has noted, during the Tech Crash the NASDAQ retraced 61.8% of the initial decline during a major bounce. It then stopped on a dime and rolled over to crash to new lows.
The same thing happened during the 2008 crash.
It’s now in the process of doing the same thing this month. Note that we are slightly above the 61.8% retracement today, but there are still two trading sessions left in the month.
On that note, if you’re worried about weathering a potential market crash, we’ve reopened our Stock Market Crash Survival Guide to the general public.
Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).
Today is the last day this report will be available to the public.
To pick up your copy of this report, FREE, swing by:
As I keep saying, it doesn’t matter what we think… it’s what the market thinks that matters.
Personally, I think it’s insane that the Fed has nationalized the entire debt markets. Similarly, I think it was a massive mistake to shut down the economy. And I think that the human suffering created by this mess is truly horrific.
Stocks don’t seem to think any of this. Stocks think that things are going to recover relatively quickly. I think that’s insane, but again, as an investor, it doesn’t matter what I think… it’s what the market thinks that matters.
With that in mind, stocks are breaking through resistance this morning. Multiple “risk” measures I track suggest we’re moving higher.
The ratio between stocks and Treasuries has broken above its 50% retracement and held there.
————————————————————
Get a LIFETIME Subscription to All Of Our Products For Just $5,000
An annual subscription (1 year) to all of our current newsletters costs $3,500.
But today, you can get a LIFETIME subscription to ALL of them, along with every new product we ever launch, for just $5,000.
Credit spreads have held support (reds line) and are forming bull flags (red lines). This suggests an upwards breakout which would be decidedly “risk on.”
And finally, breadth continues to move higher. Moreover, every correction in breadth has held support before breaking higher (red lines). This tells us more and more stocks are joining into the rally. That is what we need to see for a new bull market to begin.
Again, I think the fact this is happening during an economic depression is insane. But as investors, it doesn’t matter what we think… it’s what the market thinks that matters.
And the market thinks more upside is coming.
They also think the Fed and other central banks are going unleash an inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
As I keep saying, it doesn’t matter what we think… it’s what the market thinks that matters.
Personally, I think it’s insane that the Fed has nationalized the entire debt markets. Similarly, I think it was a massive mistake to shut down the economy. And I think that the human suffering created by this mess is truly horrific.
Stocks don’t seem to think any of this. Stocks think that things are going to recover relatively quickly. I think that’s insane, but again, as an investor, it doesn’t matter what I think… it’s what the market thinks that matters.
With that in mind, stocks are breaking through resistance this morning. Multiple “risk” measures I track suggest we’re moving higher.
The ratio between stocks and Treasuries has broken above its 50% retracement and held there.
————————————————————
Get a LIFETIME Subscription to All Of Our Products For Just $5,000
An annual subscription (1 year) to all of our current newsletters costs $3,500.
But today, you can get a LIFETIME subscription to ALL of them, along with every new product we ever launch, for just $5,000.
Credit spreads have held support (reds line) and are forming bull flags (red lines). This suggests an upwards breakout which would be decidedly “risk on.”
And finally, breadth continues to move higher. Moreover, every correction in breadth has held support before breaking higher (red lines). This tells us more and more stocks are joining into the rally. That is what we need to see for a new bull market to begin.
Again, I think the fact this is happening during an economic depression is insane. But as investors, it doesn’t matter what we think… it’s what the market thinks that matters.
And the market thinks more upside is coming.
They also think the Fed and other central banks are going unleash an inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
As I keep saying, it doesn’t matter what we think… it’s what the market thinks that matters.
Personally, I think it’s insane that the Fed has nationalized the entire debt markets. Similarly, I think it was a massive mistake to shut down the economy. And I think that the human suffering created by this mess is truly horrific.
Stocks don’t seem to think any of this. Stocks think that things are going to recover relatively quickly. I think that’s insane, but again, as an investor, it doesn’t matter what I think… it’s what the market thinks that matters.
With that in mind, stocks are breaking through resistance this morning. Multiple “risk” measures I track suggest we’re moving higher.
The ratio between stocks and Treasuries has broken above its 50% retracement and held there.
————————————————————
Get a LIFETIME Subscription to All Of Our Products For Just $5,000
An annual subscription (1 year) to all of our current newsletters costs $3,500.
But today, you can get a LIFETIME subscription to ALL of them, along with every new product we ever launch, for just $5,000.
