"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

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Journal Archive
Twitter: @kherriage

Thursday
May232019

US-China Trade Morphing into Economic War….one that China Will Lose badly.

Good Thursday morning all.

Our major U.S. indexes opened lower this morning as the U.S. administration is applying maximum pressure on China via attempts (along with US allies) to essentially shut Huawei down. Huawei is huge. As the largest telecommunications manufacturer on the planet and second largest manufacturer of smartphones (behind Samsung), Trump is now applying maximum leverage against the Chinese.

It’s still not a trade war…but it’s quickly morphing into all-out economic war vs China. This is a war that China cannot win. If you’ve read The Art of the Deal, you may recognize what Trump is doing here. In order to get the deal you want, find the pressure points on the other side and apply maximum pressure. He has our allies around the world, through governments and corporations, backing him.

Take a few minutes and watch this interview with Oculus founder. Trump is on the side of the majority in silicon valley….we also see this in actions from Google and Microsoft.

https://twitter.com/KHerriage/status/1131230137347956737

I have been in the camp that China will not be dumb enough to repeat the country killing mistakes that Japan made, beginning in the early 90’s. If I am wrong, then China is in for a world of hurt over the next 1–2 decades. For now, Chinese markets are still up in the 20% range in 2019, with technical buy signals intact.

Heres what’s on my mind; take some time to read this article, featuring Steve Bannon’s views on US-China. Without Bannon’s help, Trump is almost certainly not the president. Bannon still has the ear of the president, as just as he does with pro-populism leaders around the world (big EU elections this week!).

As you’ll read, Bannon says this goes much deeper than trade-related issues. This is essentially about taking China down…hard.

https://amp.scmp.com/news/china/diplomacy/article/3011145/steve-bannon-says-killing-huawei-more-important-trade-deal?__twitter_impression=true

Consumer Sentiment

Check this out…with the markets just 4% from all-time highs, look at last nights AAII Investment Sentiment Survey readings. 24.7% bulls and 36.1% bears. The level of negative sentiment is amazing. And no, this is NOT a sell signal.

We’re also seeing the continuation of the pattern we’ve been discussing here of late, namely that our markets continue to rally off of their lows (on down days), rather than finishing weak into the close of trading. And our observation remains that each round of “China trade war” hysteria impacts our markets less and less. We continue to see these events as important market tells.

The VRA Investing System remains at 9/12 screens positive. Dips must be bought, in our VRA buy recommended positions.

The following chart and analytics comes from CC Market Analysis and helps to confirm our bullish market views (short, medium and long term). What we see below is a chart of the S&P 500, focusing on the technical indicator called the MACD, or the “moving average convergence divergence” indicator. We use this indicator to confirm whether our moving averages are giving a buy signal or sell signal, and it can be applied to the broad market, sectors or to individual stocks. The MACD has just completed 12 consecutive weeks in positive territory. Keep reading to see what this means…

Bottom line; 12 straight weeks in positive territory for the MACD has occurred just 16 times in the history of the S&P 500, producing an average gain of 29% over the next 2 years. Another highly bullish piece of market analytics.

Populism/nationalism beats globalism, hands down!

Finally, this past weekend's Australian elections provided more evidence that the VRA’s forecast for a global bull market on steroids is playing out, a major geopolitical theme of ours, as conservative incumbent Scott Morrison shocked the pundits by beating liberal, big government, climate alarmist Bill Shorten.

Again, the election in Australia is another important piece to the puzzle for our major macro geopolitical forecast for a long term, global bull market. Our theme is unchanged; populism/nationalism beats globalism, hands down.

Until next time, thanks again for reading…

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Sign up to Join us daily for our VRA Investing System podcast

Learn more at VRAInsider.com

Also, Find us on Twitter and Facebook

Thursday
May162019

The Wall of Worry Bull Market Continues. VRA Emotions of Investing. Housing is BACK! Shocking Sentiment Numbers.

Good Thursday morning all.

A staple of the strongest bull markets of my career have been their ability to overcome all obstacles as they continue hitting new highs. In Wall Street lingo it’s called “climbing a wall of worry”. Powerful bull markets feed off of fear and worry.

Today, these fears dominate the financial MSM. We’ve been inundated by fears of trade wars, interest rate shocks (first, higher rates that would choke off economic growth, then falling rates, with an inverted yield curve), a global economic recession and of course the biggie; Trump Derangement Syndrome.

