stock collapse?

By Graham Summers, MBA

Let’s cut through the narratives and media “BS.”

The Fed is trapped.

Inflation is soaring. And the Fed has signaled that it is shifting its focus from growth (employment) to inflation. Specifically, after 20 months of claiming inflation is “transitory” and not a problem, Fed Chair Jerome Powell has publicly stated that he no longer believes inflation is “transitory” and that the Fed can consider wrapping up its taper “a few months sooner.”

This means the Fed will be tapering QE and hiking interest rates sooner than expected.

There’s just one small problem.

As Lawrence McDonald recently noted, there is over $30 TRILLION more in debt trading at yields lower than 2% than there was the last time the Fed attempted to raise rates.

For bonds with yields this low, every time the Fed raises rates, there is a dramatic impact. Remember, the yield on U.S. Treasuries are the “risk free” rate of return against which the entire financial system is valued.

So, when the Fed raises rates, all debt, including that $30+ trillion must adjust accordingly. This means those bond prices FALL and their yields RISE. And if they rise enough, the investors begin to default.

Put another way, this time around, there is a $30 TRILLION+ ticking bomb sitting there. And the Fed is going to start playing with matches right next to it… hoping the fuse doesn’t light by mistake.

Given that Fed’s attempt in dealing with the Tech Bubble and the Housing Bubble resulted in full-scale crises…what are the odds the Fed can successfully deflate this current Everything Bubble… which is exponentially larger than the first two?

Look at the below chart and you tell me.

It is HIGHLY likely another bloodbath is coming to the markets.

It’s quite possible the markets will be entering a prolonged BEAR MARKET… a time in which stocks lose 50% or more over the course of months.

The coming bust is going to be life-changing for many people. Most will lose much if not everything. But a small number of investors will generate LITERAL FORTUNES.

Let me be blunt here, if you’re not taking steps to prepare for what’s coming, NOW is the time to do so.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guidecan show you how.

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).

To pick up your copy of this report, FREE, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards,

As I’ve been outlining over the last few days, “someone” is aggressively manipulating stocks higher.

Large financial institutions do NOT attempt to move markets. In fact, the traders charged with executing these institutions’ trades are graded based on their ability to buy and sell large chunks of stocks without moving the tape.

So, we can be certain that the “investor” who is doing this…

…isn’t a large financial institution looking to open a legitimate position. No, the kind of ramp in a matter of minutes on no news is the work of “someone” looking to manipulate the markets higher. 

Why are they doing this?

Because the market is forward-looking… and next year, the Fed will be ending its $120 billion QE program, and the U.S. government will be ending its stimulus programs.

This means a total of $4-$5 TRILLION in free money/ liquidity will no longer be funneled into the financial system.

Why do you think copper, the commodity with so many industrial uses, it’s called “Dr. Copper, the commodity with a PhD in economics,” has broken down?

Or how about stocks that are closely tied to the REAL ECONOMY like 3M?

Or how about FedEx (FDX), which is even MORE sensitive to economic developments?

In simple terms, the signs are clear: the economy will be collapsing in 2022. And a bloodbath is coming to the markets. 

The losses will be staggering.

And it’s just the beginning. It’s quite possible the markets are entering a prolonged BEAR MARKET… a time in which stocks lose 50% or more over the course of months.

The coming bust is going to be life-changing for many people. Most will lose much if not everything. But a small number of investors will generate LITERAL FORTUNES.

Let me be blunt here, if you’re not taking steps to prepare for what’s coming, NOW is the time to do so.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guidecan show you how.

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).

To pick up your copy of this report, FREE, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

The dip buyers got annihilated yesterday.

Stocks started the day up as traders “bought the dip” expecting that once again the Fed would intervene to prop the markets up.

They were wrong, and stocks rolled over a dropped hard into the close.

What is going on here?

What is going on is that the Fed is no longer in the business of propping the markets up with more easing. As I noted yesterday, the Fed has completely shifted its focus from growth to inflation.