Credit spreads have held support (reds line) and are forming bull flags (red lines). This suggests an upwards breakout which would be decidedly “risk on.”
And finally, breadth continues to move higher. Moreover, every correction in breadth has held support before breaking higher (red lines). This tells us more and more stocks are joining into the rally. That is what we need to see for a new bull market to begin.
Again, I think the fact this is happening during an economic depression is insane. But as investors, it doesn’t matter what we think… it’s what the market thinks that matters.
And the market thinks more upside is coming.
They also think the Fed and other central banks are going unleash an inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
Indeed, have ramped 30% from their lows in late March. Every dip has been bought aggressively or resulted in a consolidation that was then resolved upwards with great energy.
Historically, the faster and larger the bounce following a crash, the less likelihood that we fall to new lows or crash further in a big way.
Now, before you get frustrated with me, let me say that I’m well aware that the stock market bottomed due to Fed intervention and that the Fed is manipulating everything.
I’m NOT saying I agree with what the Fed has done, nor am I saying it was the right thing to do.
Whether the person buying the stock market is someone like you or me, or it’s the Fed, doesn’t matter. Buyers are overpowering sellers time and again.
After all, if the Fed wants to force the market to rise, which would you do… say it’s fake and sit on losses or use the Fed’s policy to make money for yourself and your family?
As I keep saying time and again, it’s not what we think that matters, it’s what the market thinks. And the market thinks we’re going higher for now.
That also think the Fed and other central banks are going unleash an inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
Indeed, have ramped 30% from their lows in late March. Every dip has been bought aggressively or resulted in a consolidation that was then resolved upwards with great energy.
Historically, the faster and larger the bounce following a crash, the less likelihood that we fall to new lows or crash further in a big way.
Now, before you get frustrated with me, let me say that I’m well aware that the stock market bottomed due to Fed intervention and that the Fed is manipulating everything.
I’m NOT saying I agree with what the Fed has done, nor am I saying it was the right thing to do.
Whether the person buying the stock market is someone like you or me, or it’s the Fed, doesn’t matter. Buyers are overpowering sellers time and again.
After all, if the Fed wants to force the market to rise, which would you do… say it’s fake and sit on losses or use the Fed’s policy to make money for yourself and your family?
As I keep saying time and again, it’s not what we think that matters, it’s what the market thinks. And the market thinks we’re going higher for now.
That also think the Fed and other central banks are going unleash an inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
Indeed, have ramped 30% from their lows in late March. Every dip has been bought aggressively or resulted in a consolidation that was then resolved upwards with great energy.
Historically, the faster and larger the bounce following a crash, the less likelihood that we fall to new lows or crash further in a big way.
Now, before you get frustrated with me, let me say that I’m well aware that the stock market bottomed due to Fed intervention and that the Fed is manipulating everything.
I’m NOT saying I agree with what the Fed has done, nor am I saying it was the right thing to do.
Whether the person buying the stock market is someone like you or me, or it’s the Fed, doesn’t matter. Buyers are overpowering sellers time and again.
After all, if the Fed wants to force the market to rise, which would you do… say it’s fake and sit on losses or use the Fed’s policy to make money for yourself and your family?
As I keep saying time and again, it’s not what we think that matters, it’s what the market thinks. And the market thinks we’re going higher for now.
That also think the Fed and other central banks are going unleash an inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
“The question is not which woman is the most beautiful but which woman everyone else will think is the most beautiful.”
The man in front of me is a billionaire investor. He is a self-made billionaire. He has actually funded other billionaire investors’ hedge funds. Warren Buffett has publicly admitted that he is one of the few people Buffett “learns from.”
His name is Howard Marks. And suffice to say, I’m all ears.
Marks is discussing the importance of what he calls “second level thinking.”
Second level thinking is being able to think beyond the first level implications of a particular development. Mr. Marks provides several examples of this in his book:
First-level thinking says, “It’s a good company; let’s buy the stock.” Second-level thinking says, “It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overprices; let’s sell.”
First-level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump our stocks.” Second-level thinking says, “The outlook stinks, but everyone else is selling in panic. Buy!”
First-level thinking says, “I think the company’s earnings will fall; sell.” Second-level thinking says, “I think the company’s earnings will fall far less than people expect, and the pleasant surprise will lift the stock; buy.”
At the investment conference at the University of Virginia I attended, Mr. Marks gave a more colorful example of “second-level thinking.”
In the early 1900s in the United Kingdom there was a newspaper competition for the most beautiful woman. Readers were asked which woman was the most beautiful out of a series of candidates.
