Investment Wisdom Of The Day Google
10-Year Note: All Systems Are A Go For A Double Bottom
I sold my large 10-Year Treasury Note position in January of this year, after a 12 months holding period. At that juncture I wasn’t yet confident about what the FED bureaucrats were about to do or how aggressive they would be. That ended up being a good move as treasuries have remained in a fairly tight trading range over the last 10 months.
With that in mind, I believe the picture has now clarified as I shift back to my original assessment. That is, we will see a double bottom in rates before this bear market of 2015-2017 in equities completes itself. And as my previous posts indicate, I believe the FED will no longer raise interest rates at this juncture. Particularly, if the stock market takes a beating, something that I very much expect, while the US Economy slides back into a recessionary environment. Something that is now becoming evident.
Generally speaking, the BOND Market is more intelligent. Yields not surging higher is indicative of what the bond market sees. What does it see? Exactly that, a significant recession and a possible bear market.
Finally, 30-Year bear markets in Bond Yields DO NOT end in a V shape fashion. Typically there is a double or a triple bottom. Plus, there is a number of large gaps in the 10-Year treasury, suggesting that the bond market will retest it’s 2012 and 2013 yield lows. Possibly taking the market as low as 1.5-1.6%.
Impossible? On the contrary, that is exactly what I expect to see over the next 12-24 months. As the FED itself suggested, the next round of QE and negative interest rates might be just around the corner.
10-Year Note: All Systems Are A Go For A Double Bottom Google
The FED Has Lost Control And Credibility
9/21/2015 – A positive day with the Dow Jones up 125 points (+0.77%) and the Nasdaq up 2 points (+0.04%)
The FED generals are out in force to proclaim that the FED hike is still possible later on this year. Nothing new here, they have been feeding this to investors since the beginning of this year.
- Fed’s Bullard: October rate hike possible, but …
- Fed’s Lockhart says risks of delaying rate hike not significant
- Fed’s Williams says decision not to raise rates was a ‘close call’
With that in mind, someone should tell the FED that their credibility is now gone. Most investors have figured out by now that they will not raise. Not in October and not next year. For the reasons outlined here, Can The Stock Market Crash Due To The FED’s Inability To Raise Interest Rates? and here The FED Blinks. How Will The Market React?
In terms of the stock market, it might be as simple as this. Occam’s razor says the stock market is in a downtrend
In addition to that, the Dow Theory (if you are a follower) has confirmed a shift into a bear market at the same time. So much so that the stock market would have to stage quite a rally, pushing itself to new highs, just to force itself out of this longer-term bearish pattern.
Is that impossible?
Not necessarily, but you better have a good response to the following question…..why would it?
- Are earnings about to surge higher? Especially now that the liquidity is drying up and stock buybacks are slowing down.
- Will the US Economy stage some sort of a miraculous recovery and surge higher?
- Will the FED flood the market with QE-4..5…6 and negative interest rates?
- Are we in a “this time is different” environment where the stocks are no longer expensive?
And you if you have answered “YES” to any of the above, you might want max out your margin and load up on stocks here.
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. September 21st, 2015 InvestWithAlex.com
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COT Reports & Weekly Market Calendar – September 18th, 2015
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 September 15th, 2015
Currencies:
- USD: 2K Long Vs. 45K Short – Slight decrease in net short position. Substantial short interest remains.
- Canadian Dollar: 70K Long Vs. 4K Short – No changes. Significant long interest remains.
- British Pound: 57K Long Vs. 3K Short – Slight decrease in net long interest. British pound is remains bullish.
- Japanese Yen: 70K Long Vs. 5K Short – Substantial decrease in net short interest. Japanese Yen is now bullish
- Euro: 94K Long Vs. 12K Short – Slight increase in net long exposure. Significant long position remains. No changes.
- Australian Dollar: 99K Long Vs. 1K Short- Net decrease in net long position. Significant long position remains.
Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, British Pound, Euro, Japanese Yen and Australian Dollar rally.
Markets/Commodities/Volatility:
- E-Mini S&P 500: 635K Long Vs. 493K Short – Net neutral position remains. No major changes
- VIX: 49K Long Vs. 104K Short – Substantial increase in net short position.
- Gold: 71K Long Vs. 57K Short – No major changes. Still neutral.
Conclusion: Based on the information above, commercial interests are now net neutral the S&P and Gold. Please note, commercials have substantially increased their net short position in VIX. That could be due to them expecting a market rally and/or us remaining in a trading range. Considering the fact that S&P is neutral, no definitive conclusion can be ascertained at this time in regards to VIX. Gold is likely to remain within its trading range.
Next Week’s Market Calendar:
- Friday: GDP
COT Reports & Weekly Market Calendar – September 18th, 2015 Google
Can The Stock Market Crash Due To The FED’s Inability To Raise Interest Rates?
9/18/2015 – A big down day with the Dow Jones down 292 points (-1.75%) and the Nasdaq down 67 points (-1.36%)
As you already know by now, the FED has refused to raise interest rates. Further and thus far, most investors and financial expects assume one of two scenarios
- Due to this loose monetary policy and the possibility of further easing, the stock market will stage a massive rally.
