All primary World War 3 parties, Russia, China and NATO, continue on with their respective arm races. Let’s take a look at the latest news dump…..

• RUSSIA FEARS NATO ‘GLOBAL STRIKE’ FROM EASTERN EUROPE – Quite a few very good points in this article. Just imagine what would have happened if either Russia or China were amassing a massive military presence, bases, supply chains, etc….. on the US/Mexican border.
• US asks Russia not to target Al-Qaeda branch in Syria – Is this treason?
• US drops weapons to rebels in Syria – Again, is this treason?
• China says it doesn’t fear ‘trouble’ in S. China Sea – how many wars can the US fight at once?
• Russia Is Set to Build 12 New Monster Warships Armed with 200 Missiles Each – invest in defense?
• NATO is sending troops to Poland to stare down Russia – Didn’t Hitler and Napoleon do the same thing?
• KREMLIN CANNOT INTIMIDATE ROMANIA, SAYS PRESIDENT – Congratulations Romania. Once the war starts there will be a big hole where Romania once was.

Point being, what was outlandish just a few years ago (my forecast – Nuclear World War 3 Is Coming Soon.When, How & Why), is now becoming crystal clear. With all superpowers arming themselves to the teeth, war comes closer with each passing day. Sad.

6/6/2016 – A positive day with the Dow Jones up 113 points (+0.64%) and the Nasdaq up 26 points (+0.53%).

According to quite a few bulls, the stock market is about to breakout. Finally.

US stock market is getting closer to a ‘melt up’: HSBC

Two major components of the S&P 500 could break out, according to the note sent out by Murray Gunn and team. They are industrials and the “FANG” stocks, composed of Facebook Inc., Amazon.com Inc., Netflix Inc., and Alphabet Inc. “The S&P 500 industrials sector has given a bull signal with momentum turning higher on the back of a positive cyclical trend indicator,” the analysts write, meaning that the slope of the 200-day moving average is showing positive momentum that could preface a further move higher.

Wonderful……right? Perhaps, but just as some analyst expect the most speculative stocks to surge higher, others see major trouble ahead.

Did the S&P just crush this ‘irrefutable’ sell signal?

I may disappoint permabears when I say this, but just because it happened twice before, doesn’t mean it will happen again. Also, no stock market signal is ever irrefutable.

Wow, as soon as it is not convenient, “doesn’t mean it will happen again” tends to come out. Perhaps. Or, is it as simple as this?

Investors paying too much for growth

I believe the reality here is rather straight forward. The Fed has distorted the markets to such an extent that things no longer make sense. For either bulls or bears. With the market flashing technical signals that both support a bull market rally or an outright collapse.

Which way will it go?

One think is certain, we are about to find out.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. June 6th, 2016  InvestWithAlex.com

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6/3/2016 – A negative day with the Dow Jones down 32 points (-0.18%) and the Nasdaq down 29 points (-0.58%).

Bill Gross certainly believes that might be the case.

• BILL GROSS: The last 40 years of investing history are a ‘black swan’ that won’t be repeated

But my take from these observations is that this 40-year period of time has been quite remarkable – a grey if not black swan event that cannot be repeated. With interest rates near zero and now negative in many developed economies, near double digit annual returns for stocks and 7%+ for bonds approach a 5 or 6 Sigma event, as nerdish market technocrats might describe it.

Based on my mathematical and timing work Bill Gross is both right and wrong.

Now, most investors today would certainly believe that the statement above is insane. After all, over the long-term markets always go up. Or so they have been told. Yet, if we look at the charts going back to the first day of trading, May 19th, 1790, we will find two important periods of time that suggest otherwise.

• 1790-1860: During this 70 year period of time the Dow was able to eke out an impressive return of about 150%. That represents an annualized compounded rate to return of just 1.3%. Now, I am sure that if we take inflation into consideration, over the same period of time, the net result would be negative.
• 1899-1949: A 50 year period of time during which the Dow gained just 185%. That represents an annualized compounded rate of return of just 2.4%. Or net negative inflation adjusted rate of return during the same period of time.

Is it so hard to believe that we are in for another one of these periods?

I don’t think so and that is where Bill Gross is both right and wrong.

He is absolutely right to state that we might experience flat or even negative returns going forward. Possibly for an extended period of time. Considering today’s valuation levels, massive debt, zero interest rates and insane monetary policy, he is absolutely right.

Here is where he is wrong.

This prolonged period of time actually started in January of 2000. At least on the Dow. Before bullish investors dismiss this as insane, consider the following.

Inflation adjusted S&P/Dow are still slightly down since January of 2000.  As represented by the chart below. The Nasdaq is still down in net terms, let alone inflation adjusted terms. 