Marks points out that if you picked the woman you thought was the most beautiful you would likely lose the contest. However, if you picked the woman that you believed most readers would think was the most beautiful you would win.
In investing terms, you could rephrase this as:
“You need to overcome your own personal bias and learn to see how the market thinks about things.”
Or as I like to tell my clients: “It’s not what you think, it’s what the market thinks that matters.”
I mention this because stocks rallied yesterday on the announcement that the Bank of Japan (BoJ) would discuss “unlimited bond buying” at its next meeting.
Those of us who track central bank activity are aware that this is something of a bluff. After all, the BoJ has already effectively nationalized its bond market to the point that on some days bonds don’t even trade anymore.
However, what matters is not what we think… what matters is what the markets think. And the markets think central banks will do anything to reflate the financial system.
The key word here is “unlimited.”
In the last six weeks, the Fed, the BoJ and the European Central Bank (ECB) have issued statements saying they are prepared to buy “unlimited” amounts of bonds.
The implications here are:
1) Central banks will buy the bonds governments need to issue to continue financing their massive social spending programs (the stimulus/ welfare/ loans).
2) Central banks will intervene anytime the financial system is in danger of a deflationary collapse.
Put simply, central banks are stating, “we are ready and willing to buy anything with unlimited funds to reflate the financial system.”
Will it work?
It is so far. Stocks have held up reasonably well despite a rash of truly horrific news. In the U.S. there are now 26 million unemployed. According to the U.S. Chamber of Commerce, 54% of small business are believed to have closed during the shutdown. And 24% have stated they are less than 60 days from going out of business permanently.Bear in mind, that information was published April 3rd, so we’re already over 20 days into that 60-day window.
Again, this is horrific, economic DEPRESSION type stuff. And yet stocks refuse to drop. It’s crazy, but again with investing what matters is not what we think… what matters is what the markets think. And the markets think central banks can fix this mess with interventions.
They also believe it is going to unleash and inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
“The question is not which woman is the most beautiful but which woman everyone else will think is the most beautiful.”
The man in front of me is a billionaire investor. He is a self-made billionaire. He has actually funded other billionaire investors’ hedge funds. Warren Buffett has publicly admitted that he is one of the few people Buffett “learns from.”
His name is Howard Marks. And suffice to say, I’m all ears.
Marks is discussing the importance of what he calls “second level thinking.”
Second level thinking is being able to think beyond the first level implications of a particular development. Mr. Marks provides several examples of this in his book:
First-level thinking says, “It’s a good company; let’s buy the stock.” Second-level thinking says, “It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overprices; let’s sell.”
First-level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump our stocks.” Second-level thinking says, “The outlook stinks, but everyone else is selling in panic. Buy!”
First-level thinking says, “I think the company’s earnings will fall; sell.” Second-level thinking says, “I think the company’s earnings will fall far less than people expect, and the pleasant surprise will lift the stock; buy.”
At the investment conference at the University of Virginia I attended, Mr. Marks gave a more colorful example of “second-level thinking.”
In the early 1900s in the United Kingdom there was a newspaper competition for the most beautiful woman. Readers were asked which woman was the most beautiful out of a series of candidates.
Marks points out that if you picked the woman you thought was the most beautiful you would likely lose the contest. However, if you picked the woman that you believed most readers would think was the most beautiful you would win.
In investing terms, you could rephrase this as:
“You need to overcome your own personal bias and learn to see how the market thinks about things.”
Or as I like to tell my clients: “It’s not what you think, it’s what the market thinks that matters.”
I mention this because stocks rallied yesterday on the announcement that the Bank of Japan (BoJ) would discuss “unlimited bond buying” at its next meeting.
Those of us who track central bank activity are aware that this is something of a bluff. After all, the BoJ has already effectively nationalized its bond market to the point that on some days bonds don’t even trade anymore.
However, what matters is not what we think… what matters is what the markets think. And the markets think central banks will do anything to reflate the financial system.
The key word here is “unlimited.”
In the last six weeks, the Fed, the BoJ and the European Central Bank (ECB) have issued statements saying they are prepared to buy “unlimited” amounts of bonds.
The implications here are:
1) Central banks will buy the bonds governments need to issue to continue financing their massive social spending programs (the stimulus/ welfare/ loans).
2) Central banks will intervene anytime the financial system is in danger of a deflationary collapse.
