Why Mark Mobius says the stock market hasn’t seen an ‘absolute bottom’ yet

Why Mark Mobius says the stock market hasn’t seen an ‘absolute bottom’ yet

Emerging-markets investing pioneer Mark Mobius made those remarks Tuesday in an interview with CNBC, putting him in the investing camp that expects an inevitable cascade of brutal economic data and corporate earnings hasn’t been fully discounted by investors.

Mobius, who founded Mobius Capital Partners in 2018 after a three-decade run at Franklin Templeton Investments, said corporate earnings would be “pretty bad” and that while some bargains have emerged, investors should keep some cash ready to deploy in the event of a further market downturn.

U.S. stocks hit all-time highs in February, then plunged into a bear market as the global spread of COVID-19 forced the U.S. and countries around the world to largely lock down their economies in an effort to contain the outbreak. Stocks have taken back a large chunk of lost ground since March 23, however, with recent gains tied to expectations the pandemic is near its peak, turning attention to efforts to reopen economies.

Market bulls have argued that the unprecedented nature of the shock and the massive response from the Federal Reserve, other central banks, and governments have rendered most comparisons to past bear markets debatable.

Others have cautioned that stocks are largely sticking to the bear market script.

“Although there are some opportunities to buy, I would say it’s probably a good idea to keep some powder dry for another downturn,” he said. “We might see a double bottom.”

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.

Marxism, Buffett, Dalio, Stalin & The Bottom

Marxism, Buffett, Dalio, Stalin & The Bottom

As always, the Democrats just can’t stand the fact that Trump might take credit for helping people and have blocked and relief package. Democrats claimed in true Marxist fashion in the Senate that the GOP’s push to set aside $425 billion for loans to help select companies and industries, dubbing it a “slush fund” for the Treasury to direct as it sees fit. They said the bill is tilted toward corporations instead of working people. What they fail to even address is that those working people rely upon small businesses the Democrats hate so much which provides 70% of their employment.

Small businesses have been ordered to close down. They cannot pay employees and nobody has suspended their rents. The destruction of small businesses will be devastating to the economy and this is all about playing politics. I am saddened.

The closing for March, if down from last Friday may spark more serious liquidation as Hedge Funds dump everything and some may more to suspend withdrawals as is taking place in European bond funds. The Solus Alternative Asset Management LP, Hedge Fund, known for its investment in retail chain Toys “R” Us, informed its investors that it is shutting its flagship fund and will restrict redemption’s as it works to sell off holdings.

Even Warren Buffett’s Berkshire Hathaway may have lost more than $70 billion on its 10 biggest investments. This type of decline shows that the buy-and-hold strategy fails in a serious market correction. Ray Dalio, who will go down in history for his proclamation that “cash is trash” on January 21, 2020, has lost probably more than $4 trillion in Bridgewater.

Where the 2007-2009 Crash took out Lehman Brothers and Bear Stearns, this time we will see Hedge Funds go down in flames. This undermines liquidity and makes the market vulnerable because market-makers pull back just to survive. 

We are headed into a Global Recession which could become even worse than the Great Depression. Here’s why?

This time we have politicians taking advice from the medical industry. The medical people who do not understand that you cannot shut down the economy on this grand scale because of the devastation is insurmountable to people, their jobs, and wiping out their pensions. This economic shut down on such a massive scale is far worse than if the Corona death toll was even 8%.

Never before has the economy been crashing with such speed for this is orchestrated by people who only look at how diseases spread and not how the economy contracts.

See the source image

Yes, it is true that if we all stayed home we can even beat the common cold. But the post-coronavirus world is going to be far more damaging to the future than any of these people understand.

To have the Democrats playing politics in the middle of the is just insane.

Liquidity is collapsing everywhere. Bank failures rose after the 1929 crash because liquidity failure with a declining velocity = less money with even less money moving around the economy = recession and potential depression.

A monthly closing on Oil below $20.50 will warn of the economic recession ahead as people stay home and this command of quarantine and social distancing may undermine the very cooperation which is the foundation of civilization. 

If people are afraid to interact and suspect everyone, that is precisely the atmosphere created by Stalin during the Communist era.  We are voluntarily limiting and quickly losing all rights including the freedom of assembly. Even Twitter has shut down those who dissent against the coronavirus and this is calling into question our freedom of speech as well.

InterAnalyst will help guide everyone out of this time of insecurity and political misdirection via selfish ignorance.

Look at the chart below:

Finding The Bottom

As the markets find the bottom, it will be laced with volatility and insecurity with the media frightening you to the point of insecurity. this is not done for YOU as an InterAnalyst member. It is done for those Buy and Holders who never exited at the top and now have been scared into submission. 

However, as an InterAnalyst member,  you recognize that it likely will become the best entry point of your life! Yes, insecurity will be there but you know the stock market is going nowhere!

The stock market never lies and it always returns when there is “blood in the street” and the bottom arrives.

Thus, follow the guideline to a risky to safe entry back into the coming slingshot move.

Step One: Wealth Maximizer Pro (Daily Charts)

When the Daily chart delivers a green signal, jump for joy, then choose to enter a position or wait to see if the daily signal is holding for a few days for stability. If we are at or close to a bottom, volatility will be very high so prepare for it if you choose to trade it.

