tag:blogger.com,1999:blog-88752547401723911202023-11-16T06:59:12.741-05:00Traders UpdateThe Information is provided for information purposes only. The Information is not intended to be and does not constitute financial advice or any other advice. The Information is general in nature and is not specific to you. You should not make any decision, financial or otherwise, based on any of the Information without undertaking your own due diligence.Unknownnoreply@blogger.comBlogger79125tag:blogger.com,1999:blog-8875254740172391120.post-25728629764908935952016-11-17T23:31:00.000-05:002016-11-17T23:57:47.761-05:00I Was Wrong. The Bull Market Is OnHi Folks,<br />
<br />
It's been a while and I've waiting to post about my feelings on the market until after the election. As you know, I've been pounding the table as a bear since the end of 2014. My thoughts changed back in June of 2016 but I wanted to wait until the election for confirmation. Below I will show a weekly chart of SPY to explain my extreme bearishness and then why I've changed my tune. First the chart.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVpRSX7j7e1orHg0drIUo2CHDceJBj5f1zbPp4aeiub9IWDd7bM4Mgk0p1J2uk5kt2KX8K3fWIA7mu2CrPODGHIP_K9CP92FLOht0dE2jwPoUFuaV6PzaGVmaj-kaj1aAnfQxAnZEnOp4/s1600/Market+change+2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="357" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVpRSX7j7e1orHg0drIUo2CHDceJBj5f1zbPp4aeiub9IWDd7bM4Mgk0p1J2uk5kt2KX8K3fWIA7mu2CrPODGHIP_K9CP92FLOht0dE2jwPoUFuaV6PzaGVmaj-kaj1aAnfQxAnZEnOp4/s400/Market+change+2.png" width="400" /></a></div>
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<br />
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So I would like you to follow the green arrows from left to right. The first arrow shows when I first became bearish when my MACD(bottom of chart became inverted). When this MACD becomes inverted it is the first sign of a selloff. The data goes back over 100 years and is always accurate. I became bearish but if you recall, I said the Moving Averages(MA's) had to flatten first. The 2nd arrow on the top of the chart, is when the MA's flattened and I believed we would begin the big selloff. We did as you can see but were stopped out by the longer term MA(brown line on chart). We held that level and then the MACD became non-inverted in about June of 2016 as you can see by the 3rd arrow at the bottom of the chart. That is when the picture changed. The final arrow just occurred right as the election ended at the bottom of the chart. The MACD is non-inverted and we are bouncing off this level. Going forward my targets in SPY are 226.50 then 237.75 over the next several months.<br />
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Thanks and Good Trading,<br />
<br />
Tim<br />
<br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-13492986602127667872016-09-13T14:55:00.000-04:002016-09-13T14:55:10.648-04:00Is October 1st D Day for the US Dollar?Hi Folks,<br />
<br />
Are the days of King Dollar coming to an end? On October 1st, the IMF is adding the Chinese renminbi to the SDR Basket. So what right? Well with the recent talks at the G20 summit about the need for a replacement of the dollar as the world's reserve currency, it seems likely that the stage is being set for the SDR to take it's place.<br />
<br />
The US has enjoyed huge perks for decades while having the power of the world's reserve currency. When that goes away it will have huge impacts on our multinational companies as well as the dollar itself. If the SDR does replace the Dollar, who will buy our debt?<br />
<br />
I'm not ringing the alarm bell yet but we could be seeing the beginning of the end for the dollar.<br />
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Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-46764970404942278202016-05-03T10:36:00.001-04:002016-05-03T10:36:45.496-04:00Here Comes The BoomHi Folks,<br />
<br />
I believe in the next few weeks we are about to take the next BIG LEG down in the market. The way I see it unfolding in terms of SPY is that we trade down to around the $200 level, then rally back up to the $208 - $209 range and then the bigger selloff begins. I have also lowered my forecast for the potential market bottom from $88 to $84 based on this last leg of the market. Again that number will take time to get there. I am not suggesting that we go right to that number. This market is unfolding as expected and the eventual bottom takes a few years.<br />
<br />
Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com2tag:blogger.com,1999:blog-8875254740172391120.post-52276163090071176602016-04-16T12:25:00.001-04:002016-04-16T12:25:58.462-04:00Is this a Bubble?HI Folks,<br />
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The market keeps holding on to these levels and people are asking me if I believe this is a stock market bubble. My simple answer is yes. As I have mentioned in many posts, I get my information directly from the sources rather than letting someone in the media spin the information. I go to the Federal Reserve, The Department of Labor, or the IMF websites for example. To answer this question today I will leave you with 1 chart from the Federal Reserve website and let you decide. It shows the ratio of the Market Cap of the Wilshire 5000(one of the broadest stock market indexes) compared to GDP. Currently running at over 130% of GDP.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0Zix8p5b-TAKWV7je9NDp22Rj5ag5a6Cyn4-1bp4TyavfWrX2KrxFALz_n_kO8vkeQGf5msX33DTvd0SMfGXktsGKix0x5I_Rszhaaq75HPKs0Nnfts_BXRr5QN9T0F2V_H_72Q-hsks/s1600/Wilshire+5000+vs+GDP.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="192" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0Zix8p5b-TAKWV7je9NDp22Rj5ag5a6Cyn4-1bp4TyavfWrX2KrxFALz_n_kO8vkeQGf5msX33DTvd0SMfGXktsGKix0x5I_Rszhaaq75HPKs0Nnfts_BXRr5QN9T0F2V_H_72Q-hsks/s320/Wilshire+5000+vs+GDP.png" width="320" /></a></div>
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<br />
Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-52170777346329057222016-04-10T18:45:00.001-04:002016-04-10T18:48:00.570-04:00Chicken LittleHi Folks,<br />
<br />
I know some of you are probably thinking I sound like chicken little. My posts are all about how bearish I am and yet the market is not significantly lower. This bear trend is unfolding pretty much as I expected. This is a long term change and takes time to develop. When I first turned bearish in December of 2014, I wrote that it would take time because the moving averages needed to flatten. I also said that market would selloff and have a series of lower lows and lower highs. That is exactly what is happening. I also wrote about how the economic data looks horrible and I could see the economy slowing even though the published data did not yet show it. You have to know how to read the actual data and not look at the "headline" numbers. I still don't understand how Wall Street has ignored the writing that is on the wall.<br />
<br />
In February, the Atlanta Fed had Q1 2016 GDP estimates at 2.7%. Just last week they had 2 revisions to their estimate. On Monday they lowered their Q1 GDP forecast to 0.7% and then on Friday they revised lower again to just 0.1%. That is a significant drop from the 2.7% forecast just 2 months ago. The GDP for Q1 will be announced on April 28th. <br />
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I decided to show you a couple of charts. The first one is the current market. You can see the market top in 2015 and how prices flattened and now the moving averages are as well. <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixfyAUGgu3fUTh5pYeGOGHpixLSQ3M77PXuWcwSP6DmiNEyxsWPCp4fGEcF-5XJPQ4_e9as5oOdskIDDnn9ZAa65ANWEt18i9_1xhxZ3bJleukSQs6UYrc7f_sOXVu6hWMwMNEDTCHb08/s1600/chicken+little.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="224" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixfyAUGgu3fUTh5pYeGOGHpixLSQ3M77PXuWcwSP6DmiNEyxsWPCp4fGEcF-5XJPQ4_e9as5oOdskIDDnn9ZAa65ANWEt18i9_1xhxZ3bJleukSQs6UYrc7f_sOXVu6hWMwMNEDTCHb08/s320/chicken+little.png" width="320" /></a></div>
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As you might be able to see, we are very close to the next major move down. Below is a chart show<br />
ing the chart action for the 2001, 2007, and 2015 tops all on 1 chart. As you can see we are headed in the same direction. DOWN.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPK4eAut92fOB0-mj2b8BWkWxdXcAmF5O_bZFFCfQaO8Pv90ueJbyl_zdAmmzkrAnS8QTWt8Kgh9F3DYBvm4e_WRoUrzg_8_eEQ1G6Uhj9uP0vQEAdyMARO8TsacQz0lMrog1niLlxSrg/s1600/last+3+tops.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="224" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPK4eAut92fOB0-mj2b8BWkWxdXcAmF5O_bZFFCfQaO8Pv90ueJbyl_zdAmmzkrAnS8QTWt8Kgh9F3DYBvm4e_WRoUrzg_8_eEQ1G6Uhj9uP0vQEAdyMARO8TsacQz0lMrog1niLlxSrg/s320/last+3+tops.png" width="320" /></a></div>
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<br />
Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-33409039293718160262016-03-15T21:55:00.001-04:002016-03-15T22:11:31.038-04:00Will The Fed Raise Rates?Hi Folks,<br />