Put simply, central banks are stating, “we are ready and willing to buy anything with unlimited funds to reflate the financial system.”
Will it work?
It is so far. Stocks have held up reasonably well despite a rash of truly horrific news. In the U.S. there are now 26 million unemployed. According to the U.S. Chamber of Commerce, 54% of small business are believed to have closed during the shutdown. And 24% have stated they are less than 60 days from going out of business permanently.Bear in mind, that information was published April 3rd, so we’re already over 20 days into that 60-day window.
Again, this is horrific, economic DEPRESSION type stuff. And yet stocks refuse to drop. It’s crazy, but again with investing what matters is not what we think… what matters is what the markets think. And the markets think central banks can fix this mess with interventions.
They also believe it is going to unleash and inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
“The question is not which woman is the most beautiful but which woman everyone else will think is the most beautiful.”
The man in front of me is a billionaire investor. He is a self-made billionaire. He has actually funded other billionaire investors’ hedge funds. Warren Buffett has publicly admitted that he is one of the few people Buffett “learns from.”
His name is Howard Marks. And suffice to say, I’m all ears.
Marks is discussing the importance of what he calls “second level thinking.”
Second level thinking is being able to think beyond the first level implications of a particular development. Mr. Marks provides several examples of this in his book:
First-level thinking says, “It’s a good company; let’s buy the stock.” Second-level thinking says, “It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overprices; let’s sell.”
First-level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump our stocks.” Second-level thinking says, “The outlook stinks, but everyone else is selling in panic. Buy!”
First-level thinking says, “I think the company’s earnings will fall; sell.” Second-level thinking says, “I think the company’s earnings will fall far less than people expect, and the pleasant surprise will lift the stock; buy.”
At the investment conference at the University of Virginia I attended, Mr. Marks gave a more colorful example of “second-level thinking.”
In the early 1900s in the United Kingdom there was a newspaper competition for the most beautiful woman. Readers were asked which woman was the most beautiful out of a series of candidates.
Marks points out that if you picked the woman you thought was the most beautiful you would likely lose the contest. However, if you picked the woman that you believed most readers would think was the most beautiful you would win.
In investing terms, you could rephrase this as:
“You need to overcome your own personal bias and learn to see how the market thinks about things.”
Or as I like to tell my clients: “It’s not what you think, it’s what the market thinks that matters.”
I mention this because stocks rallied yesterday on the announcement that the Bank of Japan (BoJ) would discuss “unlimited bond buying” at its next meeting.
Those of us who track central bank activity are aware that this is something of a bluff. After all, the BoJ has already effectively nationalized its bond market to the point that on some days bonds don’t even trade anymore.
However, what matters is not what we think… what matters is what the markets think. And the markets think central banks will do anything to reflate the financial system.
The key word here is “unlimited.”
In the last six weeks, the Fed, the BoJ and the European Central Bank (ECB) have issued statements saying they are prepared to buy “unlimited” amounts of bonds.
The implications here are:
1) Central banks will buy the bonds governments need to issue to continue financing their massive social spending programs (the stimulus/ welfare/ loans).
2) Central banks will intervene anytime the financial system is in danger of a deflationary collapse.
Put simply, central banks are stating, “we are ready and willing to buy anything with unlimited funds to reflate the financial system.”
Will it work?
It is so far. Stocks have held up reasonably well despite a rash of truly horrific news. In the U.S. there are now 26 million unemployed. According to the U.S. Chamber of Commerce, 54% of small business are believed to have closed during the shutdown. And 24% have stated they are less than 60 days from going out of business permanently.Bear in mind, that information was published April 3rd, so we’re already over 20 days into that 60-day window.
Again, this is horrific, economic DEPRESSION type stuff. And yet stocks refuse to drop. It’s crazy, but again with investing what matters is not what we think… what matters is what the markets think. And the markets think central banks can fix this mess with interventions.
They also believe it is going to unleash and inflationary storm. Gold is breaking out in every major currency.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
There’s a saying that “in bull markets, stocks don’t sell off on bad news.”
I mention this because the latest jobs data is out and it’s horrific.
Another 4.4. million Americans have filed for unemployment bringing the total the number of unemployed to 26 million.
These are DE-pression type numbers. And yet stocks are holding up despite these numbers.
The S&P 500 last peaked on April 17th 2020. Despite a rash of horrific economic data, the index has barely fallen 6%.
As investors, we have to trade the markets as they are… not as we wish they were. And the market is holding up shockingly well given what’s happening in the world.