- We will remain in this range bound market until the Economy improves and the FED is forced to raise rates. The stock market will eventually push higher (there are a number of variations of this scenario).
Yet, there is another possibility that no one is talking about. As far as I know.
- The Fed’s refusal to raise interest rates will lead to an outright crash.
Let’s explore this a little bit further. You will certainly find Jim Cramer in the “Massive Market Rally” camp. Cramer: Phew! Fed gets it. Prepare for high prices This is a reasonable view and that is how at least 75% of market participants view today’s environment. I encourage you to at least review this outlook.
And since no one cares about a trading range, let’s explore our last scenario or the possibility of a market crash.
Immediately, a question comes up. Why would the market crash if the FED continues on with their “easy” monetary policy, even suggesting that the rates might go negative if they have to? Plus, there is always QE-4…..
I can give you at least four reasons.
- The stock market is massively overpriced. Still. Only 1929 and 2000 Nasdaq tops were higher. I have outlined this notion on this blog a number of times before. Click Here for one of the previous articles.
- The US Economy is rolling over into a recession while interest rates are at ZERO. This is the worst possible case for the FED. What are they going to do now since everything has failed? All of their credit cards are already maxed out. Another round of QE? Negative interest rates? Sure, maybe. But don’t expect such steps to have a net positive impact. They have already taken this Ferrari (the US Economy) to its speed limit and any further attempt to go faster might result in an engine blow out. Well, unless the idiots in power go the route of an all out monetization.
- The FED is losing credibility.
- Investors are beginning to realize all of the above.
Let me put it this way. Today’s stock market is like a 40ft container full of TNT with a lit fuse disappearing inside of it. Will it go off? That is anyone’s guess. Two cases were presented above. One calls for new all time highs while the other explores the possibility of an all out market crash. Perhaps the truth is somewhere in between. Perhaps not. That is for you to decide.
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. September 18th, 2015 InvestWithAlex.com
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Can The Stock Market Crash Due To The FED’s Inability To Raise Interest Rates? Google
Investment Wisdom Of The Day
Will The Market Call Out The Fed?
While most investors will see the FED’s action as net positive, here is what happened when the FED didn’t raise rates in August. That’s right, a 2,200 point decline we are still trying to recover from. No further commentary is necessary here.
The only remaining question is…..will the history repeat itself here, are we about to embark on even a more sinister decline or will the market push to new highs? I guess we are about to find out.
The FED Blinks. How Will The Market React?
9/17/2016 – A mixed day with the Dow Jones down 65 points (-0.39%) and the Nasdaq up 5 points (+0.10%)
Well, the FED has blinked. It appears that things are not as wonderful as most economists and politicians would have you believe. Here is the primary question…….if the FED can’t even raise rates 25 bps, how bad is it?
Thus far, the market is not sure how to react. From one vantage point, we should surge higher in anticipation of remaining in an easy monetary environment. From another, the stocks are overpriced and what kind of an economy are we dealing with here if the FED can’t even raise.
None of the above should come as a surprise to the readers of this blog. I am have been saying that the FED is unlikely to raise rates since about the beginning of this year. But don’t take it as a net positive. Here is a very bearish take on the subject matter Markets in store for huge correction if Fed doesn’t raise rates
Zero interest policies, says Stockman, are leading to the global economic turmoil we are currently experiencing. “In the last 15 years China took its debt from $2 trillion to $28 trillion… it’s a house of cards with an enormous overcapacity and enormous speculation and gambling that is beginning to roll over,” he says. “It’s just the leading edge of a global deflation that I think is underway as a consequence of all this excess credit growth that we’ve had.”
If the Fed raises rates and doesn’t mince words there’s going to be a long-running market correction, says Stockman. If the Fed doesn’t raise rates there will be a short-term relief rally but eventually the markets will lose confidence in the central bank bubble and we’ll be in store for a “huge correction.”
I couldn’t agree more. As for me, I will simply repeat what I have said here two months ago.
I am 75% confident that the FED will not raise interest rates at all and 100% confident that they will not raise it in any meaningful way. What is meaningful? Even 8 separate hikes at 25 bps each would be laughable here. And while anything above that will matter, I am extremely confident that we will not even get close to that over the next 2-5 years.
Here is why…….
- China has launched an official currency war by devaluing the Yuan 3 times in a row (thus far). Japan is trying to do the same and the EU is threatening further easing and/or QE. In this ocean of devaluation, the US cannot afford to have a strong currency.
- Plus, the US Economy is rolling over into a recession. Some of today’s official numbers are starting to reflect that.
- We are on the verge of a massive down leg in our equity markets. At least based on my mathematical and timing work.
- Commodities have collapsed.
- Deflationary forces are reappearing throughout the economy.
- Etc….
As I have mentioned before, this is the worst case scenario for the FED. They are already TOO LATE. Now they are stuck in a situation where our economy and capital markets collapse while they are rendered powerless. As soon as other investors realize that……well…….watch out below.
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. September 16th, 2015 InvestWithAlex.com
Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!
The FED Blinked. How Will The Market React? Google
Investment Grin Of The Day
When you are worth $60 Billion and you are still not the richest guy at the table.
