Weekly Update & Summary: April 12th, 2014

An ugly week with the Dow Jones down 386 points (-2.35%) and the Nasdaq down 128 points (-3.1%). Structurally, the market did very well by closing most of its gaps. In fact, just today the Dow finally closed the before mentioned large gap located at around 16,050. There are a number of smaller gaps left leading all the way down to February 5th low, but the Dow will close them as the bear leg develops further at below mentioned time frame. Overall, it has been a fairly clean week.

WEEKLY REVIEW:

Mortgage Origination Collapses….Real Estate To Follow

According to Black Knight, monthly origination volume was the lowest on record and down 23% month-over-month. This is wonderful in depth look into the state of today’s real estate market. Anyone who believes the real estate market will stay at these levels or move higher is smoking some good quality crack. Click Here to see this outstanding report. Here are just a few points.

Origination volume is the lowest on record with prepay speeds signaling more drops in refi originations.
Monthly sales were essentially flat year over year, but traditional sales were up almost 15%
The government share of originations has decreased, led by a sharp drop in HARP originations
Credit standards have shown few signs of loosening, with very little origination activity in the lowest credit score bucket.

Russia Outlines It’s Economic Warfare Plans Against The USA

In no uncertain terms, Gazprom CEO Aleksander Dyukov outlined Russia’s Economic Warfare plans against the USA in case of further sanctions or any further meddling associate with Ukraine. To summarize….

Fundamental Shift & Move From EU/West To Asia/India: As discussed here earlier, Russia is currently making a major push to shift it’s gas and oil markets from the West to the East by signing a number of large longer-term contracts with both China and India.
Move Away From The “PetroDollar” As A Reserve Currency: To demand payments for gas and oil in Euro, Yuan, Rubble, Gold or whatever else…..as long as it is not the US Dollar. As the theory goes, since the US is heavily reliant on it’s Reserve Currency status for it’s ability to maintain a heavy debt load, any move away from the US Dollar would collapse the US Economy.

I don’t buy this for the time being. Any such move by Russia will have a very limited impact, if any, on the US Economy or it’s financial markets as a whole. The US Financial System is way too large, too well diversified and there are way too many international players involved in the system to destabilize it that fast. Plus, our mathematical work in the Treasury market doesn’t confirm this either. I would give this a second thought if China decides to join Russia, but such a move would be highly unlikely at this juncture.

In short, Putin might try, but he will fail. His own economy is on the verge of a collapse and he should pay a little bit more attention to that. In fact, if the US wants to finish off Russia it should collapse the price of oil to $20-30 for about 2-3 years and you will see another 1991 type of a regime change in Russia in short order.

FOMC Minutes Confirm Our Forecast

In just released FOMC Minutes, FED Officials confirmed their dovish approach to any future interest rate increases. According to them, “even after employment and inflation are nearly back to normal levels, short-term rates may need to stay unusually low for a while because the economy isn’t fully healthy”.

While the market is celebrating the news for the time being, this falls in line with our overall forecast. Investors/traders must realize that the economy is running on fumes even though the interest rates are at historic lows. Further, when the economy finally rolls over into an “official” recession there is very little the FED will be able to do in order to induce further stimulus. A double whammy.

The outcome? An upcoming bear market of 2014-2017, a severe recession, a flattening yield curve and surging gold prices. In fact, based our mathematical and timing work the bear market is just around the corner. As such, now would be a great time to protect yourself.

MACROECONOMIC ANALYSIS:

Ukraine/Russia/USA/EU/NATO continue to be the most important issue. In fact, I continue to believe things will escalate significantly over the next few weeks.

While Ukraine interim government backed away from their 24 hour deadline on Friday, the situation remains very tense. I continue to believe the US/NATO, Ukraine’s Interim Government, Pro-Russian Movement In the East Ukraine and Russia are one spark away from reigniting this conflict and going at each other on multiple levels. While I don’t believe NATO and Russia will get involved in a direct military conflict (for the time being), any misstep here by either side might lead to Russia invading East Ukraine. In fact, I continue to believe it is just a matter of time. Such a move by Russia will spark a number of economic sanctions (from both sides), political storm, war rhetoric and a million other unforeseen consequences. As you can imagine, this would be incredibly unsettling for financial markets.

TECHNICAL ANALYSIS THE FOR DOW JONES:

Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market. Same applies to the market action over the last two weeks. Yet, that in itself can be misleading as per our timing analysis discussion below.

Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.

Short-Term: Short-term positive trend is about to reverse. If the Dow breaks below 16,000 in the upcoming week, short-term trend will shift from positive to negative. So, while the short-term trend remains bullish for the time being, it might be misleading as per our timing analysis discussion below.

Again, even though all 3 trends are bullish for the time being, that might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.

MATHEMATICAL & TIMING ANALYSIS:

First, a recap. Particularly for our new subscribers. Over the last few months we have maintained that the DOW will set a XXXX

(*** Please Note: This time around about 90% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public. As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).

Long-Term Overview:

XXXX

The next turning point is located at.

Date: XXXX
Price: XXXX

XXXX

Trading:

XXXX A lot of them have done incredibly well thus far and I hope you were able to benefit as well. I added my final position during the week as I have mentioned in the daily updates. XXXX

Remember, you should have an exact strategy and entry/exit points based on the forecast above.

The list below is for your reference point. It entails my investment strategy for my own investment purposes. While you are free to follow me, please do so at your own risk. Do not take this as a trading advice. Please note, all of the positions below have been triggered.

Stock	Entry Point ($)	Action Taken	Stop Loss @
XXXX	XXXX	Went XXXX	XXXX
XXXX	XXXX	Went XXXX	1250
XXXX	110	Went XXXX	121-123
XXXX	74	Went XXXX	80
XXXX	XXXX	Went XXXX	260
XXXX	XXXX	Went XXXX	460
XXXX	35	Went XXXX	39
XXXX	65	Went XXXX	70
XXXX	120	Went XXXX	120-130
XXXX	100	Went XXXX	108-112
XXXX	112	Went XXXX	120

Otherwise, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).

If You Are A Trader: XXXX

If No Position: XXXX

If Long: XXXX

If Short: XXXX

CONCLUSION:

An incredibly interesting week is coming up. We are now looking for our forecasts above to be confirmed over the next few trading days/weeks. I have also described what to anticipate over the next few months and exactly what you should do now. With increased volatility, multiple interference patterns and an incredibly important long-term turning points coming up over the next few months we must be very careful and risk averse here. Those anticipating the moves and those who can time them properly will be rewarded appropriately.

Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start.

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