Step Two: Wealth Maximizer (Weekly Charts)

When the Daily is followed by a Weekly green signal you know that the economy is attempting to settle and gain strength.

You should begin to feel a bit more secure. Entering a bullish position here is a bit less risky because the weekly signal has some economic strength attached rather than pure daily volatility. You can even wait another week to see if it develops more strength.

Step Three: The Wealth Preserver (Monthly Charts)

Once the Green signal has elevated from the Daily to the Weekly and the Weekly has moved into a second or third week of a bullish trend, you may select to beat the green monthly Wealth Preserver signal by entering a bullish position before month end.

If you look at The Wealth Preserver chart above, ask yourself whether you remember the days or weeks Just prior to the bottom green signals in 2003 and 2008?  NOPE, right. You don’t remember them, but what you would have remembered is getting in after preserving your money at the prior top, before the full devastating decline those bear markets delivered.

The same is true now. 

So, the bottom is going to come. You must be patient, it will arrive, it always does!

Enter in when you feel most comfortable, but recognize that the Wealth Preserver has proven to be deadly accurate at economic turning points.

The phrase to be true: “Better Safe, than Sorry!” 

Obviously, entry at any point has its risks, but as you look closely at The Wealth Preserver chart above, making a move using the monthly charts is rarely a poor decision…ESPECIALLY OFF THE BOTTOM.

This time it is coming with a slingshot.

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.

 
 

 

 

Part 2: When Will The Markets Turn Up?

Part 2: When Will The Markets Turn Up?

As I mentioned in yesterdays Bull & Bear Blog post, there was a gap to fill below yesterdays close. Today, traders put in their best efforts to close the gap, but failed to do so as you see in the chart below.

Now that it is likely to break through and fill the gap, whats next?  The indexes like to break significant corrections into 3 phases with 2 rallies before they bottom.  So, lets take a look at one example of this that could repeat now.

The image below is from the most recent correction in 2018:

That drop lasted from October – December and bounced back in January. Usually corrections of significance take back roughly -20% from the top and are not considered bear markets.

So as we can see in the top image, we have take only 9% from the top in relative terms, 11% less than in 2018.

Nonetheless, we now live in 2020 and our run up to this correction was long and strong, so we are giving back some right now with the help of the Corona-virus.  Unlike 2018 this may not bounce back quite as quick  because the virus is spreading still.

Because our Wealth Preserver signals have been so accurate at protecting against serious Bear Markets and sideways consolidating markets lets take a look at our famous question…

“If today were the last day of the month, what would be the likely signal for the S&P500, Nasdaq, Dow, and Russell 2000?”

GAPS:  The 99 Year Old – 91% Winning Trading Strategy

GAPS: The 99 Year Old – 91% Winning Trading Strategy

Do you want a 91% Winning Trading Strategy

If you could win 91% of your bets in Baseball, Basketball, Football, Poker, or the Horses, would you consider placing a bet or two?

Or, would you prefer to just blindly buy a virtually 99.999999% guaranteed losing lottery ticket?

Now, let me add to the reality.  What I am talking about is not gambling. It’s a simple to learn and easy to execute trading system that uses the Wealth Maximizer Pro trade signals built on pre-screened and optimized investments. A system with up to 99 years of history.

It is 100% real, honest, and can be a proven winning trade machine for you.

You can download and read the free PDF below right now.

GAPS:  The 99 Year Old - 91% Winning Trading Strategy

Interest Rates Will Now Rise Sharply – Part II

Interest Rates Will Now Rise Sharply – Part II

Interest Rates Will Now Rise Sharply – Part I

Interest Rates Will Now Rise SharplyThe rise in the stock market will eventually force the Federal Reserve to abandon its attempt to appease international central bankers who are still locked into negative interest rates.

This is actually the exact pattern that took place after the first real G4 meeting, as I call it when the US Fed lowered rates in 1927 to try to deflect the capital flows back to help Europe. It is ironic that history is repeating this same way once again…

Kansas City Federal Reserve President Esther George stated today that the Fed may need to “reverse” the three rate cuts implemented in 2019 that brought rates down to 1.5% to 1.75%… “We will need to asses whether the 2019 rate cuts prove to be ‘insurance cuts’ that will need to be reversed if headwinds fade.”

The Fed will once again turn to its domestic policy objectives and stop trying to help Europe which is trapped into its negative rate policy. Even Sweden has abandoned negative rates stating they have failed to provide what they were claimed to have accomplished.

I want to remind you that rising interest rates are bullish, not bearish. When the time comes to let you know when and what to buy and sell, we will provide those signals to our members. As money continues to move out of Europe to the USA we will let you know here.

Members Blog – Critical Market Juncture

Members Blog – Critical Market Juncture

Critical Market Juncture

We are at an important cyclical time as we mentioned in our blog posts last couple of months.

We will see the Trump Senate Impeachment trial begin and about 6 Republicans are lining up against Trump. They are claiming they want witnesses and this can upset markets in a very large way.

The House is supposed to present the case but here the Democrats want new evidence on which Trump was not impeached. This is presenting a serious constitutional question with a Panic Cycles starting. This has never been attempted!

Here is what to expect and do with your investments.

 

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