This means the Fed will be TIGHTENING, not easing going forward.

If you don’t believe me, maybe you’ll believe Fed Chair Powell who told a Senate panel yesterday: “The risk of persistently higher inflation has clearly risen, and I think our policy has adapted.”

“Policy has adapted” = we are tightening to crush inflation.

So, if you think the Fed is coming to the rescue anytime soon, you are mistaken. Stocks have NOT bottomed. If anything, this mess has just gotten started.

High yield credit (red line) has already figured this out. Stocks are only just starting to “get it.”

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guidecan show you how.

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).

To pick up your copy of this report, FREE, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards,

Let’s cut through the BS here.

You cannot predict the future. No one can. Not me. Not Warren Buffett. No one.

We cannot predict if omicron will prove to be a devastating mutation of the virus. Similarly, we cannot predict if world leaders will shut-down the economy again, regardless of the “science” behind that policy.

We also cannot predict if this hiccup will force the Fed to abandon its tightening policy. Nor can we predict what the impact will be on growth. Even if there are NOT shutdowns, we have no idea how another mutation will impact human behavior as far as spending, demand, and the like.

So what can we do?

Focus on price and let the market show us.

Yesterday’s price action was awful. You’d think after a dump like Friday’s we’d get a major bounce. NOPE. Stocks didn’t even “close the gap” created by that drop.

Moreover, high yield credit, which leads stocks, hasn’t recovered much if at all. If anything, it’s telling us that stocks are due for another bloodbath shortly.

As I said yesterday, I didn’t trust yesterday’s bounce…at all. Another puke is coming. And this time around, smart investors will be using it to get rich, instead of getting taken to the cleaners.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guidecan show you how.

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).

To pick up your copy of this report, FREE, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards,

For weeks I’ve been pounding the table that the market is in serious trouble.

I’ve shown that four out of the market’s five most heavily weighted stocks have begun breaking down.

I’ve shown that only a handful of stocks are holding up the entire market as the number of NASDAQ stocks hitting new lows is approaching levels associated with the fastest 30% market crash in history.

I’ve explained in great detail that the market is extremely stretched to the upside. Indeed, the only time it has been this stretched or more was right before the 1987 crash and during the Tech Bubble.

I’ve even shown that leading market indicators such as high yield credit and breadth had rolled over and were dropping hard.

Now the bloodbath has arrived.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guidecan show you how.

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).

To pick up your copy of this report, FREE, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards,

The Fed is now trapped.

Consider:

• Stocks were just at or are currently at all-time highs, trading at multiples that exceed even those of the Tech Bubble in 1999 (Market Cap/ GDP).

• There are truly INSANE levels of froth in the markets:
  1. Options trading volume (a sign of speculation) is exponentially higher than it was during the Tech Bubble.
  2. Crypto currencies that were invented as jokes trade at tens of billions of dollars.
  3. Tesla (TSLA) a $1 trillion company, trades like a penny stock rising 15% in a single day.
  4. People are selling Non-Fungible Tokes (NFTs) of farts, and other garbage… and making significant money.
  5. “Meme stocks” or stocks that are traded for ironic/ humorous purposes rise triple digits in a single day.
  6. Former President Trump’s Special Purpose Acquisition Company (SPAC) rose to a value of $5 billion despite having no business or operations.

• Real estate is on fire. Home prices are up 20% across the board, while apartment rents are up 7%-15%.

• Gasoline prices are up 122% year over year, while protein prices (meat, fish, eggs) are up 10.5% year over year.

Despite all of this, the Fed has only just begun to taper its $120 billion Quantitative Easing (QE) program at a pace of $15 billion per month. Even at this pace, QE will STILL be above its former peak for another two and a half months (QE 3 was the prior record set in 2012 at $80 billion per month).

Put another way, the Fed’s idea of tightening monetary policy today is that it will run QE at emergency levels for another six months at least. It will only finally be DONE with QE in June of 2022.

Which is 24 months after the recession ended!

Oh, and the Fed doesn’t plan to start raising rates until around then either.