Through it all, a wall of worry has continued to propel US and global markets higher. We see exactly this in this 3-year chart of the Dow Jones. From Trump's election to the first significant top (1/18, beginning of US-China trade fears), our wall of worry bull market sent the DJ 43% higher.

Next, after US markets recovered throughout ’18, we then proceeded to hit new all-time highs again (9/18), just as the Q4 from hell kicked in. But, once again, propelled by a wall of worry, our markets recovered with a classic V-bottom move higher, resulting in new all-time highs in S&P 500 and Nasdaq.

This week, our markets have taken a hit, once again, on our primary wall of worry fear….US-China trade.

But folks, have you noticed that with each trade-related decline, they become less and less of a big deal? On Monday, the DJ plummeted more than 700 points intraday but recovered 200 points of those losses by the close. Then Tuesday, the DJ clawed back another 200 points, and we saw another solid day of gains yesterday. As the single best discounting mechanism on the planet, it looks increasingly likely that the markets have discounted the worst case scenario with China. It’s already baked in the cake.

No, it doesn’t mean that trade headlines won’t have the ability to rock the markets from time to time. But what it does mean, as I interpret the markets action, is that it’s increasingly likely that any hit to the US economy and US markets from trade tensions will be minimal, going forward. The markets have already picked the winner…it’s the US. China is on the losing end of this fight. Our wall of worry bull market will continue to take US markets to fresh all-time highs. The Trump Economic Miracle will prevail (easily, I believe) over US-China trade fears (that combined impact less than 4% of US GDP).

Again, Big..and we believe important…back to back recovery days in the US and global markets. Here at the VRA, we’re big believers in watching what the market actually does, rather than what old news and the talking head, 24-hour fake news cycle, tells us that it should do.

The latest round of US-China trade tensions resulted in a 1-day sell-off (Monday). Little more, really, as our markets have come solidly back. This morning…even on the backs of the news of Trump's executive order that could block all of China’s “communications technology” (see Huawei) in the US…one would think that global markets would be lower on this big news. But one would be wrong, as the Dow Jones is up over 200 points as I write. It’s not the news/propaganda that matters…it's the market's reaction to it.

HOUSING IS BACK!

We also learned this morning that US housing starts were 5.7% higher in April, with solid revisions higher in March as well. Housing has led our post 12/24 capitulation move higher. This is MOST important to us, as housing makes up an important component of the VRA Investing System. When the US housing market is vibrant, the US economy is on solid footing. Period.

Back in 2007, as we began warning VRA Members (and those who I spoke to from onstage, many thousands globally) about the coming economic risks, we focused on exactly this….the US housing market…which flashed literally 100’s of warning signs over the course of ’07. We know what happened next. The worst financial meltdown since the Great Depression.

But today, the US housing market looks much, much different. We see below, in the chart of HGX (Housing Index) that the housing sector has been THE market leader, from those 12/24 lows, with big 39% gains (and two golden crosses).

VRA Buy Rec NAIL (3 x Housing ETF) is +112% from those same 12/24 lows. When housing leads, the rest of the US economy follows. Highly bullish.

AAII Investor Sentiment Survey

I have just one word for last nights AAII Survey. STUNNING.

This has been my go-to survey for more than 30 years. It’s yet to lead me wrong. Again, these readings are stunning. We’re just days removed from all-time highs, yet these readings show 39% bears to just 29% bulls. It’s clear that the majority of investors are scared sh*tless by the stock market. And frankly, who could blame them? The last 19 years have seen the dot-bomb crash, 9/11/01, the Great Financial Crisis (which was in fact a 2 year Depression), 8 years of BHO, $9.5 trillion in added debt and $4 trillion in QE, and we’re just 5 months away from the worst December since the Great Depression.

But also know this; bull markets do not end until investors are euphoric about the markets. For the AAII Survey, that means readings of 65–70%, for weeks on end. We are light years away from a market top. Our targets are unchanged; 35K DJ by the end of 2020. 50K+ DJ by end of 2024.

Finally, for this morning, our VRA Update from a couple of months ago was our most heavily commented on in some time. “The Emotions of Investing”.

We’re reposting much of it again this morning for our newer VRA Readers (and old). My mentors taught me about the importance of managing your emotions, as much as anything else. Read and save. Teach this to your kids. Life-Changing stuff, as applied to investing (and life).