<br />
Here we are again awaiting the FED rate decision. Do they raise again? The Fed Funds Futures give a 0% probability of the FED raising rates on Wednesday. <a href="http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html">http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html</a>. In her most most recent banter, Janet Yellen has expressed that rate hikes will come but more slowly than previously expected. I think the FED is exercising extreme caution here. They have 2 mandates for their decisions, unemployment 5% and 2% inflation. They have achieved the 2 targets for unemployment and inflation according to the most recent data so why not continue to raise?<br />
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They are looking at the weak global economic picture and the probability that it will infect the US economy. As I have mentioned before, I believe it already has and will continue. If they stick to what they have been preaching about economic recovery and hitting the 2 targets for unemployment and inflation, they should raise. The problem is the FED doesn't really have those 2 mandates as their barometer, they care more about the impact of their decisions on the markets. So I believe they will not raise tomorrow because it is not what is expected. If they do raise, the market is going to rollover again sooner than later. Either way, I think we rollover soon. We hit my target for this upside move from the February 11th low on the button yesterday. However the technical's say there could be more upside. It will be interesting to see what happens tomorrow.<br />
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<br />
Thanks and Good Trading,<br />
<br />
Tim<br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-2607628639384291232016-02-07T11:22:00.002-05:002016-02-07T11:22:51.511-05:00Game Over for Stocks?Hi Folks,<br />
<br />
Well the market did rally off the recent lows but now it's rolling over. The S&P 500 ETF, SPY, rallied off of the $181 lows and got as high as $194,58. I was expecting a few points more on the upside before rolling over but the big picture remains the same. Lower lows and lower highs on the bounces. It looks like we are in the next leg down for the next few weeks. I am expecting $173 in SPY then $159 over the next few weeks.<br />
<br />
Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-21238077451299245662016-01-30T10:45:00.003-05:002016-01-30T10:45:59.604-05:00Stock Market This WeekHi Folks,<br />
<br />
We recently made a lower low than the August low and now we are bouncing. I expect this bounce to continue into next week. I'm looking for $198-$199 in terms of SPY from the $193.75 close on Friday. Then as you can guess, I expect it to roll over again and start to make the next new low. My guess at this point is around $170 in SPY.<br />
<br />
Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-47526443843109949862016-01-16T10:39:00.001-05:002016-01-16T10:39:46.333-05:00What's Next For The Stock Market?Hi Folks,<br />
<br />
Well we hit my target for the week in SPY of $187. As of now, it doesn't feel like we have made our short term bottom yet. I think we get down to the $174 range next week. We should find support in that area. <br />
<br />
The bounce that follows the short term bottom would be the next spot to short, Hopefully everyone has their portfolios protected as I have been preaching about. With proper hedging these massive corrections present amazing opportunities to add to your portfolio. <br />
<br />
I can't wait for the time in the future when I turn wildly bullish but for now you know where I stand. Geronimo!!<br />
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Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-57423384456321195942016-01-09T13:43:00.000-05:002016-01-09T13:54:42.230-05:002016 Off To A Great StartHi Folks,<br />
<br />
As I have voiced my concern over and over, the market is in free fall. In the short run I see SPY hitting support at $187 first then $175 if that does not hold. That's the good news.<br />
<br />
The bad news is that the next spike up will be a lower higher followed by a lower low and then the cycle repeats itself until the eventual final bottom. Again this could take a few years to bottom. My current target is $88 in SPY representing a 58% decline in the markets from the top . However, as the debt crisis unfolds, if it turns into a currency crisis my target would be lowered to $44 in SPY. That would represent a 79% decline in the markets.<br />
