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.
The last time I wrote about 6 Must Fill Trading Gaps was at the end of March, however our members were getting notifications in 2019 and into (01/31, 02/24, 2/28, and 3/02) regarding Gaps and the potential consequences of ignoring them.
We all know what happens to the market if we ignore upside gaps…THE GAPS FILL TO THE DOWNSIDE.
The recent crash closed all the gaps dating back through 2018 before we started are ascent again.
I have been listening to the talking heads on Fox Business, CNN, Bloomberg, Yahoo Finance, and many others. The all ask if this rally is just a long journey back up to eventual new highs. Plain and simple, their answers must be scripted. I personally know 2 of them and they are intelligent and practiced and know that 91% of all Gaps fill.
These well trained “guru’s” can easily look to their charts and know whats coming.
If you have downloaded and read our Gaps guide, then you know the 6 Must Fill Trading Gaps are going to eventually close and are already prepared for it.
I was having a nice cold Bud chatting socially with my next door neighbor and he asked me when to expect the Gaps to fill. My answer is always the same so brace for it. “I have no clue.”
What is more important is the recognition that dating all the way back to 2018 all the gains you made were gone in a matter of a few weeks. Now that it has risen 50% from the bottom of the current decline, are you ready to fill those gaps near the bottom?
If you are not ready for a retest, then grab a self paying subscription, or a bottle of Rolaids because it is coming. At a rate higher than 91%, the Green Gaps in the chart above will refill which means the market is coming back down.
The US 10-year bond less than the 2-year bond very briefly at the end of August went into an inverted yield curve which our models picked up as capital pouring into the US from Europe. Economists warn of recession when they see this for capital is trying to park during a crisis.
What they were wrong about was the fact that the pressure was coming from Europe – not domestically. They used that to write headlines saying Trump was wrong and a recession was coming. The world economy is heading into recession but it will be far worse outside the USA. That is being born out before our eyes with manufacturing imploding in Germany.
The yield-curve has turned mildly positive again. The capital flows have illustrated an unusual concentration of dollar hoarding in Europe which seems to be most concentrated in Germany. Europe has insane politicians pushing the Global Warming agenda, restricting flights, and even in Sweden, people have stayed home rather than fly somewhere for a vacation as the socialists have made it shameful to fly hurting the climate. Then add BREXIT and the refusal to negotiate on the part of Brussels when the UK is the biggest European market for German cars. Add the climate change regulation on cars in Europe and the Diesel crisis, and you have to wonder how Europe can survive economically in the years ahead.
The negative interest rates are simply a gross tax on savings and not an income tax. They have the same impact as Elizabeth Warren’s Wealth Tax. It is simply a tax on your money irrespective of profits. To impose this for so long a time has destroyed not only the European bond market, but it has caused dollar hoarding with about 70% of paper dollars being stashed away outside of the United States. Then you have Europe stepping up enforcing taxation and the net disposable income in Europe is in massive decline. As I have said before, this policy of negative interest rates has wiped out pension funds and retirement savings. This has contributed to the sharp decline in consumer demand and has, in turn, propelled deflation. Keep in mind that this is Keynesian economics gone wrong. From their view, by artificially taking rates negative, they would force banks to lend and people to spend. When Christine Lagarde comes on board November 1st, 2019, the fear is that she will take this failed policy and then try to force it to work with even more Draconian measures. She has been a big proponent to eliminate currency in hopes of preventing hoarding to force people to put their money back in the bank where it will be taxed with negative interest rates.
Here is what it all adds up to:
People will NEVER borrow in a recession and they will NEVER spend when they are uncertain about the future. To me, these are simple fundamentals and the morons imposing these policies are experimenting with the economy with no idea of the damage European politicians have caused.
What President Trump has accomplished in the last 3 years is the result of knowing how a business runs in various changing economic cycles. He knows precisely how the USA should be run in this global expanding deflationary environment while “enticing” their money to the safety of the US Dollar based stock market. This is either pure economic brilliance or the President is inspired by God. I chose to believe God guides it all. Either way, the effects of this German/Europe contraction and China following will be a continuous Flow of Capital to the safety of the US Markets. In addition, plenty of Domestic (IRA, SEP, and Tax-Deferred Money) money will enter the safety of the US Indexes as well between now and April of 2020.