The Emotions of Investing…Nothing is More Important. VRA Approach to Crushing Mr. Market.

Wayne Gretzky said it best; “a good hockey player plays where the puck is. A great hockey player plays where the puck is going to be”.

As active investors, we want to crush Mr. Market. We have a strong desire to build our investment portfolios for a fully funded retirement account. We cannot do that if we skate where the puck is.

If we listen to the MSM, filling us with this fear, that fear, or the other fear, we’ll forever be buying when we should be selling and selling when we should be buying. We’ll forever be skating to where the puck is.

After doing this for 34 years I can tell you that it took me (at least) 10 years to get a handle on this most important subject. Understanding and controlling the emotions of investing. Nothing is more important. It’s a constant battle. Investing is as much art as it is science…artists are known for being temperamental and emotional…and nothing makes us more emotional than our money.

Think back to December. Investors sold out right at the lows. We know this because equity fund outflows hit an all-time record. Much of this selling occurred just as the Fear and Greed Index was hitting 2…yes TWO…another all-time record, indicating fear had gripped investors even more so than during the ‘08–09’ financial crisis. Remarkable.

If you were here with us then, you know that we were pounding the table to “buy buy buy”. We said exactly this during the last half of December, the worst since the Great Depression, and we said it often.

Investors that bought stocks in late December have massive gains to show for it. Unfortunately, that's not most investors. And even more unfortunately, this is how investment portfolios get wiped out…frequently.

I know, because I’ve done it myself. Tough lessons learned are always the best. Those lessons led me to the creation of the VRA Investing System. They led to getting my clients out of the market in late 1999, just before the dot-bomb, saving them $20–30 million in losses. They led to my warnings to everyone that would listen, beginning in 2006, at 100+ events all over the world, that “the coming financial crisis could wipe out stock markets and drive housing prices into the ground”.

And they led to my bottom calls in March ’09 and this past December. I’ll repeat, both bottoms will be all-time lows. That's how we played it in ’09 and that’s how we’re playing it now.

Where are investors mindsets today? Check this out…as Bloomberg reported this morning, even as global equity markets have gained $9 trillion in value this year, investors continue to pull money from the markets.

Remarkable. Even as our markets have surged higher, invests still aren’t believers. Fear continues to grip them. Our fake news financial MSM has much to do with this, along with the permabears that have taken over social media. Combined, investors have a level of anxiety that may be the highest yours truly has ever witnessed.

But folks, don’t believe it. It's one big psyop. And it’s designed to keep investors afraid and in cash. But trust me on this; as the markets continue to move higher. our financial press will start to become more bullish. We’ll hear them begin to whisper about the global economic recovery. Then, as the DJ crosses 30,000, we’ll hear them start to say “hey, maybe the good times are returning”. Then, as the DJ crosses 35,000, we’ll hear them join the VRA’s major global macro point of “wow…it does appear that populism/nationalism is better than globalism.”

Then, likely in 2023–2024, as the DJ approaches 50,000, literally everyone and their mother will be wildly bullish on stocks. We’ll hear “100,000 DJ is even possible”!

And that’s when we’ll be selling and taking profits. It’s the very nature of investor sentiment…the very nature of fear and greed…the very nature of the emotions of investing.

In addition to using the VRA Investing System to crush Mr. Market with our leveraged ETF’s, we own five story stocks for the opportunity of 500% to 1000% gains..something I’ve specialized in my entire career. Updates coming soon.

Make sure and do two things; sign up for our VRA 14 day free trial to ensure you are positioned correctly and listen to our daily VRA Investing System Podcast (sign up at vrainsider.com/podcast).

Until next time, thanks again for reading…

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Sign up to Join us daily for our VRA Investing System podcast

Learn more at VRAInsider.com

Also, Find us on Twitter and Facebook

Thursday
May092019

The Rise and Fall of Japan, Echoes of China Today. VRA Market and System Update.

Good Thursday morning all. All eyes are on US-China trade talks in DC, where Trump has announced that beginning Friday, tariffs on $200 billion in Chinese imports will rise from 10% to 25%.

Frankly, this amount is not a big concern. Think about it. Should the tariffs increase, the total amount raised annually would equal just $30 billion. Sound like a lot? It’s not. China’s total annual GDP is $13 trillion.