<br />
Either way the market does not look good and I believe an official recession is around the corner. The FED recently updated their Q4 GDP forecast. The initial forecast they gave was 2.5% GDP growth. Their most recent update was given on January 8, 2016. They are now forecasting just 0.8% for Q4 GDP. That is a huge downgrade in expectations. It is possible that the final Q4 number will be flat or negative. Follow that with a Q1 2016 negative GDP and boom we are in a recession.<br />
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Buckle up, the next few years are going to be a rocky road.<br />
<br />
Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-79525180136183469072015-12-11T15:42:00.000-05:002015-12-11T15:42:11.467-05:00Will the FED raise rates on Wednesday?Hi Folks,<br />
<br />
The big question is will the FED raise rates next week. Virtually everyone on Wall Street believes that they will raise. I guess I am the lone wolf who believes that they will NOT raise rates. <br />
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Although Janet Yellen recently changed her talk from "the fed may raise rates" to "if we raise rates, the next one will not come for a while", I still believe the answer is no. I wish and hope that they do raise rates because that is exactly what is needed. The fact is the FED does not want to look foolish by raising rates and then shortly there after having to cut them back again and possibly start QE4. <br />
<br />
If you look at the economic data, the economy is slowing. Manufacturing numbers are at 6 year lows, employment numbers are weak, and the giant retailers like Walmart are getting crushed. The headline 5.1% unemployment rate does not show the real situation. The labor force participation rate is at 40 year lows and we are losing higher paying jobs. The jobs that have been added in the past few years are mainly lower income jobs.<br />
<br />
There are plenty of bubbles that will be popping with higher rates. The auto industry is a giant bubble, the housing market is in a bubble, and the credit markets are in a major bubble.<br />
<br />
I am still very bearish for the longer term(next 1-3 years) and I believe, as in my last post, that from here we make lower highs and lower lows going forward. My long term target in SPY(SP500 ETF) is 89, currently trading roughly 206.<br />
<br />
Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-34147857738642281762015-11-13T00:36:00.000-05:002016-03-15T21:56:28.269-04:00Where is the Market Heading?Hi Folks,<br />
<br />
So here we are again. This is the second chance I have been referring to in my prior posts. Please take the steps the protect your portfolio now. You will not get another chance. As I mentioned in my earlier posts, the market has rebounded back into the moving averages and now we beginning the longer term move down. I have received feedback that maybe I have not been clear about how this would unfold so I will attempt again.<br />
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The initial phase of a reversal is a big move down, roughly 5 - 40%, then a move back into the moving averages (2nd chance), then begins the series of lower lows and lower highs until the it eventually bottoms out. We started this reversal with a 14% move lower off of the highs. Right now we are in the 2nd chance stage. We have rebounded back into the moving averages, From this point I expect lower lows and lower highs.<br />
<br />
At today's close SPY was at $204.84. My target over the next few years for the bottom is $88 in SPY. Keep in mind, I've used the same modeling to calculate the low is 2003, the high in 2007, the low in 2009, and the high in 2015. These numbers are almost exact in every case. In an earlier post I showed you the Fibonacci chart showing the high for 2015. Here are the charts for the 2015 top and the eventual bottom over the next few years,<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFh57IxuyHPTjT49ORq5i87L3z0Lu8wBjR-SJrmV6RJngkxVRE3-zNty_MXBuM7JApoW4UOzRoKiC36hoRVERGNW61BWvA4VuGuNNg1TjKVnKXcBr4ymRFOejRkZ5ylyX4508KZMY8x2A/s1600/2015+high.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="224" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFh57IxuyHPTjT49ORq5i87L3z0Lu8wBjR-SJrmV6RJngkxVRE3-zNty_MXBuM7JApoW4UOzRoKiC36hoRVERGNW61BWvA4VuGuNNg1TjKVnKXcBr4ymRFOejRkZ5ylyX4508KZMY8x2A/s320/2015+high.png" width="320" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhukHCm7lb9dhncX0SRz3OtpNFnWqiIZBvbC7HXZCpl_0TJrjyykunAEc-k2_lJyNgM5sZLkVvxy50CJRUvg00JqMgWnP_YJ5ahbBvYPTrI1ObDDx5vaAJYdLjxBFsVSnnqYKBeduM9ngI/s1600/Bottom.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="224" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhukHCm7lb9dhncX0SRz3OtpNFnWqiIZBvbC7HXZCpl_0TJrjyykunAEc-k2_lJyNgM5sZLkVvxy50CJRUvg00JqMgWnP_YJ5ahbBvYPTrI1ObDDx5vaAJYdLjxBFsVSnnqYKBeduM9ngI/s320/Bottom.png" width="320" /></a></div>