Stay tuned. A fun ride is coming soon to a theatre near you.
The SPY ETF one-year chart in the header image corresponds to the S&P 500 index. The two curved lines I drew in black at the right side of this chart represents a double top. Double tops portend lower prices and also a significant barrier to new highs. The horizontal orange line is the closing price. And isn’t it fascinating that it skims the previous highs on the left-hand side? You can chalk that up to coincidence if you want, but experience tells practitioners of technical analysis that prior highs are a support level. A corollary is that once prior highs are pierced, they become resistance. In any case, what this chart is showing me is that traders will take this support and trade against it. That is why I think we bounce tomorrow. Simple, right? Well, they also see the double-top, and so they will take profits before we get there. So once the momentum switches back to the downside, I think the shorts will kick in.
S&P 500 DoubleTop is now down 3% to 5% to down 5% to 7%; here’s why
S&P 500 Breaks Support Level Of 2,950, I thought we’d bounce at the 2,880-2,900-2,910 area. Friday’s low for the S&P 500 2,914.11; that’s close enough to say that this important level held. We closed at 2,932, which gives us our 3% drop. I think traders will use that as a sign for a quick trade on the long side. Also, those that shorted on Friday will look to buy in shares to lock in profits. But will this level last? I think the market needs more time to digest the escalation of the trade war with China. The constant drumbeat of lower growth in the rest of the world and contraction especially in the manufacturing PMIs. Many of which are now below 50, which represents contraction in manufacturing in places like Germany, and China.
China is notable in that it reported the lowest number in 27 years, just below 50. Here in the states, we are seeing our 10-year fall below 2%, and that has not stopped. We see the 2-year stubbornly higher than the 5-year showing inversion. This is a cause of concern for many market commentators and, in my mind, is what pushed Powell to lower Fed funds rate in the first place. If the 10-year rate continues to fall, the lower we get, the more shrill the proclamations of the coming of that ole boogeyman – recession will rise. We also haven’t heard about how China will retaliate, though it doesn’t announce that until the tariffs are actually slapped.
On the other hand, Trump could delay the tariffs to give US businesses more time to change their supply chain. In turn, China could quietly begin to buy farm products and halt Fentanyl smuggling into the US as it promised many times before. I felt obligated to give that caveat. The truth is I am in the other camp, the camp of hardening of positions. Frankly, this is good for Trump and his election prospects. And Xi, well, he has to stand tall for China’s honor. The idea that Xi is president for life is hogwash. I have explained this many times before. There are many factions in the Communist Party, and if Xi does not show strength and keep tight control, he will not be President. It was little noted, but Ming Chai, an Australian citizen, cousin of President Xi Jinping was indicted for money laundering in Australia. I find this very interesting, and I wonder if this was initiated by domestic foes of Xi to weaken him.
Xi’s rise to President was powered by his anti-corruption campaign, and here his own family is engaged in washing cash. Conspiracy aside, the fact this wasn’t swept under the rug and combine that with the near-revolution in Hong Kong means that Xi cannot appear to knuckle under to the US. I don’t write on geopolitics, I write about the stock market and stocks, and in the quiet of the weekend, I want to adjust my projection that this sell-off will be no deeper than 3-5%. I think 5% to 7% is a stronger possibility and perhaps another steeper drop early next month. The good news is that within the next four weeks, there will be definite signposts to trade between.
To know where you are going you have to know where you’ve been
Using the charts below, we see that we have put in a top, and that top will last until the fourth quarter as we gain visibility into 2020, and also we will see that Q3 will have grown smartly from Q2 GDP. How can I say that? Well, I am old enough to remember that for decades post-war the US was the world’s engine of growth. There used to be a saying that if the US caught a cold, the rest of the world would have pneumonia. The consumer is 70% of our economy, and the consumer is earning more, saving more and spending more. Energy is cheap and coming more and more from US sources.