Remember, “in bull markets, stocks don’t sell off on bad news.”
What’s even more shocking is the fact that ENERGY stocks are UP more than the broader market this month.
That’s not a typo, the Energy ETF (XLE) is up 16% while the S&P 500 is up 8% in April. And this is happening at a time when Oil prices dropped to NEGATIVE $40!
This again suggests we are entering a bull market. In bull markets, stocks don’t sell off on bad news. The news lately is horrific, and stocks aren’t selling off.
There’s a saying that “in bull markets, stocks don’t sell off on bad news.”
I mention this because the latest jobs data is out and it’s horrific.
Another 4.4. million Americans have filed for unemployment bringing the total the number of unemployed to 26 million.
These are DE-pression type numbers. And yet stocks are holding up despite these numbers.
The S&P 500 last peaked on April 17th 2020. Despite a rash of horrific economic data, the index has barely fallen 6%.
As investors, we have to trade the markets as they are… not as we wish they were. And the market is holding up shockingly well given what’s happening in the world.
Remember, “in bull markets, stocks don’t sell off on bad news.”
What’s even more shocking is the fact that ENERGY stocks are UP more than the broader market this month.
That’s not a typo, the Energy ETF (XLE) is up 16% while the S&P 500 is up 8% in April. And this is happening at a time when Oil prices dropped to NEGATIVE $40!
This again suggests we are entering a bull market. In bull markets, stocks don’t sell off on bad news. The news lately is horrific, and stocks aren’t selling off.
Let’s talk about what just happened with Oil prices.
Yesterday, Oil dropped to -$40 per barrel. That is not a typo. Oil was priced at NEGATIVE $40.
On Friday, it was priced at $27 per barrel.
How is this possible?
This is possible because of derivatives: financial instruments that trade in opaque markets, with little oversight, and which regulators, including Congress, have permitted to become a systemic problem.
In its simplest rendering, yesterday oil traders who owned oil derivatives realized that if they continued to hold these derivatives, they (the traders) would have to actually take delivery on the physical oil they owned. We’re talking thousands and thousands of oil barrels being delivered.
The traders don’t want the actual physical oil. They simply want to be able to trade oil prices. So, they dumped their derivatives at any price… including PAYING someone to take the derivatives off of their hands.
This is how you get NEGATIVE oil prices. And it reveals the degree to which the financial system has become totally overrun with derivatives, leverage, and financial trickery.
Even worse, Oil is not the only asset class that has been overrun with derivatives. The bulk of trading in every commodity, including gold, involves derivatives. The same is true of BONDS.
Derivatives are used to hide losses, manipulate prices, and even fake profits. They are a massive problem that nearly blew up the financial system in 2008… and as oil’s implosion yesterday revealed, remain a major problem today as well.
How big a problem are we talking?
The last official data on the global derivatives market puts it at $640 TRILLION, or over SEVEN TIMES GLOBAL GDP.
What happened in oil is a signal that this financial monstrosity is once again rearing its head. The question now is just how horrific the carnage will be.
On that note, if you’re worried about weathering a potential market crash, we’ve reopened our Stock Market Crash Survival Guide to the general public.
Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).
Today is the last day this report will be available to the public.
To pick up your copy of this report, FREE, swing by:
Let’s talk about what just happened with Oil prices.
Yesterday, Oil dropped to -$40 per barrel. That is not a typo. Oil was priced at NEGATIVE $40.
On Friday, it was priced at $27 per barrel.
How is this possible?
This is possible because of derivatives: financial instruments that trade in opaque markets, with little oversight, and which regulators, including Congress, have permitted to become a systemic problem.
In its simplest rendering, yesterday oil traders who owned oil derivatives realized that if they continued to hold these derivatives, they (the traders) would have to actually take delivery on the physical oil they owned. We’re talking thousands and thousands of oil barrels being delivered.
The traders don’t want the actual physical oil. They simply want to be able to trade oil prices. So, they dumped their derivatives at any price… including PAYING someone to take the derivatives off of their hands.
This is how you get NEGATIVE oil prices. And it reveals the degree to which the financial system has become totally overrun with derivatives, leverage, and financial trickery.
Even worse, Oil is not the only asset class that has been overrun with derivatives. The bulk of trading in every commodity, including gold, involves derivatives. The same is true of BONDS.
Derivatives are used to hide losses, manipulate prices, and even fake profits. They are a massive problem that nearly blew up the financial system in 2008… and as oil’s implosion yesterday revealed, remain a major problem today as well.
