3 Up Gaps That Must Fill

3 Up Gaps That Must Fill

When it comes to the stock market, never say never because every possible market event will happen at least once. Especially events you least expect.

Here’s one that is positive for your portfolio.

There are specific events that have been proven through over 200 years of actual stock market history.

In fact, this one is proven beyond a shadow of a doubt and you can make money with it very soon:

Up & Down Gaps Close 91% Of The Time!

For those of you who do not know what a gap is, and how important it is, here is a simple explanation.

Let’s now look at the current chart below:

As you can see, the  Standard Poor’s 500 chart above reveals 3 Up Gaps in price that, at a better than 91% chance will eventually fill to the downside. The reason that pushes this to the ranks of “it will now LIKELY move sooner than later is the fact that all 3 Up Gaps occurred within 3 months and this is almost unprecedented.

Watch out below. We are not trying to scare you, quite the opposite, we are giving you a kind warning.

So lets add it up:

“A 91% chance of filling every market gap up or down for the last 200 years?” 

Prepare for anything because the last time more than 3 Gaps were closed within only 5 weeks was February 2020! 

What is hard to imagine is that the rise lasted 1,458 days for the 5 Up Gaps to be created between December 2016 and February 2020. It took exactly 22 Corona-Crash days to close (fill all 5) to the downside.

The point is clear. This is not a question of will the current 3 Up Gaps fill, but when will they fill and will you avoid the decline?

You must be ready to avoid the coming decline unless you have 1,458 more days to wait for it to come back to break even.

As we already demonstrated to our members on January 18, 2020 with a market Red Light exit signal, InterAnalyst will warn and protect our members when it turns down again.

A Sharp Reflex Rally

A Sharp Reflex Rally

While it is indeed a sharp “reflex rally,”  With follow through today, please remember this: “Bear Markets” are not resolved in a single Day, Week, or a Month. Most importantly, “bear markets” do not end with “consumer confidence” still very elevated. 

 

Notice that during each of the previous two bear market cycles, confidence dropped by an average of 58 points.

This past week, we saw early indications of the unemployment that is coming to America as jobless claims surged to 10 million, and unemployment in April will surge to 15-20%.

Confidence, and ultimately consumption, Which comprises 70% of GDP, will plummet as job losses mount. It is incredibly difficult to remain optimistic when you are unemployed.

No Light At The End Of The Tunnel Yet

Most importantly, as shown below, the majority of businesses will run out of money long before SBA loans, or financial assistance can be provided. This will lead to higher, and a longer-duration of unemployment.

What the cycle tells us is that jobless claims, unemployment, and economic growth are going to worsen materially over the next couple of quarters.

The problem with the current economic backdrop, and mounting job losses, is the vast majority of American’s were woefully unprepared for any disruption to their income going into recession.

Two important points:

  1. The economy will eventually recover, and life will return to normal. 
  2. The damage will take much longer to heal, and future growth will run at a lower long-term rate due to the escalation of debts and deficits. 

For investors, this means a greater range of stock market volatility and near-zero rates of return over the next decade.

The Bear Still Rules

History tells the story covering the last 8 full fledged bear markets: The should be sold into!

In other words, if you have taken the decline thus far, When you see the rally explode up, sell it and preserve as much as you can before the next dip.

On Friday, our colleague, Jeffery Marcus of TP Analytics, penned the following:

  1. When the 11-year bull market trend ended, other shorter trends were also violated.  In late February, the S&P 500 fell below its 14-month uptrend line, and in early March the 13-month uptrend line was violated.  Those breaks set in place the steep declines seen in the 2nd and 3rd weeks of March.
  2. While it may seem like an epic battle is going on around S&P 500 2500, the real problem is the downtrend forming from the 2/19 high.
  3. TPA still continues to see real long term support in the 3% range between 2110 and 2180A less likely move below that support, would leave long term support levels of the lows of 2014 and 2015.

