– State of the Market Address:

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

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

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

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This just about says it all….

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

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

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

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

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

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

What does that mean? 

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

Why is that important? 

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

Now, to chart number two. 

Original source Fed to take historic leap into the unknown

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

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

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

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

The answer is……NO ONE with a brain. 

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

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

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