How big a problem are we talking?
The last official data on the global derivatives market puts it at $640 TRILLION, or over SEVEN TIMES GLOBAL GDP.
What happened in oil is a signal that this financial monstrosity is once again rearing its head. The question now is just how horrific the carnage will be.
On that note, if you’re worried about weathering a potential market crash, we’ve reopened our Stock Market Crash Survival Guide to the general public.
Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).
Today is the last day this report will be available to the public.
To pick up your copy of this report, FREE, swing by:
The financial system is now completely addicted to Fed interventions.
As I’ve noted over the last month, the Fed has implemented monetary programs to buy just about every asset class.
As a brief refresher, the Fed is now intervening directly in:
1) The Treasury markets (U.S. sovereign debt).
2) The municipal bond markets (debt issued by states and cities).
3) The corporate bond markets (debt issued by corporations).
4) The commercial paper markets (short-term corporate debt market).
5) The asset backed security market (everything from student loans to Certificates of Deposit and more).
Of the various programs the Fed announced, its daily QE program is the most important as far as stocks are concerned.
The Fed first announced a daily QE program of $75 billion on March 23rd 2020. That was THE day the stock market bottomed.
It then reduced this operation from $75 billion per day to $60 billion per day on April 2nd, and again to $50 billion, then $30 billion the following two weeks. And last week, the Fed announced it would be cutting its daily QE even further to $15 billion.
You’ll note in the chart below that with each reduction in the Fed’s QE programs, the market’s momentum has slowed. The one exception to this was the week of April 2nd to April 9th during which the Fed announced another $2.3 trillion in monetary interventions, which negated the drop in its daily QE programs that week and sent stocks soaring.
What does this tell us?
That the markets are addicted to Fed interventions. Every time the Fed reduces its daily QE programs, stocks lose momentum. It is no coincidence that stocks are red right now, on news that the Fed will be lowering its daily QE program to $15 billion.
If the impact of Fed interventions on stocks is high, it’s even greater on gold. The precious metal has exploded higher in the last month. Mind you, the Fed isn’t the only central bank ramping up the printing presses… gold is exploding higher priced in Dollars, Yen, and Euros as central banks around the world are printing trillions of their currencies.
Gold is realizing that all of this money printing is going to ignite an inflationary storm.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
The financial system is now completely addicted to Fed interventions.
As I’ve noted over the last month, the Fed has implemented monetary programs to buy just about every asset class.
As a brief refresher, the Fed is now intervening directly in:
1) The Treasury markets (U.S. sovereign debt).
2) The municipal bond markets (debt issued by states and cities).
3) The corporate bond markets (debt issued by corporations).
4) The commercial paper markets (short-term corporate debt market).
5) The asset backed security market (everything from student loans to Certificates of Deposit and more).
Of the various programs the Fed announced, its daily QE program is the most important as far as stocks are concerned.
The Fed first announced a daily QE program of $75 billion on March 23rd 2020. That was THE day the stock market bottomed.
It then reduced this operation from $75 billion per day to $60 billion per day on April 2nd, and again to $50 billion, then $30 billion the following two weeks. And last week, the Fed announced it would be cutting its daily QE even further to $15 billion.
You’ll note in the chart below that with each reduction in the Fed’s QE programs, the market’s momentum has slowed. The one exception to this was the week of April 2nd to April 9th during which the Fed announced another $2.3 trillion in monetary interventions, which negated the drop in its daily QE programs that week and sent stocks soaring.
What does this tell us?
That the markets are addicted to Fed interventions. Every time the Fed reduces its daily QE programs, stocks lose momentum. It is no coincidence that stocks are red right now, on news that the Fed will be lowering its daily QE program to $15 billion.
If the impact of Fed interventions on stocks is high, it’s even greater on gold. The precious metal has exploded higher in the last month. Mind you, the Fed isn’t the only central bank ramping up the printing presses… gold is exploding higher priced in Dollars, Yen, and Euros as central banks around the world are printing trillions of their currencies.
Gold is realizing that all of this money printing is going to ignite an inflationary storm.
On that note, we just published a
Special Investment Report concerning FIVE secret investments you can use to
make inflation pay you as it rips through the financial
system in the months ahead.
The report is titled Survive
the Inflationary Storm. And it explains in very simply terms how to
make inflation PAY YOU.
We are making just 100 copies
available to the public.