Meanwhile, inflation is ROARING. The Consumer Price Index (CPI) and Core Consumer Price Index (Core CPI) just hit their highest year over year readings since 1990 and 1991 respectively.

This is happening at a time when stocks are more stretched above historic metric than all but a few times in the last 40 years. The only times the market was MORE stretched than this was right before the 1987 crash and during the Tech Bubble.

So, the Fed is facing a conundrum. 

Either it starts tightening a lot more aggressively, thereby bursting this INSANE stock market bubble… or it continues down its current projected path, inflation destroys the economy and stocks crash anyway.

Simply put, one way or another, the following is coming.

The big question for investors is… HOW DO WE AVOID THIS? 

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards,

​​

The market is on THIN ice.

This is the single largest stock market bubble in history. It’s larger than the Tech Bubble in multiple metrics including:

1. Market cap/ GDP (Warren Buffett’s favorite metric).

• Options trading volume (a sign of speculation). As Bill King has noted, this is BIBLICAL levels of speculation.

• Tesla (TSLA) a $1 Trillion company (the size Mexico’s GDP) is trading like a penny stock, moving over 10% to the upside or downside on a given day.

Moreover, stocks are stretched some 40% above their 50-month moving average. It’s only been MORE stretched three times in the last 40 years: right before the 1987 Crash and during the Tech Bubble in the late ‘90s.

This whole mess is going to come crashing down in spectacular fashion… just as all bubbles do. In chart form, it’s only a matter of time before we experience this:

The big question for investors is… HOW DO WE AVOID THIS? 

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

Stocks are now on the edge of a cliff.

The S&P 500 broke below its 50-DMA two weeks ago. It has since failed to reclaim this line. That is the first time this has happened this year.

The good news is that 4,300 (purple line in the chart below) served as support last week for the market. But if the bulls cannot rally here and now, we’ll likely see a drop to the 200-DMA (currently at 4,161).

To make matters worse, the weekly MACD is on a “sell signal” (red circle in the chart below). You’ll note that this sell signal is quite different from previous signals in its depth and violence.

And finally, as of Friday, we had a new slew of weekly candles. Not one sector of the S&P 500 is in an uptrend. At best we have one that might be in an uptrend. The other 10 sectors are all in confirmed downtrends, meaning over 87% of the market’s weighting is in downtrends.

This is all REALLY bad news. With this much of the market’s weight in downtrends, the door is open to some REAL fireworks!

This has many investors asking…

IS A CRASH ABOUT TO HIT!?!?

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

Stocks are now on the edge of a cliff.

The S&P 500 broke below its 50-DMA two weeks ago. It has since failed to reclaim this line. That is the first time this has happened this year.

The good news is that 4,300 (purple line in the chart below) served as support last week for the market. But if the bulls cannot rally here and now, we’ll likely see a drop to the 200-DMA (currently at 4,161).

To make matters worse, the weekly MACD is on a “sell signal” (red circle in the chart below). You’ll note that this sell signal is quite different from previous signals in its depth and violence.

And finally, as of Friday, we had a new slew of weekly candles. Not one sector of the S&P 500 is in an uptrend. At best we have one that might be in an uptrend. The other 10 sectors are all in confirmed downtrends, meaning over 87% of the market’s weighting is in downtrends.

This is all REALLY bad news. With this much of the market’s weight in downtrends, the door is open to some REAL fireworks!

This has many investors asking…

IS A CRASH ABOUT TO HIT!?!?

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

Stocks ended the month with an extremely ugly candle.

As the below chart shows, September ended outside the range of August (purple circle in the chart below). Historically, these developments usually resolve with the stock market testing its 10-month moving average (MMA).

As I write this Friday that line is at 4,116, however, we can expect it to rise to 4,1150 or so in the coming weeks. So, we’re talking about stocks dropping another 5% from here, which would bring the total correction to 10% or so.

The bigger question is if stocks will stop there.

