Market Support Is Deteriorating Fast as the market rally to date has been defined by the five largest stocks in the index. Via Goldman Sachs:
“Broader participation in the rally will be needed for the aggregate S&P 500 index to climb meaningfully higher. The modest upside for the largest stocks means the remaining 495 constituents will need to rally to lift the aggregate index.”
Such also becomes problematic when corporations are issuing debt at a record pace to supplant liquidity needs to offset the economic crisis rather than repurchasing shares. It’s worth remembering that over the last decade, buybacks have accounted for almost 100% of net stock buying.
Overbought & Extended
Besides the supportive underpinnings, the technical backdrop is also conducive for corrective action in the short-term. Here is something that is more compelling:
“The number of stocks above the 50-dma is pushing record levels. Historically, whenever all of the overbought/sold indicators have aligned, along with the vast majority of stocks being above the 50-dma, corrections were close.”
Such doesn’t mean a “bear market” is about to start. It does suggest, at a minimum, a correction back to support is likely.
… it’s probably because it is, as the latest Wall Street professional to join the chorus of naysayers and skeptics including such luminaries as David Tepper and Stanley Druckenmiller, claims.
In an interview with the Financial Times, Manolo Falco, Citigroup’s co-head of investment banking said that financial markets were “way ahead of reality” with tougher times to come, and is warning corporate clients that they should raise as much money as they could before the pandemic’s true cost is factored in by investors.
“We definitely feel that the markets are way ahead of reality. We really are telling every client to tap the market if they can because we think the pricing now couldn’t get any better,” Falco said, adding that “as the second quarter comes along and we start seeing the pain, and the collateral effects of that, we think this is going to be much tougher than it looks.”
Manolo Falco, Citigroup’s co-head of investment banking.
His comments came at the end of a week when stock markets largely rallied even as relations between the US and China just hit rock bottom, as riots were about to break out across the US which now has more than 40 million unemployed, and as millions of businesses around the world remained shut and economies lurched towards their worst recessions in memory.
“Markets are pricing a V [shaped recovery], everyone’s coming back to work, and this is going to be fine,” Mr Falco said. “I don’t think it’s going to be that easy quite frankly” said the investment banking icon who just made Robinhood’s shitlist.
Investors’ optimism led investment grade companies to raise a record $1 trillion of debt in the first five months of the year, putting investment banks such as Citi on course for a surge in debt capital markets revenues in the second quarter of the year compared with 2019.
Citi is not the only bank to take advantage of the bond issuance feast, which has been explicitly backstopped by the Fed which as we learned last week has been busy buying up over a dozen ETFs.
Last week senior bankers predicted another strong quarter for trading. This was especially true at JPMorgan Chase, whose investment bank boss Daniel Pinto said trading revenues in the second quarter could be up as much as 50% compared with a year earlier.
Falco was more circumspect on the prospect of a wave of activist investment in the aftermath of the coronavirus crisis. Low asset prices can tempt activist investors to buy into companies on the cheap and then look for ways to make them more profitable, often by cutting costs and jobs, but mostly issuing more debt (although with corporate leverage now at even record-er levels than just 2 months ago it is unclear just who has the capacity for even more debt).
“You gotta be careful though because an activist can become very quickly a focus of governments if they really step in too hard at a time when people, what they want is to protect employment and to actually get things going in the economy,” Falco said. “We’ve got to be careful because in some cases . . . maybe those [investments] are at the wrong time and could create a lot of anger.”
We doubt that: in fact, if activist investors step up and end up causing millions more to be fired, it will simply mean that the government’s free handouts will have to be extended even further, Congress will have to pass even more stimulus bills, and the Fed will have to monetize even more debt bringing us that much closer to the period of runaway inflation so eagerly sought by the Federal Reserve.
In other words, more layoffs mean win, win, wins for everyone, except those who still believe in working hard and saving, of course.
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.
Jed Clampett’s Oil Trade Signals are unmatched because they make logical common sense.
J.D. “Jed” Clampett, usually called Jed Clampett, is the patriarch of the family with his mother-in-law Granny, nephew Jethro, and daughter Elly May.
Although Jed had received little formal education, Jed Clampett has a good deal of common sense.