S&P 500 – Long Term

His analysis agrees with our own:

“While the technical picture of the market also suggests the recent “bear market” rally will likely fade sooner than later. Such an advance will ‘lure’ investors back into the market, thinking the ‘bear market’ is over. Importantly, despite the sizable rally, participation has remained extraordinarily weak. If the market was seeing strong buying, as suggested by the media, then we should see sizable upticks in the percent measures of advancing issues, issues at new highs, and a rising number of stocks above their 200-dma.”

On a daily basis, these measures all have room to improve in the short-term. However, the market has now confirmed longer-term technical signals suggesting the “bear market” has only just started.

There are reasons to be optimistic about the markets in the very short-term. We will get through this crisis. People will return to work. The economy will start moving forward again.

However, it won’t immediately go right back to where we were previously. We are continuing to extend the amount of time the economy will be “shut down,” which exacerbates the decline in the employment, and personal consumption data. The feedback loop from that data into corporate profits, and earnings, is going to make valuations more problematic even with low interest rates currently. 

This is NOT the time to try and “speculate” on a bottom of the market. You might get lucky, but there is very high risk you could wind up losing even more capital.

For long-term investors like our Wealth Preserver Members, just remain patient and let the market dictate when the bottom has been formed. As you can see in the image below, the InterAnalyst Green Buy signal will come as it has every other time. But it only signals when the market is on solid footing.

 
Bear markets never end with optimism, but in despair. So remain patient, it the bear will end and you will capture the slingshot move back up once the markets are on solid footing.

Although we continue to author opinion and analysis, please remember that our writings do not replace the green buy and red sell signals derived from over 140 years of market analytics. Use the Wealth Maximizer Pro to help give you daily charts and signals to help with daily market direction. Apply those to the Wealth Maximizer Weekly charts and signals to give you more confidence in the direction.

When the Wealth Preserver Monthly signal confirms both the Wealth Maximizer and Wealth Maximizer Pro memberships, you are prepared for the slingshot.

 

Members Version of A Sharp Reflex Rally

Members please login to view your market signals and read the balance of this post for entry and exit points.

 

Another Leg Down?

Another Leg Down?

We have seen a hefty relief rally but does Another Leg Down loom? For those who are Wealth Maximizer Pro members, you have caught the nice profitable rally, contratulations.

I am seeing some “disturbing” signs that the market is very close to re-testing the lows that we previously have made, or, will it form another leg down loom?.

At the very least, it is 98% certain we will come to test the lows around 2250 at any moment in time. It is possible that we have another final leg down, and I believe that we likely will.

It is important for you to remain patient instead of panic buying and falling into bull trap.

During this last leg down, simultaneously, Gold and Silver will likely sell-off for liquidity reasons. People are now and will continue to liquidate their hidden savings.

Here’s why we know that the last leg down is coming:

The VIX remains incredibly elevated (60+) despite big pops in the markets and has not subsided. This tells you another sell-off is looming. Whats more, it’s supported by many other technical and fundamental factors.

For the market to continue up and ignore these factors would be unprecedented.

Prepare for another drop to the eventual bottom.

Crono-Crash & The Slingshot

Crono-Crash & The Slingshot

Livio,

I exited with the Wealth Preserver on the on March 2nd.  The last couple of bullish days brought to mind the Slingshot, are we there and have we missed the first 2 days. In your recent Celente video post you mentioned we’re entering into a global depression which may be even worse than the Great Depression.

Before all that happens is it possible we see DOW tumble another 5K-10K?

There seems to be an incredible amount of liquidating-at-all-costs mentality at the moment. I worked on an equity desk during the 2008 crisis, and currently at a very small non-bank FX dealing desk and have never seen anything like this. Your feedback is always appreciated.

Thanks,
Victor

“Great Question Victor.

The simple answer is NO.

The worst-case scenario appears to be testing the reversal technical line in the 15,000 level and do not see a drop to 5-10K. That is way too far for a slingshot. 

I see the slingshot build and breakout to new highs by 2023.

However, let’s tale a look at history to guide us on recovery times with similar drops to our current CronoCrash. 

Look at the two charts below.