Plus, as suggested above and multiple times on this blog, we are sitting at bubble valuation levels. Today. That doesn’t bode well for future market performance.

Don’t get me wrong. We will still have bull markets and bear markets. The market will rally to new all time highs only to collapse to today’s levels. What my work suggests is the following. When we look back from the year 2040, the Dow WILL find itself just north of 20,000. Again, based on my long-term mathematical and timing work.

And that would be after significant inflationary pressures the FED will unleash over the next decade. In other words, ladies and gentlemen, Bill Gross is dead on. Brace yourself.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. June 3rd, 2016  InvestWithAlex.com

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COT Reports: If you are not familiar, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions. In other words, it gives us a preview of what commercial interests are buying or selling. As the theory goes, we want to be on the same side of the trade as the big guys.

While not a good timing tool, currencies, commodities and the stock market (to a lesser extent) tend to move in the direction of the bets made by the commercial players. Not always, but often enough.

Latest data, as of May 31st, 2016

Currencies: 

• USD:  1K Long Vs. 25K Short – No changes. Substantial short interest remains.
• Canadian Dollar: 5K Long Vs. 73K Short – Significant short interest.
• British Pound: 147K Long Vs. 48K Short – No changes. British pound remains bullish.
• Japanese Yen: 11K Long Vs. 22K Short – Neutral.
• Euro: 72K Long Vs. 38K Short – Yet, Euro remain bullish.
• Australian Dollar: 34K Long Vs. 21K Short – Neutral.

Conclusion: Based on the information above, commercial interests expect the US and Canadian Dollars to decline while British Pound and Euro to rally. Japanese Yen and Australian Dollar remain neutral. 

Markets/Commodities/Volatility: 

• E-Mini S&P 500: 407K Long Vs. 329K Short – Net neutral position remains.
• Nasdaq 100-Mini: 30K Long Vs. 77K Short – Small net short position.
• VIX: 150K Long Vs. 13K Short –  Record net long VIX position. VIX is at extreme bullish levels. That is net bearish for the market.
• Gold: 41 Long Vs. 176K Short – Large net short position against the gold.

Conclusion: Based on the information above, commercial interests are now net neutral the S&P. Short the Nasdaq and gold, long the volatility. It is important to note a record breaking net long position in VIX. 

Next Week’s Market Calendar: 

• No important developments. 

COT Reports & Weekly Market Calendar – June 3rd, 2016 Googles

GM’s President believes the car industry is about to go through a major transformation.

The auto industry will change more in next five years than prior 50

I tend to agree and we have covered this topic before. One thing is certain. There will be losers and there will be winners. Those who prepare today might be able to capitalize. In addition to the article above, here is a more comprehensive view on the subject matter.

Self-driving cars are expected to change the way we live, work and interact with each other. So much so that some expect this change to be in full swing by 2025. While I have my doubts, it is an important trend to follow if you are an investor.

For instance, this trend has the ability to decimate the tracking industry while other multi-billion dollar companies will seemingly appear out of nowhere. Let’s take a look at some of the other probable outcomes.

• Mind-boggling cost of overhauling our entire road system, traffic management and signposting. Or insurance regulations. Or driving tests. Or road tax. Or liability issues. Someone will make or lose a lot of money here.
• Road death is the eighth leading cause of death on the planet, with between 90% and 95% of car accidents the fault of human error. The economic cost of road accidents is estimated to be around $277bn in 2013.
• City design will change enormously, even just in the short term. With great swathes of city real estate covered in car parks, self parking cars can cut down on that dramatically.
• Fuel savings will be immense. Autonomous cars drive consistently and economically, without man’s strange insistence of moving one, righteous, car up the queue by overtaking, and aggressively lane-changing.
• Morgan Stanley projected autonomous cars could save the US $170bn in lower fuel costs, and another $138bn in congestion avoidance. And that’s just fossil fuels. Which could also be a thing of the past.
• Another option to charge your car is wireless induction charging – a primary coil is ferreted away in your garage floor, a secondary coil is incorporated into the floor of the car, and an alternating magnetic field charges the battery.
• Personal insurance will mostly likely become defunct, because as the car takes responsibility for safety, liability will shift to the manufacturers themselves, with the ABI – the Association of British Insurers telling Factor: “The key change – and the potential shift to product liability – comes when the driver is not expected to oversee or monitor the vehicle and when they have ceded full driving responsibility to the car itself.
• ‘Sleeper cars’ will become available for long journeys where you’ll simply set off at night, tuck yourself into the incorporated bed, with blacked-out windows if there are windows at all, and wake up right outside your destination, be it Land’s End to John O’Groats, or a cross-Europe trip.
• Freight will be completely automated, putting every single lorry driver out of work. Deliveries will be automated, using the highways at night when there’s no congestion and economies of scale can be greater, without pesky regulations forcing weak-bodied professional drivers to take breaks.
• Rather than own a vehicle, you’ll most likely whip out your smartphone and call an automated car, just like we would an Uber taxi today. Prod your destination into the app and off you’ll go, automatically billed at the end.