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Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-53635385141881091682015-10-12T09:44:00.002-04:002015-10-12T09:44:20.707-04:002nd ChanceHi Folks,<br />
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On my August 21st post I said that if you did not sell or hedge your positions, not to worry you would get a 2nd chance. We are in the midst of that 2nd chance in my opinion. In the short term we could go back up near the highs. I urge you to use this opportunity to sell or hedge your positions.<br />
<br />
I also mentioned that I believe that we are already in a recession. The technical definition of a recession is 2 consecutive quarters of negative GDP growth. The real economy shows signs prior to the GDP releases. The last 2 jobs reports have been awful and then revised even lower the following month. The jobs numbers show a labor force participation rate of 62.4% which is the lowest in nearly 40 years. This number is more important than the unemployment rate. It shows that an alarming number of people are dropping out of the work force because of extended unemployment and no ability to find a higher paying job so they are forced to not work or to work part time.<br />
<br />
The Q3 GDP number will be released on October 29th. The street is expecting 2.5%. It will be interesting to see what the number comes in at. My guess is far below 2.5%. Could this be the 1st negative GDP quarter to start the official recession? It's possible but I doubt it. My guess is much lower than expected and then possibly Q4 being negative followed by Q1 2016 as a negative as well.<br />
<br />
Thanks and Good Trading,<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-79945936274185876272015-10-02T22:15:00.001-04:002015-10-02T22:15:23.007-04:00Deja Vu All Over again Carl IcahnHi Folks,<br />
<br />
I am glad to see at least one mainstream business tycoon coming on board with the things that I have been talking about. Here is a video from Carl Icahn from September 29th 2015.<br />
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<iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/ZyKIvnied-o" width="560"></iframe><br />
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Thanks and Good Trading,<br />
<br />
Tim<br />
<br />
<br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-19577343797676197442015-09-21T13:04:00.003-04:002015-09-21T13:04:31.634-04:00Next Leg Down in MarketHi Folks,
<br />
<br />
Well as I expected the Fed did not raise rates. The market originally rallied then sold off. We are in the continuation of the sell off. We are in the next leg down. Roughly another 10% lower from here. I feel the SPY target in the next 2 weeks is $170. Currently trading $196. That would represent roughly 20% off the highs and put us in an official bear market.
<br />
<br />
Thanks and Good Trading,
<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-33075626925523509822015-09-15T22:30:00.000-04:002015-09-15T22:30:00.900-04:00Will The Fed Raise Rates Tomorrow?Hi Folks,
<br />
<br />
For a guy who claims to stick to technical analysis I sure am writing too often about economic fundamentals more and more. With that being said here we go again.
<br />
<br />
The Fed really can't raise rates tomorrow. If they do it will start a rush to the exits in US Treasuries further pushing rates higher and higher without the Fed ever having to raise rates again for a long time and in a short period of time causing a reversal of policy triggering QE4.
<br />
<br />
China, the largest holder of US Treasuries, has recently started dumping treasuries. Why? At the beginning of this month China announced that is was committed to letting the Yuan or Renminbi actually float against other currencies. This is HUGE folks! In my opinion this is part of their openness about wanting a currency other than the US Dollar as the world's reserve currency. China has for a long time had it's currency literally pegged to the US Dollar until 2005 but then purchased such a huge portion of US Treasuries that it was still unofficially pegged to the dollar. Now that it wants to float it has to sell it's treasuries.
<br />
<br />
Additionally due to falling commodity prices and political unrest, the Emerging Market economies currencies are in free fall potentially forcing them to liquidate their US Treasuries. They account for about 6 trillion of the outstanding US Treasuries. So if they liquidate only 10% of their treasuries that amounts to an increase in the 10 yr of about 108bps or 1.08% alone. For every 1% rise in rates it costs the government $170 billion more in interest. Where will this come from?
<br />
<br />
I think the writing is on the wall. We are heading down the rough road of economic contraction coupled with inflation regardless of what the Fed does tomorrow. Ouch!!
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<br />
Thanks and Good Trading,
<br />
<br />
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-26151718370375976402015-09-13T17:30:00.000-04:002015-09-13T17:40:19.735-04:00Is The Dollar Is About to PlungeHi Folks,
<br />
<br />
The US Dollar is looking like the stock market....about to plunge. So what does that mean to you and me? Well for a lot of US companies it would seem to be a good thing. If the dollar falls the cost for other countries to buy our goods and services goes down. That leads to an increase in our exports. On the flip side, it means that it will cost you and I more to buy goods because the U.S. is a net importer.
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The bigger problem is what I see longer term. As in my earlier post regarding the global debt crisis, the US debt could lead to a collapse of the US dollar. I will preface this with saying that I feel this scenario is the most unlikely to unfold however, it is a possibility.
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What would happen if the dollar collapses? This scenario is not pleasant at all. Most of the world trade today is done in US dollars. Most foreign nations hold a lot of US dollars in reserve due to this fact. What if those countries suddenly lost confidence in the US solvency? They would dump dollars leading to a snowball effect of selling dollars.
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This would lead to at first more deflation like we have experienced thus far but then it would lead to hyperinflation and the destruction of people's savings. What that means is that if you have $1,000,000 dollars saved, the buying power is diminished significantly. You would still have $1,000,000 but what you could buy with that million dollars goes down significantly. So a gallon of milk that today is roughly $3.50 would suddenly be $100 or $1000 dollars. Sounds crazy right? But it has happened many times in history in the case of a total currency collapse.
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I do not watch the news or read the newspapers. Any opinions I form are based entirely on my own research. If I want economic data I go to The Federal Reserve or the US Treasury websites and look at the data for myself. Here are 2 charts from the St. Louis Federal Reserve website. As you can see, the money supply has gone parabolic while the velocity of money is plunging. What does this mean in layman terms? The unprecedented QE has exploded the supply of money. The idea was to pump money into the economy and stimulate economic activity. So how do you measure it's effectiveness? The best way is to look at the velocity of money to measure economic activity. If I buy a sandwich and I leave a $1 tip, then the waiter takes a cab home and uses that $1 to pay for the cab and then the cab driver uses that $1 to pay for gas, that would have a velocity of 3. If instead the waiter took my $1 and put it in a jar and didn't invest it it would have would have a velocity of 1. Velocity measures the speed that $1 moves through the economy or how many times it moves through the economy. As you can see on the chart, the velocity of money is plunging while the money supply is exploding. In other words, QE did not work and the real economy is about to become known. We are already in a recession. QE ended in October 2014. QE was artificially holding up our economy. Now the massive money supply is out there with no economic growth.
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<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibLfDBwJN-aT0Iq4BnyslSqUaCHxrxi7U2_3n1o5dLlvWzSjpCwQJsXi4pWf_k9dNTIdBJvkqFd5FiklN33el5prtLuAdOd6VE7y85-wW7y9-KY84wH8ANNSlztbDV8Cf0H32fXDm5Muo/s1600/Money+suppy.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibLfDBwJN-aT0Iq4BnyslSqUaCHxrxi7U2_3n1o5dLlvWzSjpCwQJsXi4pWf_k9dNTIdBJvkqFd5FiklN33el5prtLuAdOd6VE7y85-wW7y9-KY84wH8ANNSlztbDV8Cf0H32fXDm5Muo/s320/Money+suppy.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEoRB7SYauqa1eE5fyRSHghEv-I9zksea1qHP2_Wa-ZQjagEr2kwvSbgM3Gga1WRtXfrc22l9N6Hifbt43ac20Dt7DhKwQkHTyucOPb2okk2N_DozggoGLYnTB0skPIzvw7EgdpQBfH4s/s1600/Money+velocity.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEoRB7SYauqa1eE5fyRSHghEv-I9zksea1qHP2_Wa-ZQjagEr2kwvSbgM3Gga1WRtXfrc22l9N6Hifbt43ac20Dt7DhKwQkHTyucOPb2okk2N_DozggoGLYnTB0skPIzvw7EgdpQBfH4s/s320/Money+velocity.jpg" /></a></div>
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I am not a doom and gloomer. I was quite bearish from 2007 to early 2009 but then I became extremely bullish in March of 2009. I have remained a cautious bull until the beginning of this year, 2015. I am a trader so all of my market directional opinions are based on technical analysis. As you know I am very bearish and feel that 2016 is not going to be a good year for the stock market.
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Thanks and Good Trading,
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TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-33278037387743710712015-09-12T20:27:00.000-04:002015-09-12T20:27:25.427-04:00Short Term Market OutlookHi Folks,
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I thought I'd share my short term trading thoughts. A few weeks ago I told you that I believed that SPY would trade down to 190 within 2 weeks which would represent a 10% drop and that is what happened. I am not revisiting to brag but to point out that the technical analysis that I do works.
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Normally based upon my technical analysis used for day trading I would be actually short term bullish on the market(please don't confuse this with me turning bullish). Meaning the next few days would be bullish. My long term position is the same. The market is going down longer term. That being said, even though my short term signals say buy, the longer term look really bad. Putting literally the next few days as a potential for something bad to happen in the world. Before you think I'm nuts let me explain. My call for SPY to hit 190 was a given in my opinion. My concern over terrorism or something else in the next few days is not a given. My reason for this is because even though the market was down 14% off the highs at it's low a few weeks ago, the market should have gone lower from a technical standpoint. If it's going to go lower according to the technical analysis I do, it requires some sort of unforeseen event to turn this down again in the short term. Otherwise, the market will bounce in the next few days.
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Thanks and Good Trading,
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TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-72126581484749902522015-08-22T23:17:00.000-04:002015-08-22T23:17:00.553-04:00Global Debt CrisisHi Folks,
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I normally stick to technical analysis because that is what I know best. However, with my recent posts regarding the impending massive selloff, I figured I would impose my fundamental "opinion" here as well.
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In some of my posts I questioned what the catalyst for the selloff would be? Terrorism, interest rates, student loan crisis etc. However any of these are just a guess to what tips the market on it's side. The root problem is the same as it was in 2007 only now much...much bigger.
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Debt is what caused the massive selloff from 2007 to 2009. One would think that after that crisis, globally we would have learned a thing or two and made some changes. The sad fact is that in the last 7 years, global debt has increased by an incredible and unsustainable 40%. Our own federal reserve has increased the debt on it's balance sheet 800% since the market bottom in 2009. These levels are clearly unsustainable and ultimately this nation and other nations will have to make some hard choices to get back on track.
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Couple the massive debt collapse with the shift from the "open outcry" trading model to a world where almost every market is 99% electronic trading and you set the stage for an 80% market correction.
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This is what will be talked about in the media after the dust settles and the crisis is near it's end. Why isn't this a major focus for the media right now? Hopefully you are all taking steps to protect yourself from what is about to unfold.
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Thanks and Good Trading,
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TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-91311520944799383972015-08-21T00:13:00.001-04:002015-08-21T00:26:41.410-04:00Market Crash ReduxHi Folks,
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Well it looks like the beginning stages of the selloff that I have been talking about is here. I think SPY will drop to 190 within the next 2 weeks. If that level doesn't hold the next level is 175. 190 would be a 10% drop off the highs but in my opinion just the beginning of the bigger selloff. Again, I have many scenarios that may unfold. The best case is a 30% selloff and the worst case is an 80% selloff. Any way you slice it, it's not good. Hopefully you took my advice and talked to your financial advisor about collaring off your positions. The market doesn't normally just go straight down so if you have not taken action you will get a chance to do so. The bottom will probably take 2 years to unfold.
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Thanks and Good Trading,
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TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-92074529236206135892015-08-11T19:36:00.001-04:002015-08-11T19:36:25.050-04:00Market Crash Imminent?Hi Folks,
Just another update. I am still bearish on the market. I believe the selloff begins before the end of the year. Chart wise, the end of September looks particularly bad. It looks as though something bad is going to happen. Maybe terrorism? I really think people need to protect their portfolios going into the next few years. Since my last post the market has traded sideways allowing the moving averages to catch up so the stage is set for a potentially massive sell off. One possibility based on Fibonacci's is an 80% correction. Ouch!! Below is a chart with the Fibonacci drawn on it from the 2007 high to the 2009 bottom. You can see the market hit the 161.8 on the button.
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtDZhYTffK9vQPsgf5csOXeylh3otTw4yWJ0gvjW_tvN2gU9_vuoy1xg4e0LbYvpCII8zadPTmzhLozYAKXhyphenhyphenrW3J7johYYTvq6wjCZBjF-lHj_C-kMJv4GwZURzz37Vbwg-IYBP5_gDg/s1600/Market+Top.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtDZhYTffK9vQPsgf5csOXeylh3otTw4yWJ0gvjW_tvN2gU9_vuoy1xg4e0LbYvpCII8zadPTmzhLozYAKXhyphenhyphenrW3J7johYYTvq6wjCZBjF-lHj_C-kMJv4GwZURzz37Vbwg-IYBP5_gDg/s640/Market+Top.png" /></a></div>
Thanks and Good Trading,
Tim Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-17661094641517457642015-01-10T13:35:00.000-05:002015-01-10T13:35:11.695-05:00The Next Big Stock Market CrashHey Folks,
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Once again it has been awhile since my last post. Happy New Year to everyone. I'm not going to make any promises about more frequent posts this time.
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The markets have had quite a run since the '09 lows but all good things must come to an end. I believe we are at the beginning of a significant market sell off. What will the catalyst be? Maybe a student loan crisis, rising rates, collapse of the dollar, terrorism or political unrest. I have no idea. All of my opinions are based on technical analysis not news or events.<br />
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I believe that SPY(SP500 ETF)will be cut in more then half over the next 1 - 2.5 years or so. My target is 85 and it's currently trading at 204. <br />
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So what do you do? If your portfolio is with a broker, typically you can only have 10% of your portfolio short. You could buy SDS which is a<br />n inverse ETF for SP500. So as the SP500 goes lower SDS goes higher. If you have a portfolio of stocks, you could use options to "collar" the position off. Here is how that works. Let's say you own 1000 shares of CBS at $55. You would sell 10 Jan 2017 65 calls at $4 giving you $4000 to buy 30 Jan 2017 35 puts at $1.30. Then if CBS falls to $25 over the next 2 years, you break even plus you keep the dividend. If you didn't hedge your position you would be down $30,000. <br />
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I may be a little early since the longer term moving averages are still trending up and have not started to flatten or roll over yet but i feel the top is already in. With this pattern we should move lower towards the October lows then run back up and then the big sell off begins. So time frame wise maybe March.<br />
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Thanks and Good Trading,<br /><br />
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TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-88326975958758250352014-03-11T14:12:00.005-04:002014-03-11T14:12:46.966-04:00Long WLTHi Folks,
I sold NAVB for about a 10% win today and bought WLT.
Thanks and Good Trading,
TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-53763635536313990212014-01-23T12:39:00.002-05:002014-01-23T12:40:36.784-05:00NAVBHi Folks,
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I got long NAVB at $1.87 today. Target is $2.30.
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Thanks and Good Trading,
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TimUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-8875254740172391120.post-43444114863150369352014-01-21T09:46:00.002-05:002014-01-21T21:14:00.613-05:00NIHDHi Folks,
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I sold out of the NIHD position today at $3.24 for a 27% gain in 2 weeks. Target is really $3.64 but a 27% in 2 weeks I don't want to get greedy. I'll keep you posted on the next trade.
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Thanks and Good Trading,
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TimUnknownnoreply@blogger.com0