Friday’s employment numbers included 16,000 new manufacturing hires. In the Obama admin, there were no manufacturing jobs added; tens of thousands were lost and expected to never come back. I am mentioning this not as a dig to the Obama admin, but just that manufacturing jobs are not a given, and they could be lost in droves even while the economy is growing. This is further proof that the US economy is healthy, it is growing, and the stock market will finish the year above the recent high.
That position if you agree is a powerful signpost in which to operate, so to sum it all up is we have an interim top. Presuming that we get the 5% to 7% drops to buy equity or to set up call spreads knowing where the upper limits are, a disciplined trader can do very nicely in that world.
Pension Crisis In America Is expanding again. The Wall Street Journal recently highlighted a better method of analyzing the impact of public sector pensions on state and local budgets. The results are ominous for government finances, the bond markets, and pretty much everything else:
A new study shows that the pension crisis in America is expanding again and that pension benefits are rising faster than GDP in most states.
Pension costs are soaring across the country, and government unions blame politicians for “under-funding” benefits. Lo, if only taxes were higher, state budgets would be peachy. The real problem, as a new study shows, is that politicians have promised over-generous benefits.
In a novel analysis, the Illinois-based policy outfit Wirepoints compared the growth of state pension liabilities relative to state GDP and fund assets. Most studies have examined “unfunded” pension liabilities, which is the difference between current assets and the present value of owed benefits. But this obfuscates the excessive pension promises that politicians have made.
According to the study, accrued liabilities—how much states are on the hook for—between 2003 and 2016 grew more than 50% faster than the economies in 28 states and more than twice as fast as GDP in 12 states. Leading the list are the usual suspects of New Jersey (4.3 times faster than GDP), Illinois (3.23) and Connecticut (3.18), as well as New Hampshire (3.46) and Kentucky (3.08).
Between 2003 and 2016, New Jersey’s pension liability ballooned 176%. Unions blame lawmakers for not socking away more money years ago, though lower pension payments helped them bargain for higher pay. The reality is that New Jersey’s pension funds would be broke even had politicians squirreled away billions more.
Ditto for Illinois, where the pension liability has grown by 8.8% annually over the last 30 years. Yet when the Illinois Supreme Court in 2015 blocked state pension reforms, the judges rebuked politicians for inadequately funding pensions. The solution, according to unions, is always to raise taxes. But no tax hike is ever enough because benefits keep growing faster than revenues.
New Jersey recently raised corporate and income taxes on high earners, but the state would need to spend billions more on pensions each year to adequately finance promised benefits. Illinois’s Democratic Legislature last year overrode GOP Gov. Bruce Rauner’s veto of a corporate and income tax hike. Yet the Democratic candidate for Governor, J.B. Pritzker, and unions are now campaigning to kill the state’s flat tax rate and raise taxes again.
Stanford University lecturer David Crane has calculated that every additional penny that California schools have received from the state’s 2012 “millionaire’s tax,” which raised the top individual rate to 13.3% from 10.3%, has gone toward retirement benefits. The only salve to state pension woes, as the Wirepoints study notes, is to rein in current worker benefits.
A case can be made – and was made a long time ago by F.D.Ramong many others – that the whole idea of public sector unions is misguided. As F.D.R said, “It is impossible to bargain collectively with the government,” because when government unions strike they strike against taxpayers, which he considered “unthinkable and intolerable.”
We’re seeing the truth of this now, as public sector unions use their growing clout to convince politicians to write checks that taxpayers can’t cover.
The inevitable result of a parasite that grows faster than its host is the death of the host. In this case, that means municipal bankruptcies on a vast scale in the next recession, default on hundreds of billions of municipal bonds necessitating a government bailout – culminating in a system-wide crisis that pops the Everything Bubble here and around the world.
Unless something else blows up first. These days it’s not if, but when and in what order the world’s unsustainable imbalances tip over.
Zuckerburg and Dorsey, two liberal leaders allow their companies to build millions of false accounts.
These two allowed these fake accounts to expand on their own platforms, why? Because they need there stocks price to rise. Remember their value is directly correlated to the number of users their advertisers can reach. So, more revenue is generated on the backs of FALSE users. This is the type of deception that comes from greedy criminals. Capitalism uncovered the idiots attempting to control and manipulate business income and the investors who own the shares.