And that’s just to name a few possibilities. How all of this will shake out and how long it will take is anyone’s guess. If the human race doesn’t manage to destroy itself over the next 20 years, as per my other forecast, this change has the capability of delivering massive gains to enterprising investors. Definitely put it on your “watch list”. 

How To Make A Zillion In The Next Car Revolution  Google

6/2/2016 – A positive day with the Dow Jones up 49 points (+0.27%) and the Nasdaq up 19 points (+0.39%).

Recently Marc Faber pointed out a number of inconsistencies I have been talking about on this blog for some time. That is, a number of rally/bounce non-confirmation points the market is flashing.

Chief among them are the Nasdaq, Russell, Biotechnology (IBB) and the Dow Transports. If we were truly in a new phase of a bull market, the indices above should be leading the pack. Instead, they are lagging behind the Dow and S&P. To one degree or another. And if that doesn’t raise a number of red flags, well, Mr. Faber believes that it should. I agree.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. June 2nd, 2016  InvestWithAlex.com

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Exactly a year ago we saw analyst and investors falling all over each other to upgrade Apple (AAPL). Suggesting that it would double within a short period of time to become the first Trillion dollar company. Since then the stock is down 28%.

We are now witnessing the same insanity with Amazon (AMZN). Case and point….

• Three reasons Amazon’s stock may be ‘unstoppable’
• This Venture Capitalist Thinks Amazon Stock Could Rise 900%

Seriously? A $3 Trillion dollar valuation for a tech company with only $1 Billion in net earnings. Yes, I get it. Amazon is the future as it is best positioned to take advantage of future tech. Things like Amazon’s Bezos: We’re near a ‘golden age’ in AI Just don’t forget, the investment landfill is full of such visionary companies. And finally, Jeff Bezos sells $671 million worth of Amazon stock

Undoubtedly, Amazon (AMZN) is very well run company. Yet, considering its valuation levels and the general overvaluation levels in the overall market, I believe it would be foolish to chase the stock here. Instead, you might want to consider buying something a little bit more undervalued. Like an entire Russian Market (RSX), selling today at a market cap not that much higher than Amazon’s own.

6/1/2016 – A positive day with the Dow Jones up 2 points (+0.01%) and the Nasdaq up 4 points (+0.08%).

What was unheard of in January and February is once again back on the table. Various bullish commentators are once again out in force calling for new all time highs. For instance….

• What Fed? Stocks will post double-digit returns this year, Tom Lee says

“We’ve got inflation picking up; which is good, we’ve got commodities bottoming. The dollar isn’t gaining anymore. High yield probably is the most important thing to focus on; it’s telling us that the stock market should have double-digit gains this year,” the founder of Fundstrat Global Advisors told CNBC’s “Squawk Box.”

• Strategist Jim Paulsen makes case for why stocks are about to hit record highs

Economic growth, not only in the U.S. but around the world, is picking up in a “synchronized” fashion, and deflationary concerns are fading, the chief investment strategist at Wells Capital Management told CNBC’s ” Squawk Box .”

Fair enough. Since the market is close to new all time highs it is fairly easy or convenient to make the prediction above. In essence, it is a 50/50 shot at being right.

But don’t be too eager to load up on stocks here.

• New all-time highs in stocks could be the ultimate trap this summer

U.S. stocks are making yet another run at all-time highs—at least for the S&P 500 (^GSPC) and Dow Industrials (^DJI). But even if that were to happen, that’s no reason to get uber-bullish on risk markets, as there are three significant headwinds facing the markets right now.

Here is the bottom line. The NYSE (largest index by capitalization) trades today just about where it was 2.5 years ago. And if we take recent lows into consideration, lows we are likely to revisit, nearly 3.5 years of market gains vanish into thin air.

Plus, numerous indicators are not confirming the most recent rally. For instance, we are experiencing low volume melt up days while the leadership is lagging. Neither of the leaders or supposed leaders (Nasdaq, Russell or Biotech) are confirming today’s rally. The Dow theory is certainly not giving a buy signal, with Transports barely moving off of recent lows.

The conclusion here is therefore simple. Today’s bullish market remarks are caused by recent market gains or bullish sentiment and should not be used as indicators for future performance. New highs or not.  After all, the sentiment above can just as easily swing negative.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. June 6th, 2016  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

How to Hold & Carry $80 Billion