So, lets take a look and what is occurring in the markets that started with the Corona-Crash, and see if have Jed’s common sense to make tycoon size profits in OIL… even if you’re not an oil type of investor! It is just common sense!
Just 2 days ago, Oil futures “May 2020” contract reached about a minus -$35 dollars per barrel. Understand that this is a DOMESTIC market and it does not reflect the world price of oil. But all oil is falling.
InterAnalyst Members, who trade oil and sold or shorted when the signals came out on the monthly, weekly, and daily charts below are smiling, but not as much as they will be when the signals turn bullish!
(Please click on the charts to maximize)
The contractual terms of the WTI Crude Oil contracts traded on the CME NYMEX market are based upon the domestic pipeline delivered crude oil contract.
This is not the crude in tankers. Because of the sudden drop in domestic demand thanks to the lockdown, there is no demand for Gasoline and even Jet Fuel has declined in demand.
This resulted in the filling of the majority of storage facilities inside the United States for the supply was coming in by pipeline rather than trucks or tankers. This is why the domestic crude oil market collapsed ahead of expiration. The GLUT is reflected in the United States and this is impacting domestic production that will lead to the drop which in turn will swing back and eventually materialize in higher prices and production then declines and jobs are lost.
This situation does NOT reflect the scope of the international market in Asia or Europe. BRENT Crude oil is the international benchmark reference index price for the majority of global oil markets. BRENT Crude prices are holding above $25 dollars per barrel for immediate physical delivery.
Looking at the price chart of DBO, the ETF we track for OIL traders, once the economic news settles down, and it will, do you think OIL will go back to a normal price? It is 95% off its highs!
Are you kidding? Jed already bought by the time you read “Are you kidding?”.
Let me ask you a second question. Once the Corona-virus settles down, and it will, do you think people around the world will need oil again? How about when a Corona-vaccine is developed and all economies explode? That day could make you 100 – 500% alone.
We have Jed’s common sense, do you? Best of all, we will track it all for you in the members blog.
Once the economic news settles, we will provide our members a signal that will explode their profits. And as it goes up and down along the way, which it certainly will, why not capture gains and the avoid declines the whole?
This will be a bullish move of historic proportions and can set you up for historic profits… the kind you’ll read about in the history books.
Jed Clampett knows this one is a “No Brainer”.
And because it is obvious, if you become a member today, we are offering you a 25% Lifetime Discount. Use the Promo-Code “Wealth25” when you sign up for your 15-day free trial.
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.”
This Bear Market Rally is still not complete but should be shortly and Here’s When The Bear Market Rally Ends.
We are actually still in a bear market rally with today clearly being another ‘green’ day, it is likely the rally will continue until the herd jumps in again.
It is not uncommon what-so-ever to re-touch near a 50% level during voracious bear markets, however, at this point you can actually argue the market is more over-valued now given the environment than when the Standard & Poor’s was near 3400 ironically enough.
The markets are already trying to price in a possible slowdown in the COVID-19 pandemic. But, even if the Pandemic miraculously disappeared today, the massive economic shock won’t disappear anytime soon.
Major indices all over the world have already plummeted into Bear Territories and the recent rally is simply a correction. In fact, if you look at previous bear markets, you will find plenty of temporary Bullish rallies within the larger Bearish move.
So, do not get emotionally carried away by the bull run right now. Shortly, we will be dealing with bad economic data, a bigger than 2008 recession (likel):
Falling Output. Less will be produced leading to lower real GDP and lower average incomes. Wages tend to rise much more slowly or not at all.
Unemployment. The biggest problem of a recession is a rise in cyclical unemployment. Because firms produce less, they demand fewer workers leading to a rise in unemployment.
Higher Government Borrowing. In a recession, government finances tend to deteriorate. People pay fewer taxes because of higher unemployment and they need to spend more on unemployment benefits. This deterioration in government finances can cause markets to be worried about levels of government borrowing leading to higher interest rate costs. This rise in bond yields may put pressure on governments to reduce budget deficits through spending cuts and tax rises. This can make the recession worse and more difficult to get out of. This was particularly a problem for many Eurozone economies in the aftermath of 2009 recession.