Despite the recent drop, stocks are still extremely stretched above their 20-MMA (some 13% to be precise). Historically any time the market has been this stretched, we’ve seen a drop to the blue line.

This has many investors wondering if a crash is about to hit.

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

The markets are bouncing today, but nothing has been resolved.

The technical damage from the last few weeks has been horrific. The two most heavily weighted sectors in the S&P 500 (Tech and Healthcare) are in confirmed downtrends.

Tech (XLK) has broken below its 50-DMA. It also as a sell on its weekly MACD.

It’s the same story for Healthcare (XLV).

These two sectors alone count for 40% of the S&P 500’s weighting. With both breaking down like this, the market is under significant duress. Throw in the fact that all but three sectors are in a similar situation, and we have some 85% of the market’s weighting in DOWNTRENDS.

This is the kind of environment in which fireworks can hit.

But is a crash about to hit?

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

The biggest development last week was the breakout in the 10-year U.S. Treasury.

The 10-year US Treasury is arguably the single most important bond in the world. The yield on this bond represents the risk-free rate of return against which all risk assets (stocks, corporate bonds, mortgages, real estate, etc.) are valued.

Now, this yield moves based on a slew of issues: economic growth, portfolio balancing, Fed monetary policy, what’s happening in international bond markets… and inflation.

I mention all of this, because the yield on the 10-year US Treasury SPIKED sharply higher last week.

Let’s put this spike in a larger context.

From August of last year (2020) until March of this year (2021), the yield on the 10-Year Treasury spiked rose rapidly as inflation entered the US financial system. I’ve illustrated this spike with a green arrow in the chart below.

Then, in March of 2021, the Fed began to suggest that it was planning to tighten monetary policy. This hurt inflation expectations as the financial system began to believe the Fed would act quickly enough to stop inflation before it became a real problem. As a result of this, the yield on the 10-year Treasury dropped from March of 2021 until July.

I’ve illustrated this with a purple arrow in the chart below. This was, effectively, the bond market giving the Fed the benefit of the doubt when it came to monetary policy.

In this context, last week’s spike in the yield on the 10-year US Treasury represents the first time since March that the bond market began to freak out about inflation again.

This is a MASSIVE deal. It tells us that the market has called the Fed’s bluff: that the Fed won’t act to stop inflation in time and that the economy and financial system are heading towards a crisis in the near future.

If the Fed acts now, by tightening monetary policy aggressively, it will crash stocks. After all, the primary driver of this insane stock market bubble has been the Fed keeping rates at zero and pumping $120 billion per month into the financial system.

And if the Fed DOESN’T act now, inflation will rage, leading to a stag-flationary collapse in the economy… and stocks will still crash as inflation destroys profits in the corporate sector.

Just like in the mid-1970s, when stocks dropped 50% as inflation crippled the economy.

Put simply: a crisis is coming no matter what the Fed does.

The big question is “WHEN”!?!?

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

By Graham Summers, MBA

Was it a dead cat bounce… or something else?

On Monday, the markets were melting down due to fears of contagion from Evergrande, China’s second largest real estate company, going bankrupt.

Since that time, the market has bounced hard… despite the fact nothing has changed about Evergrande, or its $300 billion in debt, or the contagion issues that it presents to the financial system (commodities, EU banks, Australian miners, etc.).

So, the big question for stocks is: was this a dead cat bounce or the start of a new major rally?

Let’s find out.

The S&P 500 is attempting to reclaim its 50-day moving average (DMA). As the below chart shows, this line has acted as major support throughout much of 2021. So, the fact we broke below it is significant. If the S&P 500 cannot reclaim this level and stay there… then stocks are in MAJOR trouble.

For anyone who understands risk management, the below chart has been a MAJOR concern for the last few months. On a monthly basis, the S&P 500 is EXTREMELY overstretched to the upside. At a minimum, you would expect a drop to the 12-month moving average (MMA) to occur sometime this year.

This would mean a 10% drop in stock prices. 