Of course, the bigger issue is what happens next. Would Trump actually move forward in introducing additional tariffs of 25% on an additional $300 billion in Chinese imports? If so, then we’re getting into the ballpark of an actual trade war. But as we’ve said…consistently…since early 2018, thus far we’ve had something more like a trade tickle with China. At least that’s how the US has been impacted.

But in China, the pain has been much, much more real. Consider that (according to AP this morning), in coastal cities that ship electronics parts to the US, revenues are down some 40% in just the past year. Now that is REAL pain. There’s no way that these kinds of income losses don’t scare the sh*t out of Chinese leadership.

VRA Bottom Line: Trump is a hard-nosed negotiator but he’s also a pragmatist that wants the US economy and US stock markets to continue to lift off. It’s our continued view that a full-blown crisis will be averted this week. China acted almost exactly as the same rogue country when they were being admitted into the WTO in 2001. They backed out of previous commitments going into the final week of negotiations…just as they’re doing here. But at the end of the day, they capitulated and became a full fledged member of the WTO…and their economy soared.

For those that want to understand what happened to Japan in the early 90’s, just as they were thought to be the next global superpower, I think you’ll find this 1998 article from the Cato Institute most interesting. There is zero chance that China has forgotten Japan’s meltdown. The question is, will they egos allow them to change course in time to avert a similar fate?

https://www.cato.org/publications/trade-policy-analysis/revisiting-revisionists-rise-fall-japanese-economic-model

“The revisionists claimed to have discovered a new and superior form of capitalism: the Japanese capitalist developmental state. Today, however, the Japanese model is better known as “crony capitalism,” and its manifest failures are causing economic pain and political turmoil up and down the Pacific Rim. The revisionists argued that the United States was doomed as a leading economic power unless it adopted Japanese-style practices. It didn’t and is now enjoying spectacular and unrivaled prosperity.

In short, the revisionists’ doom-and-gloom prophecies could not have been more wrong. All their errors trace back to a common source: an inability to understand and appreciate the power of free markets. Suffering from what Nobel Prize-winning economist F. A. Hayek termed the “fatal conceit,”87 they believed that a handful of government planners could outthink millions of private decisionmakers — could pick “strategic” industries, allocate capital in defiance of market signals, and prop up the stock market and real estate values. Like so many others before them, they prided themselves as sophisticated realists, yet in fact their faith in bureaucratic miracles was hopelessly naive. Only a few short years were needed to burst their bubble.”

Know a Couple of Things

1) In my opinion, if you’re considering selling, you are clueless about the underlying strength of the US economy and US bull market in stocks. Again, in all candor, if you are selling into this then you should probably do anything other than invest in equities (unless you are a short term trader).

The smart money move here is to do one thing and one thing only….BUY.

2) The US does not need China. We just don’t. Frankly, not for much of anything. In fact, I can make a strong case that US GDP would skyrocket to 5%+ inside of 12–18 months, without China’s theft and cheap manufacturing that robs US jobs and US GDP. The US would suddenly self produce everything that we import from China. Yes, these items would be more expensive…for at least a short while…but the US economy and US stock markets would explode higher, on the backs of economic production.

But man oh man, the coin flip of that argument looks quite a bit different. Without the US, China would fall into a decade + long depression. Civil war would quickly ensue. It would be game over for the current regime in power. The Chinese economy relies on US buying power to such a degree that it “mandates” that China get a trade deal done with Trump.

So yes…I look for a deal. Again, I look for it to be phased in. But it will also require immediate changes to China’s criminality. Trump owns China. Not debatable.

If you’re not following me on Twitter, why not? You wouldn’t have to wait to see some of my tweets here. Come join me @kherriage!

— -

VRA MARKET & SYSTEM UPDATE

The VRA System continues to read 10/12 screens bullish. No change since late January. This means that we continue to use monthly dollar cost averaging to add to positions. With the best US economy in 50 years and with our targets pointing to a doubling in the stock market over the next 4–5 years, pullbacks must be bought.

We also saw something interesting in the internals yesterday. With the inherent risks and fear that we’re seeing, our VRA Market Internals were positive across the board. Advance/decline, up/down volume and new 52 week highs/lows were all green. A trifecta of positivity, even as the public sent the put/call ratio to 120% (highest since January).

In addition, each broad market US index has worked off its overbought readings. No, we have not reached heavily or extreme oversold, but I’ll frankly be surprised if that should happen.

Bitcoin: THE Market Tell

As we’ve discussed here for some time, Bitcoin has been THE “risk on, risk off” market tell for well over two years, leading equities sharply higher (into the ’18 top), then lower, and finally, bottoming in mid-December of last year. Bitcoin continues to rise, hitting $6000 again yesterday. This repeating pattern bares watching. Should Bitcoin reverse lower, it will send us a warning sign that “risk off” could be returning. So far, so good.

And I find it most interesting that gold is only fractionally higher for the week. If this was the start of a serious global trade war, we would see the fear showing up in gold. Just not happening.

Until next time, thanks again for reading…have a great week.

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Sign up to Join us daily for our VRA Investing System podcast

Learn more at VRAInsider.com

Also, Find us on Twitter and Facebook

Friday
May032019

Jobs Growth Blowout, Global Bull Market Will Continue to Impress

Good Friday Morning all,

Tyler Herriage here with you for today’s update.

After a slow last 2–3 sessions, the markets are positive as we received the closely watched Labor Department’s monthly employment report this morning, which came in with a blowout number.

April non-farm payrolls crushed estimates of 190,000 new jobs by over 70,000, coming in at 263,000 new jobs created in April. Even more good news came from revisions of February’s weak number which was raised from 33K to 56K. Unemployment also continued to drop from 3.8% to 3.6% and remains at a 50 year low compared to 3.5% in 1969. That is right the best jobs market in 50 years. While we have to sift through all of the numbers still, it looks that the minority unemployment rate just dropped to all time record lows, a point President Trump will certainly be making shortly, as he should as this is hugely bullish for our overall economy and prosperity as a nation.

If you’re still concerned about a recession…or maybe slower corporate earnings…we recommend that you listen to experts that know what they’re talking about. They’re the ones that get it right, much more often than they get it wrong. If you’re not sure who the real pros are (outside of the VRA, of course) a good place to start is with my Twitter feed (@kherriage). Each day I retweet some of my most trusted sources. Begin following some of them…you’ll find that you no longer need those wrong-way gurus.

$2 Trillion Infrastructure Deal?

We also learned Wednesday that, and this was a shocker to yours truly, that Trump and leading Dems look to have reached a basic agreement on a $2 trillion infrastructure deal. Thought I was reading The Onion at first. They claim to need 3 weeks to put together the funding side, which means that anything can happen between now and then, let’s hope that our Washington leadership can prove that they actually care about the people of this country.

A bipartisan deal on infrastructure would be hugely bullish for the economy and equity markets. Structured correctly, with public-private partnerships, targeted directly at our most pressing infrastructure needs (roads, bridges)…instead of Obama era fundings like now bankrupt and out of business solar fraud Solyndra.

Earnings Numbers

We continue to see the best quarter of earnings in nearly 10 years. 67% of the S&P 500 (333 co’s) have reported 1Q19. 77% beat EPS ests on +7.2% growth. 61% beat sales estimates on +4.4% growth. Don’t listen to the market bears who have told you there was a coming recession. When they were wrong they said there would be an “earnings recession”. Well it appears that they were wrong again and I’m sure they will have a new story to tell us here soon.

Not only is the economy not slowing, its continuing to pick up speed. We’ll repeat our long held beliefs, once more. Trumps tax reform and deregulation efforts will drive the US economy past 4% GDP growth…possibly even past 5%…before he leaves office. 50,000 + DJ.

This is just the 4th year in S&P 500 history that the first 4 months of the year each had positive returns of at least 1.75%. Bodes very well, for at least May and June.

WSJ Loves Small Caps…Welcome to the Club.

This Tuesday’s Wall Street Journal reads like a VRA Update from the last couple of weeks. Small caps are ready to run. Their primary thesis? A rising tide lifts all boats. With S&P 500 and Nasdaq at all time highs, and with the Dow Jones knocking on the door, its time for a serious catch up move higher.

WSJ also makes the very good point that the strong US dollar has little of the same impact on small caps that it does on large cap, US multinationals, where a strong dollar acts as a headwind to earnings.

With the Russell 2000 still 8% below its all time highs, as we’ve been writing, this is the index we want to pay serious attention to.

We featured the chart of small cap ETF (IWM, Russell 2000) last week in our blog, along with our forecast that a breakout was nearing. We have that breakout, as can be seen on the trend line below. In addition, IWM just experienced a Golden Cross (50 dma crossing over 200 dma), another bullish technical event.

This chart checks all the boxes for the VRA Investing System. We are aggressively long small caps…the move higher is still in the very early innings.

Importantly, each US broad market index (S&P 500, Dow Jones, Nasdaq) today sit at overbought levels. The Russell 2000 does not. Another reason to like small caps here.

Global Conditions

Finally, for the day, U.S. China trade talks continue in full as the two parties look to get a deal done in the near future. Next Wednesday Chinese Vice Premier Liu He is scheduled to arrive in Washington with the hope of wrapping up a deal. This resolution will be a big win for both countries and we want to be positioned ahead of a deal being announced.

This trade war has been brought about for many necessary reasons, but probably one of the most crucial elements is cracking down on China’s IP theft from U.S. Businesses. China is already known to spy heavily on its own citizens. Check out the article published yesterday by Bloomberg exposing Chinese surveillance methods based on research by the Human Rights Watch.

https://www.bloomberg.com/ news/articles/2019–05–01/ alibaba-backed-face-scans- show-big-tech-ties-to-china-s- xinjiang?cmpid=BBD050219_BIZ& utm_medium=email&utm_source= newsletter&utm_term=190502& utm_campaign=bloombergdaily

If they have this level of research on their own people, which includes foreign citizens who travel to Xinjiang, think about the broader implications of what this would mean if we had more unregulated Chinese communications and technology services in the United States. No privacy would be safe, much less protecting our business IP. Although we would be naive to think the U.S. isn’t already doing the same to many of us here in the U.S.

Asian markets have seen a pullback after their tremendous start to the year, but looking at the charts it is more of a lull than a correction. Now, their indexes are at oversold conditions on VRA screens.

Check out the chart of ASHR, meeting all of our technical parameters, above the 200 day MA, extreme oversold on Stochastics, strong volume of buying since February. No better time than now to be positioned before the train leaves the station.

Until next time, thanks for reading…

Tyler Herriage

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Learn more at VRAInsider.com

Also, Find us on Twitter and Facebook

Friday
Apr262019

First Quarter GDP Blows Away Estimates. What Happened to the Recession Doomsdayers? Move Higher, Just Kicking In.

Good Friday morning all. Permabear after permabear, Trump hater after Trump hater, has been predicting a recession in the US. At minimum, they’ve predicted an “earnings recession”, where corporate earnings decline. Bloomberg even said this morning that their estimate for Q1 GDP was ZERO percent growth…with things getting even worse throughout the year.

Imagine their chagrin when the Q1 GDP report came out this morning, showing US economic growth of 3.2% vs 2.5% estimates, in what is almost always the weakest quarter of the year (Q1). My biggest question this morning? How do mainstream economists and MSM financial experts keep their jobs when their forecasts are this horrible?

You know our thoughts. Full year GDP for ’19 of 3%+. Full year GDP for ’20 of 4% +

And we have to talk about this guy, this morning; Charles Hugh Smith, one of the biggest permabears around, and who has been bearish for at least the last 8 years. Just yesterday he issued another of his dire warnings for economic growth, going so far as to say that this is a market top similar to the dot-com top of 2000. Charles gets it wrong…WAY wrong…once again.

If you wonder why I single out permabears in these pages so regularly, its not that I enjoy dunking on people (although that is fun), there’s a much bigger reason behind it; good people…regular investors that are just trying to save for their kids college and retirement…they see these dire warnings from people like Smith and fellow permabear Jim Rickards, and it scares them out of the markets. That’s why dolts like these guys MUST be called out. As many people as possible need to know who they can and who they cannot trust.

Track records matter.

And it’s also why we see a huge 66% of all investors in the AAII survey as neutral/bearish on the stock market. Please, keep this one thought in mind, the next time you see a supposed permabear guru telling you that black is white and white is black; permabears are almost always paid clickbait propagandist list builders. They have no skin in the game…they’re not short the market and they don’t own puts…they just want you to sign up for their sites and lists so you can be marketed to by their corporate masters. Thats the bottom line.

We’ve been a broken record on this issue for many, many years. Help us spread the word on this highly manipulative, marketing fraud.

Here’s the reality of what’s happening, in addition to this blowout Q1 number. Check out the updated Q1 earnings report. 79% beating EPS estimates on 7.89% growth. Not recessionary!

VRA System and Market Update

While our broad markets (outside of small caps) still sit at extreme overbought in the short term, we continue to see this as the pause that refreshes. We have seen a bit of weakening in our VRA System Market Internals…something we are watching closely…but VRA System readings still sit at 10/12 screens bullish.

