Stock Cycle Low – Hang On Another Day

Stocks have almost completed their  “intermediate cycle low” so you “holders of paper” only need to wait another day er two / catch your breath / don’t freak out.

You have grown “so complacent here” that these “few down days” have you on pins and needles, debating whether you should simply just “sell” before you’re left with nothing.

You sell on green candles traders ( some days ago? )…… and you buy on red.

None the less…..we are still very much so in a right translated / daily uptrend in stocks – with this cycle extending to like…..38-40 days? Wow….a long one….but now near completion.

Dow Nears Support

Dow Nears Support

This is still a very strong uptrend – with an “intermediate cycle decline” now near complete. The test of support area ( as seen by the black line ) looking good.

I can only assume the next leg higher starts like……tomorrow.

 

Bitcoin slowly moving up from the proposed low at 6400.00

Gold = flat ( who really cares right? )

USD – Crater on deck – as suggested.

 

Stay SHORT USD – USD Pop ‘n Drop

Daily cycles can vary in length for different assets, but in general The U.S Dollar tends to move in an “18-22 day period” from trough to trough.

The previous daily cycle topped out on day 4 then rolled over for a good solid move lower over a 16 day period.

Today marks the beginning of a new daily cycle now………don’t get excited.

USD Downtrend to Continue

USD Downtrend to Continue

A new daily cycle that will “again fail” early ( if not immediately ) and roll back over for another “crater” into oblivion so……..a new daily cycle in a “bearish downtrend” only providing further opportunity to SHORT. The dark black line showing the resistance zone for USD. She ain’t poppin thru that – no way!

I’m not flinching / moving a muscle as today is a single day’s action that has already run straight into overhead resistance. The U.S Dollar is NOT reversing its downward trajectory here – hell no.

Waterfalls ahead. Stay Short – keep accumulating crypto. You’ll see.

 

 

Market Participants – How Can’t You See This?

Please Read: I’ve highlighted the significant bits.

kong and rickards

Jim Rickards – Markets Are Experiencing Cognitive Dissonance

Cognitive dissonance is a psychological term to describe a situation where perception and reality are out of sync.

It’s similar to what most people refer to as “denial.” The patient sees things one way, but the reality is different. Of course, it’s just a matter of time before reality prevails and the patient is jolted back to reality. This process can be fast or slow, easy or painful, but the important thing to bear in mind is reality always wins.

Something like cognitive dissonance is going on in markets right now. Markets have been temporarily euphoric over Trump’s tax, regulatory and spending policies. Those policies are important to business and credit cycles and economic growth.

The perception is that happy days are here again. The new Trump administration is expected to pour trillions of dollars of stimulus spending and tax cuts into the economy. Immediately after the Nov. 8 election, investors took a quick look at Trump’s policies and decided they liked what they saw.

Trump wants lower taxes, less regulation and higher infrastructure spending. Corporate profits and consumer spending benefit from lower taxes. Banks and pharmaceutical companies benefit from less regulation. Construction firms and defense contractors benefit from infrastructure spending. There seemed to be something for everyone, and the stock market took off like a Roman candle.

And indeed, the major stock indexes hit one record closing after another. The Dow topped 20,000 this week before pulling back. The dollar has been trading near a 14-year high, although it’s slipped in recent days. Gold was moving mostly sideways until it broke out again over the past few days.

Bank stocks went vertical in expectations of wider net interest margins (from Fed rate hikes) and less regulation (from Dodd-Frank reform). Happy days, indeed.

Reality is another matter. I’ve been warning my readers lately that the Trump trade is levitating in thin air and is ready for a fall. Now that reality could be beginning to sink in.

It’s far from clear how much of the Trump economic agenda will see the light of day. Congress wants to offset tax cuts in one area with tax increases in another so they are “revenue neutral.” That takes away the stimulus. Less regulation for banks won’t help the economy if bankers lead us into another financial meltdown like 2008.

Infrastructure spending will increase the debt-to-GDP ratio past the already high level of 105%, putting the U.S. closer to a sovereign debt crisis like Greece. As I wrote Tuesday, many believe a 60% debt-to-GDP ratio retards growth. That’s the standard the ECB uses for members of the Eurozone. Scholars Ken Rogoff and Carmen Reinhart put the figure at 90%.

Again, the U.S. debt-to-GDP ratio is currently at 105%, as stated, and heading higher. Under any standard, the U.S. is at the point where more debt produces less growth rather than more. This is one more reason why the Trump infrastructure spending plan will not produce the hoped for growth. And if infrastructure is funded privately, you’ll need tools and user fees to pay the bondholders, which is just another form of tax increase.

There’s almost no way Trump’s policies can supply the stimulus the market is pricing in. The Dow Jones index peaked on Jan. 26, 2017, one day after cracking the mythical 20,000 mark. It’s now trading around 19,900. The downhill trend may continue and get steeper soon.

Productivity has stalled out in recent months. Economists are not sure why. It could be due to lack of investment by business, or that workers are not being trained in useful skills, or that everyone is spending too much time on social media. Whatever the cause, productivity is flat.

Fourth-quarter GDP came in at 1.9%, below expectations — the final chapter on the worst year of U.S. growth since 2011 when the economy was still healing from the global financial crisis. The strong dollar is a major headwind to growth, along with flat labor force participation and weak productivity growth.

Growth in a major economy is simply the sum of increases in the labor force plus increases in productivity. Think about it. How many people are working and what is the output per worker? That’s it; that’s all there is. The reality is that the workforce is not growing.

Labor force participation is near 40-year lows and is expected to decline further for demographic reasons. Birthrates have never been this low since the Great Depression. The U.S. used to get a labor force lift from immigration, but that might dry up because of Trump’s policies. We’ll have to wait and see.

A flat labor force plus flat productivity equals a flat economy, or almost zero nominal growth. That’s reality.

kong and rickards

                                                        How will this situation be resolved?

Either growth will rebound based on “animal spirits” and the Trump stimulus working better than expected or markets will collapse once they realize the growth is not coming. By “collapse,” I mean a violent stock market correction, a falling dollar and major rallies in bonds and gold. We expect the latter.

Financial crises are not mainly about the business cycle. They’re about investor psychology, sudden shocks and the instability of the financial system. Right now investors are skittish, numerous shocks are waiting to happen and the system is highly unstable due to overleverage and nontransparency.

Despite Trump’s best efforts and positive policies, a collapse could happen any day unless radical steps are taken to prevent it — such as breaking up big banks and banning derivatives. I’ve been warning about this for a while, but now mainstream economists see the danger too. Nobel Prize winner Robert Shiller, for example, sees a stock market crash coming that could be worse than 1929 or 2000. I hope he’s wrong.

The problem with a financial panic is that panicked investors don’t care if the president is a Democrat or a Republican; they just want their money back. The same dynamic applies to natural disasters like tsunamis and earthquakes.

Once the disaster starts, the dynamics have a life of their own and don’t care if the victims are liberals or conservatives. Everyone gets hurt just the same. I’m not hoping for it, but this is a lesson Trump may learn the hard way.

Above I said collapse means a violent stock market correction, a falling dollar and major rallies in bonds and gold. I expect the latter. The long-term trends favor gold if U.S. growth continues disappoint.

The strong dollar story can’t last, so it won’t. The Trump administration has clearly signaled that the day of the strong dollar is over. When you see a coordinated attack on the dollar from the White House, the Treasury and the Fed, you can bet the dollar will weaken. That means a higher dollar price for gold.

The dollar may get one last boost from a Fed rate hike in March, but after that, even the Fed will acknowledge that they got it wrong again and start another easing cycle with happy talk and forward guidance.

For now, investors should not stand in front of a moving train. Keep cash ready and be prepared to move into gold, bonds and the euro. In fact, it’s not too soon to leg into those positions now.

Instead of watching the tape or short-term trends, my advice is to stay focused on the long-term trends. That’s how you’ll make the most money and preserve wealth in adversity.

kong and rickards

 
                                             – Source, James Rickards via the Daily Reckoning
                                                                            Who is James Rickards?

Dollar Top – Tomorrow On Follow

One can only wonder how “positive for markets” a 7.5 Earthquake off the coast of Fukushima will be ( no sarcasm there )

Regardless…..USD topping out for the long plunge over the next several weeks.

I’m jumpin on board here shortly, and will likely get picked up sub 99.00 with tonnes of room for lower.

 

usd_topping_out

usd_topping_out

I like the short side, as people freak out and movements are so much bigger.

Steady as she goes…..

 

Timed To Perfection – USD Gets Cooked

I laugh out loud this morning….as Im sure you´ve seen my last two posts – encouraging you to get short USD.

Talk about timed to perfection. USD is getting hammered on ¨no real news¨ and look at that…..U.S Equities falling pretty hard too. Again I wonder about all those blow hard ¨dollar longs¨struggling to understand how I keep making this look easy.

dollar-on-fire

dollar-on-fire

The trade is ¨short USD¨…….the reasons are many.

Timing has been key here these past months as you´ve recently seen me come out of hiding to bang down the first trade in weeks – if not months.

Boom……. thar she be.

 

 

 

 

The Wait Is Over – USD Rejected at 200 SMA

As I am always a touch early……..short USD trades are looking very good here.

One can see that The Buck has had it´s day, and has now been soundly rejected at the 200 SMA.

You guys can look back and recall short trades in Apple – with the exact same set up. Very straight forward…when an asset hits the 200SMA from below, then gets smoked. A very large level of resistance, and generally a pretty clear indication that things will be headed lower.

USD Rejected at the 200 Simple Moving Average

USD-lower-Aug-1

USD-lower-Aug-1

You can look for a million different reasons, but fact remains that a rise in interest rates will blow this market up, and that if anything….further easing will likely make more sense, and that´s bad for USD.

You have to keep in mind that the big boys are ¨spinning the story¨ not sheepishly following along! Long positions by the big boys have already been sold to you, as the common man ¨reactes¨ to the trickle of silly news stories aimed at keeping you on the wrong side of the trade.

You falling for this shit? Grab a backbone. Get informed. Remember the days when The U.S Federal Reserve was printing like mad, and crushing the currency with hopes to boost exports and the economy?

How did that go?

Dollar No More – A Global Perspective

I took this graphic from “somewhere” as it’s a great visual representation of what is “really going on” with the U.S Dollar and international trade.

Dollar_No_More

Dollar_No_More

Don’t be a dope. If the arrows and numbers where pointed in the “other direction” then perhaps you could build a case. The numbers speak for themselves. The U.S “strangle hold” on the world’s reserve, and in turn “slice of the pie” generated via currency exchange ( in order to buy commodities ) is over.

 

Citi Sells All USD Positions – No Really?

Again….you generally need to be “ahead of these moves” in order to take advantage ( note yesterdays post- please scroll down ).

Gold, & Silver Jump As Citi Sells All USD Positions Fearing “Squeeze”

I envision a time ( in the not so distant future ) when “all things American” ( USD, Stocks and most certainly the bonds ) are sold.

I’m sure you’ve noticed the correlation of USD strength = U.S Equities strength so…..one would have to imagine the complete and total “inverse relationship” as well right?

Or they just all keep going up forever. RIght.

Little chance of that.

Other than the few short USD positions already in play I’m more or less “cash ready” for the large positions “long JPY” ( against most every other currency on the planet ) kicking in here soon.

No shorts in SP 500 as of yet.

More at the Members Site: Forex Trading With Kong