What you see is that it took 65 months from the 2007-2009 Crash to get back to even.

The 1987 Crash appears to be a likely type of pattern from a timing perspective to our current Crono-Crash. That was a 53% decline and took 24 months to break even.

The 2000 -2003 Bear Market was a 3 year 54% decline and took 81 months to break even. 

If we were to fall on par with those declines, we would be looking at a drop to the mid-15000 level.

Because InterAnalyst members s stepped aside (red signals)  for most of the Corona-Crash, they will miss all those months of recovery just to get back to even.

More importantly, while everyone else is back to even, those who stepped aside will be 100% – 400% ahead of those buy and hold investors who did not step aside of the Corona-Crash.

As for the future, when we get back in (green signal) we could reach the test of just below the 40,000 level happening in 2024.

The Buffett Retracement Gap

The Buffett Retracement Gap

Warren Buffett + Closing The Gap + 21% Retracement = The Buffett Retracement Gap

In early 1987, Warren Buffett wrote to Berkshire Hathaway shareholders about what to do in the face of an epidemic.

This was, of course, way before the outbreak of the novel coronavirus that’s causing worldwide concerns today. It was even before the avian flu, Ebola, SARS, or MERS made the news.

But more than 30 years ago, Buffett addressed two “super-contagious diseases.” He told readers that there are “occasional outbreaks” of these diseases and that they will “forever occur.” Buffett admitted, though, that “the timing of these epidemics will be unpredictable,” cautioning to “never try to anticipate the arrival or departure of either disease.”

What were these two diseases? “Fear and greed” among investors. Buffett stated that his goal to deal with these “epidemics” was “to be fearful when others are greedy and to be greedy only when others are fearful.”

There’s no question that plenty of investors are fearful right now. The so-called fear index — the CBOE Volatility Index (VIX) — has skyrocketed over the past couple of weeks. When the VIX goes up a lot, it’s a clear sign that many investors are scared. If you think that Warren Buffett was right in 1987, though, that means it’s time to be greedy.

Buffett Current Time: BE GREEDY

 

Closing The Gap

As you can see in the chart below, we are near closing the final GAP before return of a new upward push. Once the gap closes (yellow chart markers), we can start a new bullish momentum cycle.  We are very close to closing the gap and when it does close, we have another notch in our belts for a new bullish trend to begin.

23% Golden Ratio Retracement

Retracements are temporary price reversals that take place within a larger trend. The key here is that these price reversals are temporary and do not indicate a change in the larger trend.

You may wonder where these numbers come from, though. They are based on something called the Golden Ratio. If you start a sequence of numbers with zero and one, and then keep adding the prior two numbers, you end up with a number string like this: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 … with the string continuing on indefinitely. The Fibonacci retracement levels are all derived from this number string.

Interestingly, the Golden Ratio of 0.618 or 1.618 is found in sunflowers, galaxy formations, shells, historical artifacts, architecture, and the growth of the stock market.

Final Thoughts

Once the Gap is closed and the Fibonacci level is reached you should be looking closely at your Daily trade signal charts. If you want to be a little more patient and lower your risk level, then wait for the Weekly trade signal charts match the Daily.  Ultimately, when the Monthly turns, your investments should be growing safely and rapidly after avoiding most of the decline.

 
 

 

 

2019 Wealth Maximizer Performance, Insiders Power Newsletter & Trade Signals

2019 Wealth Maximizer Performance, Insiders Power Newsletter & Trade Signals

Because the Dow closed above 26430 for 2019 it is still poised to make a new high in January 2020. If we see a high form the week before or after January 20th, then the market may be making a temporary high from which we could see a decline into early 2021.
Each week starting last Friday at the close should produce the opposite effect.

Read the rest and get our deadly accurate Trade Signals for 2020 by becomeing a member here.