Note in the above chart that every drop to the 12-MMA started with a significant black candle. We’ve got one week left in September, but it looks like we could be getting our first black candle of the year.

However, given that stocks are in their largest bubble of all time by some measures… that leverage levels are obscene, and that we are seeing the kind of mania associated with major tops… smart investors are asking…

“Is a Crisis about to hit?”

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

By Graham Summers, MBA

The markets have rallied hard on news of a potential Evergrande debt payment.

In case you’ve missed this story, Evergrande is a massive property developer in China. The company is effectively insolvent, and with $300 billion worth of debt many analysts were predicting this would lead to China’s “Lehman moment.”

We had some fireworks on Monday, but the markets have since rallied hard on news that Evergrande would make a payment on one of its Yuan-denominated bonds. 

That payment is expected to be made today.

Regardless of what happens with this specific payment, the fact remains that Evergrande is effectively insolvent. The chart says it all.

Moreover, this company is not an isolated situation. China’s government has made it clear it wants the real estate sector to deleverage, which means many of the over-indebted property developers are at risk of similar issues. Real estate and construction account for 16% of China’s ~$15 trillion economy… so this is not a small problem.

Keep an eye on BHP Group limited (BHP). As one of the largest Australian mining companies responsible for supplying China’s construction/real estate sectors, it’s a decent litmus test for whether or not this issue is really resolved or not.

As I write this, BHP is staging a VERY small bounce. The chart is profoundly ugly.

At the end of the day, whether Evergrande pays its bond or not today is just one paragraph in the book of bad debts that are floating around the financial system. The fact the Fed has spent over $4 trillion propping things up since 2020 doesn’t mean this whole mess won’t come crashing down.

In chart terms, it’s only a matter of time before this happens.

The multi-trillion dollar question is…

WHEN?!?!

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards,

All eyes are on the Fed today.

The Fed is expected to announce its tapering schedule for its current $120 billion per month Quantitative Easing (QE) program. The Fed has been hinting at its plan for months, via both Fed officials and media proxies.

The current proposal appears to be a $10-$15 billion per month tapering program, starting in November 2021. This is a very rapid scheme that would bring its QE program to a complete end by mid-2022.

By way of comparison, during the Fed’s last QE taper (that pertaining to QE 3 in 2017), the Fed reduced the pace of its then-QE program by $10 billion every THREE months, with the pace stopping at $30 billion per month.

Again, the current proposed tightening is much faster and aggressive than the last.

The big question is how the markets digest this. The last time the Fed attempted to taper a major QE program, it ultimately blew up the corporate debt markets resulting in stocks collapsing 20% in a matter of weeks.

Will the Fed blow things up again?

It’s quite possible, particularly when you consider that stocks are currently in their largest bubble in history by some measures… financial leverage is extraordinarily high… and we are seeing the types of mania associated with major market tops.

At the end of the day, the stock market is EXTREMELY overstretched above its 50 -month moving average. The only time it’s been more stretched was before the 1987 Crash and during the Tech Bubble.

At some point we are revisiting that blue line. The market always does.

By the way, the 50-MMA is currently at 3,141 while the S&P 500 is at 4354.

The big question is WHEN will this happen?

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

Stocks got creamed yesterday, but thanks to late day manipulation, they ended up well off the bottom.

From a purely technical perspective, the S&P 500 has broken below its 50-day moving average (DMA) for the first time since March 2021. Stocks then bounced hard off the 126-DMA (six month moving average).

It will be crucial to see how the markets act the next few days. We’ve had three significant breaks below the 50-DMA since the March 2020 bottom: one in September ’20, October ’20 and March ’21 (purple circles in the chart below). All of those were resolved in a little over a week.

On the surface things don’t look that bad. But “underneath the hood” things are terrible. None of the S&P 500’s sectors are in uptrends.

Moreover, four out of the five most heavily weighted stocks (AAPL, FB, AMZN, and GOOGL) have lost their 50-DMAs and are losing their uptrends.

This is the kind of environment in which actual crashes can happen. 

To figure this out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards