By Graham Summers, MBA

War has broken out in the Middle East.

As usual, everyone is attempting to have an “expert” take on this situation. The reality is that less than one in 10,000 of the people speaking on this stuff have any idea what they are talking about. And unfortunately this goes for the actual experts with degrees and pedigree.

Before listening to anyone opining on this conflict, ask yourself the following three questions:

1) Does this person know what kind of government the country or countries involved has? (parliament, congress, neither, theocracy, etc).

2) Could this person find the countries in question on a map?

3) Can this person name the leaders of the countries in question?

If the answer to all three of these isn’t YES, then ignore anything else this person has to say. If they’re too lazy to even spend five minutes learning the basics, then they’re just another fake guru trying to act like they’re omniscient. 

With that in mind, I’m staying in my lane and focusing on the markets today. I’m doing this not because I don’t care about the people under attack, nor is it because I’m insensitive to the situation… I’m doing this because I’m not an expert on the middle east and have nothing to add in the way of quality insights.

What I did note however was the stock market bounced hard from the initial sell-off yesterday and closed out the day at the highs. This is quite bullish given that the geopolitical situation. 

From a purely technical analysis situation, stocks bounced HARD off the 200-day moving average, or DMA, as represented by the green line in the chart below. The door is now open to a run to the 50-DMA as represented by the red line in the chart below. 

The key however is what happens to bonds. 

The bond market was closed yesterday. So we need to assess how bonds act today now that they’re trading again. If yields break to new highs, then something BAD is coming for the stock market in the next few weeks.

Again, everything hinges on what bonds do. Bonds are the reason stocks rallied from 2020 to 2022. They’re the reason stocks crumbled from March 2022 to October 2022. So whatever happens in bonds will dictate what’s coming for stocks.

The key however is what happens to bonds. 

The bond market was closed yesterday. So we need to assess how bonds act today now that they’re trading again. If yields break to new highs, then something BAD is coming for the stock market in the next few weeks.

Again, everything hinges on what bonds do. Bonds are the reason stocks rallied from 2020 to 2022. They’re the reason stocks crumbled from March 2022 to October 2022. So whatever happens in bonds will dictate what’s coming for stocks.

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By Graham Summers, MBA

The market rally in 2023 has been driven by tech, specifically, Big Tech (Apple, Microsoft, Nvidia, Alphabet, etc.).

While a handful of large companies have driven the stock market gains, the vast majority of stocks are down. Take out the big tech players, and the S&P 500 would have lost money thus far in 2023, as opposed to rising 8%.

Many gurus are suggesting this divergence will resolve with a collapse for the stock market. But that’s not necessarily true. Yes, the big tech players could correct which would be negative for the overall market. But we could also see some of the lagging sectors and companies play “catch up.”

If that happens, then the market will hold up and possibly even rise to new highs.

So how do we assess this?

Personally, I’m watching two sectors: Healthcare (XLV) and Industrials (XLI).

Both of these sectors have been lagging big tech, but they’re consolidating or moving sideways as opposed to falling in value. So if they begin to rally, it will dramatically improve market breadth.

Healthcare (XLV) is the second heaviest weighted sector in the market with a weight of 13%. It’s been in a consolidation pattern since mid-2021. Which ever direction this sector finally breaks out will have a significant impact on the overall market.

Industrials (XLI) have a weight of 8% in the S&P 500. This sector, like healthcare, has been in a consolidation pattern for most of the last two years. A breakout to the upside would boost the market and improve the breadth of this rally significantly.

In the simplest of terms, if these sectors begin to participate, then this market rally will have legs and continue longer than most expect.

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Let’s set politics aside today and focus on the stock market.

From a technical analysis perspective, the market has become extremely overstretched and is due for a correction.

The S&P 500 is trading above its monthly Bollinger Bands to the upside (red circle in the chart below). This means the stock market is now three standard deviations above their average historic price.

Any time stocks have performed a similar move in the last three years, it’s been quickly followed by a sharp decline, usually to the tune of 200+ points on the S&P 500.

You can see this for yourself in the chart below. I’ve circled the last similar three occasions in which the S&P 500 was three standard deviations above its average historic price.

In simple terms, stocks are EXTREMELY overstretched and due for a breather. I’ve identified the lines of support at which I would expect stocks to be a “buy” in the coming days. Save your capital for now, and prepare to buy around those levels.

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You can pick up three special reports (a value of $99) without paying a cent, today at this link:

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Best

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Things are beginning to get out of control in currency land.

The $USD is collapsing. Astute chart readers will note that the $USD has already experienced two sharp drops in the last few months (blue rectangles in the chart below). They occurred in late February before the COVID-19 shutdown and late March after the COVID-19 market meltdown subsided.

So why is this current drop (green rectangle in the chart above) so important? 

Because this collapse is happening outside of a crisis.

The other two sharp drops were triggered by true Black Swan events (an economic shutdown and viral pandemic). This one is happening while things are actually returning to normal.

Put another way, the $USD is telling us that:

1)    Either another Black Swan event is underway already.

2)    The world is losing faith in the $USD based on the Fed’s’/ Federal Government’s money printing and stimulus.

For a better perspective on what I am talking about take a look at the next chart. The $USD is breaking its bull market trendline at a rapid clip. The only other time it did this was right before the COVID-19 black swan event.

Something BAD is brewing in the financial system. And it’s going to catch 99% of investors by surprise.

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Graham Summers

Chief Market Strategist

Phoenix Capital Research

The financial system today is trying to figure out what happens when an unstoppable force meets an immovable object.

The Unstoppable Force= the Everything Bubble bursting as debt markets collapse around.

The Immovable Object= the Federal Reserve and its decision to buy EVERYTHING to stop the panic.

Regarding #1, in March we saw numerous debt bubbles burst including high yield corporate debt, investment grade corporate debt, high yield muni debt, and even investment grade muni debt.

The Fed, in an effort to stop this, announced several weeks ago that it would be buying everything. And I do mean EVERYTHING.

The Fed announced it would:

• Make its quantitative easing (QE) program “unlimited.” Meaning it would simply print money and buy assets ad infinitum.
• Increase the scope of its QE program from simply buying U.S. Treasuries and mortgage backed securities to include:Expand its money market QE to also include a “wider range of securities” including certificates of deposits (CDs).
  • Corporate debt (debt issued by corporations).
  • Corporate debt-related ETFs (stock funds linked to corporate debt).
  • Municipal debt (debt issued by states, counties, and cities).
• Expand its commercial paper QE program.
• Introduce a new QE program to buy any asset-backed security (ABS) including student debt.
• Soon begin a bailout program for small- and medium-sized business.
• Lower the interest rate on its repo programs from 0.15% to LITERAL ZERO (meaning NO interest charged).

Not the Fed was buying everything including CDs, student loans, muni bonds, corporate bonds, etc. As a friend of mine joked, the only thing the Fed wasn’t buying was NFL contracts.

We are now in the process of watching to see if the Fed has succeeded or not. That is… has the Fed’s move to backstop the entire financial system been enough to stop the panic.

Thus far the answer is a resounding yes. Risk assets are up across the board and stocks are moving to retrace 50% of the initial drop in March.

However, the bigger issue… and it’s the one that may lead to a second round of the crisis is:

What is the actual economic damage caused by the Covid-19 panic and subsequent economic shutdown?

Throwing trillions of dollars at the financial system doesn’t mean that consumer spending is going to come back in a major way.

Cutting interest rates and buying asset backed securities doesn’t make people want to go to restaurants, or go out shopping, or attend sporting events.

Put another way, if the consumer doesn’t come back in a BIG way relatively quickly, then we will indeed find ourselves in a significant prolonged recession.

And that would trigger another round of the financial crisis.

With that in mind, if you’re concerned about how your portfolio might handle a crash,

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:

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best RegardsParagraph

Graham Summers

Chief Market Strategist

Phoenix Capital Research

The financial system today is trying to figure out what happens when an unstoppable force meets an immovable object.

The Unstoppable Force= the Everything Bubble bursting as debt markets collapse around.

The Immovable Object= the Federal Reserve and its decision to buy EVERYTHING to stop the panic.

Regarding #1, in March we saw numerous debt bubbles burst including high yield corporate debt, investment grade corporate debt, high yield muni debt, and even investment grade muni debt.

The Fed, in an effort to stop this, announced several weeks ago that it would be buying everything. And I do mean EVERYTHING.

The Fed announced it would:

• Make its quantitative easing (QE) program “unlimited.” Meaning it would simply print money and buy assets ad infinitum.
• Increase the scope of its QE program from simply buying U.S. Treasuries and mortgage backed securities to include:Expand its money market QE to also include a “wider range of securities” including certificates of deposits (CDs).
  • Corporate debt (debt issued by corporations).
  • Corporate debt-related ETFs (stock funds linked to corporate debt).
  • Municipal debt (debt issued by states, counties, and cities).
• Expand its commercial paper QE program.
• Introduce a new QE program to buy any asset-backed security (ABS) including student debt.
• Soon begin a bailout program for small- and medium-sized business.
• Lower the interest rate on its repo programs from 0.15% to LITERAL ZERO (meaning NO interest charged).

Not the Fed was buying everything including CDs, student loans, muni bonds, corporate bonds, etc. As a friend of mine joked, the only thing the Fed wasn’t buying was NFL contracts.

We are now in the process of watching to see if the Fed has succeeded or not. That is… has the Fed’s move to backstop the entire financial system been enough to stop the panic.

Thus far the answer is a resounding yes. Risk assets are up across the board and stocks are moving to retrace 50% of the initial drop in March.

However, the bigger issue… and it’s the one that may lead to a second round of the crisis is:

What is the actual economic damage caused by the Covid-19 panic and subsequent economic shutdown?

Throwing trillions of dollars at the financial system doesn’t mean that consumer spending is going to come back in a major way.

Cutting interest rates and buying asset backed securities doesn’t make people want to go to restaurants, or go out shopping, or attend sporting events.

Put another way, if the consumer doesn’t come back in a BIG way relatively quickly, then we will indeed find ourselves in a significant prolonged recession.

And that would trigger another round of the financial crisis.

With that in mind, if you’re concerned about how your portfolio might handle a crash,

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:

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best RegardsParagraph

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Disclaimer: I am not a scientist nor am I a healthcare official. I am not downplaying the Covid-19 situation; I am simply looking at what the markets are saying about the Covid-19 pandemic.

A very strange thing has started happening in the markets.

While the news continues to tell us that there is a global pandemic and that soon millions of people will be dead… the stock markets have begun bottoming.

The stock market in Italy, which is supposed to be completely imploding from Covid-19, bottomed on March 16^th. It failed to make a new low and has yet to roll over again.

Germany, which is now experiencing its own Covid-19 issues, looks like it bottomed on October 18^th. It is still touch and go here, but we have yet to see new lows.

Here in the U.S., multiple economic bellwethers are showing us something similar. 

Caterpillar is the largest producer of large machinery in the world. If the world was entering a depression, and things were worsening, CAT’s stock actually bottomed on March 12^th and is now putting in a higher low.

Similarly Freeport McMoran (FCX) is the largest copper producer in the U.S. Copper is a commodity that is closely linked to economic growth. And FCX’s share price looks like it bottomed last week on March 19^th. Despite yesterday’s early morning bloodbath, FCX shares never broke to new lows.

Taken together, these charts are suggesting that the the market is in the process of bottoming. The one area of concern that has yet to give us the “all clear” is the credit markets.

High yield credit spreads DID put in a new low yesterday. They are now attempting to bounce. But unless credit bottoms, any rally in stocks will be short-lived.

Put another way, if that last chart begins to rally in a significant way, stocks could EXPLODE higher.

These charts are suggesting to us that the first round of the crisis, the deflationary collapse, will be ending sometime soon. But the second round, the INFLATIONARY storm triggered, by central banks printing trillions of dollars is just around the corner.

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

We are making just 100 copies available to the public.

As I write this there are 55 left.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Disclaimer: I am not a scientist nor am I a healthcare official. I am not downplaying the Covid-19 situation; I am simply looking at what the markets are saying about the Covid-19 pandemic.

A very strange thing has started happening in the markets.

While the news continues to tell us that there is a global pandemic and that soon millions of people will be dead… the stock markets have begun bottoming.

The stock market in Italy, which is supposed to be completely imploding from Covid-19, bottomed on March 16^th. It failed to make a new low and has yet to roll over again.

Germany, which is now experiencing its own Covid-19 issues, looks like it bottomed on October 18^th. It is still touch and go here, but we have yet to see new lows.

Here in the U.S., multiple economic bellwethers are showing us something similar. 

Caterpillar is the largest producer of large machinery in the world. If the world was entering a depression, and things were worsening, CAT’s stock actually bottomed on March 12^th and is now putting in a higher low.

Similarly Freeport McMoran (FCX) is the largest copper producer in the U.S. Copper is a commodity that is closely linked to economic growth. And FCX’s share price looks like it bottomed last week on March 19^th. Despite yesterday’s early morning bloodbath, FCX shares never broke to new lows.

Taken together, these charts are suggesting that the the market is in the process of bottoming. The one area of concern that has yet to give us the “all clear” is the credit markets.

High yield credit spreads DID put in a new low yesterday. They are now attempting to bounce. But unless credit bottoms, any rally in stocks will be short-lived.

Put another way, if that last chart begins to rally in a significant way, stocks could EXPLODE higher.

These charts are suggesting to us that the first round of the crisis, the deflationary collapse, will be ending sometime soon. But the second round, the INFLATIONARY storm triggered, by central banks printing trillions of dollars is just around the corner.

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

We are making just 100 copies available to the public.

As I write this there are 55 left.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Disclaimer: I am not a scientist nor am I a healthcare official. I am not downplaying the Covid-19 situation; I am simply looking at what the markets are saying about the Covid-19 pandemic.

A very strange thing has started happening in the markets.

While the news continues to tell us that there is a global pandemic and that soon millions of people will be dead… the stock markets have begun bottoming.

The stock market in Italy, which is supposed to be completely imploding from Covid-19, bottomed on March 16^th. It failed to make a new low and has yet to roll over again.

Germany, which is now experiencing its own Covid-19 issues, looks like it bottomed on October 18^th. It is still touch and go here, but we have yet to see new lows.

Here in the U.S., multiple economic bellwethers are showing us something similar. 

Caterpillar is the largest producer of large machinery in the world. If the world was entering a depression, and things were worsening, CAT’s stock actually bottomed on March 12^th and is now putting in a higher low.

Similarly Freeport McMoran (FCX) is the largest copper producer in the U.S. Copper is a commodity that is closely linked to economic growth. And FCX’s share price looks like it bottomed last week on March 19^th. Despite yesterday’s early morning bloodbath, FCX shares never broke to new lows.

Taken together, these charts are suggesting that the the market is in the process of bottoming. The one area of concern that has yet to give us the “all clear” is the credit markets.

High yield credit spreads DID put in a new low yesterday. They are now attempting to bounce. But unless credit bottoms, any rally in stocks will be short-lived.

Put another way, if that last chart begins to rally in a significant way, stocks could EXPLODE higher.

These charts are suggesting to us that the first round of the crisis, the deflationary collapse, will be ending sometime soon. But the second round, the INFLATIONARY storm triggered, by central banks printing trillions of dollars is just around the corner.

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

We are making just 100 copies available to the public.

As I write this there are 55 left.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research