Thats One Big Pile Of S**T

Thats One Big Pile Of S**T

quadruple-whammy of not-awesome trade-related comments today spoiled the party…

  1. 0602ET *TRUMP TO RESTORE TARIFF ON STEEL SHIPPED FROM BRAZIL, ARGENTINA
  2. 1035ET *TRUMP WILL INCREASE TARIFFS IF NO CHINA DEAL, ROSS TELLS FOX
  3. 1200ET *TRUMP AIDE SAYS IT’S UP TO CHINA IF DEAL WILL BE MADE THIS YR
  4. 1230ET *CHINA TO RELEASE ‘UNRELIABLE ENTITY LIST’: GLOBAL TIMES

And then US Macro data poured cold water on China and EU economic hope as construction spending plunged and manufacturing ISM disappointed significantly.But that ‘surprising’ surge in a government-provided survey of manufacturers in China was offered up as evidence that (despite US weakness) everything will be ok and the trough is in…

Chinese stocks clung to very modest gains overnight (trade headlines hit after the China close)…European stocks were hammered on trade turmoil (despite PMIs beating expectations)…And European bonds were also down (in price) along with stocks (10Y Bunds +8bps)…US equities suffered their biggest daily drop in 6 weeks…Dow futures were down over 400 points from the overnight highs…Momo was dumped at the open but the trend in value/momo reversed around the European close…VIX spiked above 15 intraday but once again vol-sellers returned after Europe’s close…Credit was smashed today (after last week’s insane surge)…Treasury yields surged on the day, led by the long-end (2Y was marginally lower in yield)…Most notably, the ultra-bond futures collapsed overnight (hitting a 3-point limit circuit breaker)…And today saw a major steepening of the yield curve… (the yield curve move has the smell of rate-locks given the underlying macro data, but we will have to wait and see what the calendar looks like – high-grade dealers expect this week to bring $15b-$20b in supply. This is likely to be December’s busiest week, with just about $25b for the full-month in store, according to estimates — that’s $8b more than last year and in line with the $23b that priced in December 2017)The dollar was dumped today (biggest daily drop in 6 weeks)……breaking down through its 50- and 100-day moving-averages…Yuan also lost ground as trade-deal hope faded…Bitcoin has been unable to get back above $7400…Gold, Copper, and Silver ended the day lower (despite a tumbling dollar) but oil popped on Saudi calls for more production cuts/extensions at OPEC (as its Aramco IPO looms)…But, with regard to oil, it is still a lot lower than before Friday’s plunge…

The 2019 FOMO rally’s resilience has taken it far enough in the face of a cloudy forecast. Any declines from here could get very steep indeed.And then there’s this…And the US is just as bad (if not worse)…And this…

Stay tuned…
and close to your Wealth Preserver and Wealth Maximizer signals.
Bullish Doubts Among The Wealthy

Bullish Doubts Among The Wealthy

Bullish Doubts

Wealthy people around the globe are hunkering down for a potentially turbulent 2020.

A majority of rich investors expect a significant drop in markets before the end of next year, and 25% of their average assets are currently in cash, according to a survey of more than 3,400 global respondents. The U.S.-China trade conflict is their top geopolitical concern, while the upcoming American presidential election is seen as another significant threat to portfolios.

Wealthy Red Alert

“The rapidly changing geopolitical environment is the biggest concern for investors around the world,” said Paula Polito, client strategy officer at UBS GWM, in a statement. “They see global inter-connectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.”

Nearly four-fifths of respondents say volatility is likely to increase, and 55% think there will be a significant market sell-off before the end of 2020, according to the report which was conducted between August and October and polled those with at least $1 million in investable assets. Sixty percent are considering increasing their cash levels further, while 62% plan to increase diversification across asset classes.

In the same survey in May, an even higher amount — 32% — of investor portfolios was in cash.

“The challenge is that they seem to want to respond” to short-term uncertainty “by really shortening their time horizons and shifting to assets like cash that are safe,” said Michael Crook, a managing director on the investment strategy team. Though with many of these people investing on a time horizon across decades and for future generations, that “seems like a mismatch.”

The reality is that Volatility cycles in the markets as you see in the chart above. We are currently at a low point which points to rising volatility.  But does that mean a correction?

You can review our Members Blog update today for details.

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