SMALL CAPS ARE NEXT

Here’s the chart that we’re focused on now. The chart of the week. Small caps. IWM (Russell 2000 ETF).

As you can see below, IWM is in the process of breaking higher from its overhead resistance trend line. We believe the breakout will be rather massive…good news for VRA small cap buy recs. In addition, IWM is very close to a golden cross (50 dma crossing over 200 dma). Looks likely today. Another bullish event. With small caps still 7.6% away from all time highs, we’re looking for a big catch up move higher. In our work with technical analysis, this is chart perfection.

 

VRA Portfolio

Folks, if you’ve been here for a while, heres what you already know. We’ve been talking market melt-up pretty much since Trump was elected. Sure, the December mini-crash was brutal, but we held strong. Those that stayed the course, those that averaged down, or those that joined earlier this year, have some rather massive short term gains. How’s the VRA Portfolio performed, exactly? Hey, thanks for asking… the VRA Portfolio is up 38% vs. the S&P 500’s 17% and has thus far outperformed our bogey (S&P 500) by a solid 126% in 2019. And folks, here’s the interesting part; wait until our 10 bagger VRA growth stocks really get going.

We said this at the beginning of the year, so we’ll repeat it here once more; 2019 should be one of our best years ever. It will take some work to top 2009’s +360% returns…but that continues to be our target.

And this is when my mentors Ted Parsons voice (RIP Ted) starts ringing in my ears. I can here him saying:

“Kip, if you’re not already humble, the markets will make you humble”. As a brash 23 year old, I thought he was a bit of an old fool. How young and dumb was I?

And another of Ted’s favorites “in a bull market, everyones a genius”.

#WISDOM

BTW, in 1987, I had been a broker for 2 years. As the Black Monday crash unfolded (the Dow crashed 23% that day), I watched as 20–30 year veterans completely lost their minds. At -15% they were lined up at the tube system (yep, just like your bank drive through) to enter their pink slips (sell orders). Most all entered their orders as “market orders”, desperately trying to get their clients out at any price.

But Ted remained rock solid. He was entering buy orders, beginning an hour or so before the close. I had maybe 50 clients at the time, with most in muni bonds, so I was able to sit back and watch the crazy unfold.

What these veteran brokers did not know…how could they really…was that their market orders would be sold out right at the lows of the day. And it took 3–4 days before they even learned the prices they received. Volume swamped the floor trading systems (as they were). By the time they learned their fate, the markets had already recovered much of their losses. Careers were ended, that fateful day. Offices opened up, as brokers took early retirement…I wound up getting one of them…certainly not the way I wanted to move up the corporate ladder.

By the end of the year, the Dow Jones and S&P 500 actually managed to book positive returns. And Ted? He came out of it with huge gains for himself and his clients. This was my lightbulb moment as a contrarian. When there’s blood in the streets…buy, buy, buy. When everyone is bullish and bragging about how much money their making…when Uber drivers are giving their hit stock tips…and when your co-workers are quitting their jobs the become day traders. Get. The Hell. Out.

And no, we’re nowhere near this level of froth today. Check out the latest AAII Investor Sentiment Survey, my go to survey for more than 30 years. Bulls sit at 33.5%, bears at 20.2% with neutral investors at a massive 46.3%. Combined, this means that 66% of investors are either bearish or neutral on the stock market. Remarkable, with all time highs and the v-bottom, straight up move higher since 12/24.

We’ll start taking (serious) profits when bulls reach 70%. Then, when bulls sit at 70%+ for weeks on end, we’ll take even more. This is also when we’ll put some short positions on.

When will take happen? Who knows…but not before the Dow tops 35,000 is my best guess. Likely just after the ’20 elections. Then, we’ll be patient and wait for the correction to run its course, before re-loading again.

Important point: this does not mean we will hold all of our positions today til DJ 35,000. We’ll take advantage of interim moves to take profits on some positions, as we add new positions. But that day is not today. We are well positioned. Locked and loaded.

Lastly, a very big thank you to everyone thats listening to our daily VRA System Podcasts! On our 189th podcast yesterday we surpassed 25,000 listens (Soundcloud and ITunes). Sign up for email updates at vrainsider.com/podcast

Until next time, thanks again for reading…

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Learn more at VRAInsider.com

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