Hysteresis. This is the argument that a rise in temporary (cyclical) unemployment can translate into higher structural (long-term) unemployment. hysteresis
Falling asset prices. In a recession, there is less demand for buying fixed assets such as housing. Falling house prices can aggravate the fall in consumer spending and also increase bank losses. This fall in asset prices is particularly a feature of a balance sheet recession (e.g. 2009-10) recession.
Falling share prices. Lower profits lead to lower levels of share prices.
Social problems related to rising unemployment, e.g. higher rates of social exclusion.
Increased inequality. A recession tends to aggravate income inequality and relative poverty. In particular, unemployment (relying on unemployment benefits) is one of the largest causes of relative poverty.
Rise in Protectionism. In response to a global downturn, countries are often encouraged to respond with protectionist measures (e.g. raising import duties). This leads to retaliation and a general decline in trade which has adverse effects.
These factors are not at the top of the news yet cycle right now. But I assure you that when the Corona-Virus takes a back seat to the Presidential Election, the reality will set in and we will witness a new test of the bottom.
So, such rallies as the one we are seeing now will be sold aggressively and markets will plummet into fresh lows. Until a 50%-55% drop has happened, we can’t start thinking about bottom formation.
Conservative investors should continue to follow the Wealth Preserver signals as is proven historically, the signals will protect you from every market crash that matters.
The Destructive Coronavirus Truth is much more dangerous than the virus itself.
No one has stated it more clearly that Mr. Celente in this video. We appreciate and value his Wealth Preserver Membership.
You absolutely must watch every minute of this video as he is as animated as ever.
He explains the who, what, why, where, and when of this whole mess. More importantly, he does not mince words of how its effecting the economy.
Fortunately our members have been protected from this crash and are preparing the coming slingshot up. Holding the right investment will be vital and once this crash and slingshot back up is over, the real depression and 90% crash is coming.
The Wealth Preserver will guide our members step by step through the future like a GPS system for your Investments and retirement accounts.
Baron Rothschild, an 18th-century British nobleman and member of the Rothschild banking family, is credited with saying that “the time to buy is when there’s blood in the streets.”
The original quote is believed to be “Buy when there’s blood in the streets, even if the blood is your own.”
Here is an image of today’s Drudge Report…
Based on the Drudge report, it certainly looks like someone is bleeding right now.
Are we at the bottom though?
All my neighbors are out walking for exercise or stress relief.
What I do know is that I saw the same types of activities going on in late 2002 and 2008. Because this is early 2020, let’s hope to see it bottom soon and turn up.
We expect a “Slingshot” to the upside with the same ferocity as it had to the downside.
On February 18th, our daily trading charts issued a stock market exit signal. It was supported by our weekly sell signal that week, followed by our monthly Wealth Preserver that month.
(Click on any image to maximize)
Now that the Bear Market has come out of the woods to show itself, no one knew it would come with a unique flu called Caronavirus. This virus has certainly moved the bear into the psyche of our global economy. And by the looks of the Drudge Report, the bears flu it really bad.
When will this Bear fever break?
InterAnalyst will know within a few days of it bottoming and turning up.
As Baron Von Rothschild knows, more blood is coming before the bear will be ready to hibernate again.
Fortunately, we give entry signals just as we have for almost 30 years.
These signals in the charts are real and have been followed by our member from further back than the chart illustrates.
Each bar in the chart represents a month, all you need to do to visualize the power is to move the Green Signal up and over the prior Red Signal, and you can quickly realize how much farther ahead you would be.
Here, let me do it for you:
FYI: The chart is consolidated for illustrative purposes and the ending values depend on when and which bear markets you would have avoided. Avoiding all of them would put you between 400% – 1200% ahead of buy and hold. Because you are on the sideline while markets drop, you lower your risk.
This is the Global Central Bank, Pension Fund, Retirement Account, and Stock Market Crash we warned was coming. It is here.
As for a bottom?
Keep in mind that we MUST go down first in order to clean it out and this then creates the bear trap as we saw back in 2009.
It will turn when there is more “blood in the streets” and all three of our memberships pegged it and protected our Members. That is why our members have avoided 70% of this decline thus far and will likely avoid 95% of it before it turns up. The important point here is that they will reenter the market with as much money as they had in late February.
And as the market turns and rallies off the bottom, the banks, brokerages, insurance companies and press will once again not believe it has turned because they will fear it will turn down again.
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