Here are a couple of questions:
How long have the false accounts existed?
How much ad revenue, in false advertising, was generated from those false accounts?
If they can make a false account, they can certainly make a false click, correct?
A real business, owned by real humans pay for Facebook advertising. Did they pay for a legitimate service?
The Point: If I were to sell you a nice 3″ x 5″ ad in your local paper, collect the money, and then never run the ad, would you want your money back?
In all fairness and honesty, Zuckerburg and Dorsey MUST return all ad revenue generated from fake clicks and false accounts to their advertiser accounts.
Technology Index Updated (NASDAQ) Charts
It’s clearly evident that we remain bullish as the current month has not produced a red light indicating a bear market warning as we did in 2000 and in 2008, and 2015! So, longterm 401k, RSP, IRA and other Long-term retirement plan investors holding technology in their portfolios should remain invested even if a couple of their tech stocks take the hit right now.
The weekly charts are telling a similar bullish pattern although weakening somewhat from the Facebook and Twitter issues. Right now, the market is above momentum on our weekly models hinting this is still in a bullish long-term trend.
This chart says it all for the trader. Based on market action Friday, our members were out at the market open today and avoided today’s decline entirely. We see continued downside follow through with a buying opportunity shortly.
So, once this market finishes its decline, we can rethink what Facebook and Twitter will do when they fixed their criminal overcharging.
At that time our algorithm will show you precisely when to ride the bull again.
S&P 500 Cash Index closed today at 2818.82 and is trading up about 5.43% for the year from last year’s closing of 267361. Thus far, we have been trading down for the past 2 days, while we have made a low at 2808.34 following the high established Wed. Jul. 25, 2018. We did penetrate the previous session’s low and closed below that low creating an outside reversal to the downside.
From a cyclical perspective, the broader view which provides a map of the future is interesting. Our next yearly target in time for a turning point is 2026. Up until now, the market been consolidating trading within last year’s range. The direction into the next target due 2028 will be indicated whether we close above or below last year’s closing of 2673.61.
The Daily level of this market is currently in a full bullish immediate tone with support at 2808.61.
On the weekly level, the last important high was established the week of July 23rd at 2848.03, which was up 24 weeks from the low made back during the week of February 5th. So far, this week is trading within last week’s range of 2848.03 to 2795.14. Nevertheless, the market is still trading downward more toward support than resistance. A closing beneath last week’s low would be a technical signal for a correction to retest support.
The broader perspective, this current rally into the week of July 23rd reaching 2848.03 has exceeded the previous high of 2791.47 made back during the week of June 11th. Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend, and cyclical strength. Looking at this from a wider perspective, this market has been trading up for the past 16 weeks overall.
Currently, this market remains in an uptrend posture on all our indicators looking at the weekly level. We see here the trend has been moving up for the past 24 weeks. The previous weekly level low was 2532.69, which formed during the week of February 5th, and only a break of 2789.24 on a closing basis would warn of a technical near-term change in trend. The last high on the weekly level was 2848.03, which was created during the week of July 23rd, and has now been exceeded in the recent rally.
Critical support still underlies this market at 2446.54 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Immediately, the market is trading within last month’s trading range in a neutral position.
Overall on a broader basis, looking at the monthly level, this market is currently in a rising trend. We see here the trend has been moving up for the past 28 months. The previous monthly level low was 1810.10, which formed during February 2016, and only a break of 2594.62 on a closing basis would warn of a technical near-term change in trend. The last high on the monthly level was 2872.87, which was created during January.
The business confidence index produced by the National Australia Bank (NAB) decreased to 6 points in June from 7 points in May.
The series nevertheless remained positive indicating that Australian businesses are largely optimistic regarding economic conditions.
Looking at the sector-by-sector picture, the manufacturing, and transport and utilities sectors grew slightly less optimistic, while the construction and mining sectors became more optimistic. Meanwhile, business conditions improved in June on the back of an improvement in trading conditions and profitability. The employment index decreased for the second consecutive month, although it is still consistent with the pace of jobs growth sufficient to keep the unemployment rate at least constant.
All sectors remained firmly in positive territory and business conditions remained strong, which bodes well for business investment and growth this year.
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