VRA Update: Bulls and Bears Make Money...PIIGS Tend to Get Slaughtered...But Where Does That Leave Totalitarians?

As outlined in my last update here, I expected the markets to correct, and thanks to the VRA Trading & Investing System we were alerted just prior to a major shift in market direction (which also gave VRA Subscribers their next 100% in profits…in a single day).

The vast majority of this weakness has come from the insanity coming out of Europe/Greece…and with the NO vote from this weekends referendum vote, it’s clear that we aren’t out of the woods yet.

Just make sure you keep this in mind; the bull market for stocks…both here and globally…remains entirely intact.  If you’ve been waiting for a pullback to buy stocks, you’re getting your opportunity with this pullback.

**(note: the VRA recently launched our “financial recovery program” for those that may have been buried by Wall Street “guru’s”. Contact us at verticalresearch@mindspring.com for info on our program’s discounted membership, with three awarded each month)**

By now I'm sure you've heard the old investing paradigm, "Bulls and bears make money, but pigs get slaughtered." Whoever came up with this had a pretty clear understanding of the markets, at least as I've always interpreted the phrase. Over my 30 years in the markets, I've known plenty of bullish investors that have made money as the markets rise and conversely, I've known plenty of bearish investors that have made money as the markets fall (in fact, the best investment minds that I know tend to be more skeptical, and hence are probably wired to be more bearish). 

My definition of "pigs" may not be the same as the original author, but in my mind, it's the investor that simply hasn't figured out the emotions of money (fear and greed)...something that I tend to write about fairly often in these pages. By no means is it an easy personality shift to conquer, but with focused effort and discipline, it can absolutely be done. And, as the markets drop, as they did on Monday...and as they may continue to do for a short time into the future (my belief), we will come back to discuss the emotion of "fear" here at the VRA, once again. 

However, you may have noticed my spelling of "PIIGS" in the subject line of this update...and because VRA Subscribers are among the brightest I know, you likely already know that I'm actually referring to a completely different breed of animal. In this case, PIIGS means "Portugal, Ireland, Italy, Greece and Spain"....a derogatory acronym for certain...but one that is prevalent in the investment world once again, as potential Greece contagion fears begin to sweep the planet.

Of course, we've all seen this movie before...maybe that's why things have dragged out this long in Europe before stock markets woke up, once again, to the downside risks. 

My view really has not changed. Some may call it a simple view, but it's really the exact mindset...or more accurately...the frame of reference that I've adopted since the 2008 financial crisis and the resulting global bailout of all things "BIG MONEY"...aka, those special interests/powerful corporations, and most certainly, Wall Street's preferred brokerages and US major money center, commercial banks. 

It's the mindset that says "The Fix is In"... and while I'm certain that it will sound more than a little conspiratorial, when you examine the events of recent history, who knows...I might even bring you over to the dark side with me.   

It's this newfound frame of reference that has served me well in understanding things that, in the past, might completely drive me crazy. For example, following the start of our financial crisis, I would never have believed that our own Central Bank..the US FED (of course, there's nothing Federal about it...and it's certainly not "ours") would make it their mandate to save the worlds financial system as we knew it, including the printing of some $10 trillion + in fresh currency, and then (among many other things) to enter into all kinds of nefarious bailout agreements, not just in the US, but globally as well....AND, not just global governments and financial institutions, but substantial loans to high net worth individuals in the US and globally as well. Of course, we only learned of some of these "off the books" bailouts thanks to a couple of (semi) successful FOIA requests, but the vast majority of bailout details have never been shared with the public...and almost certainly, never will be.

"The Fix is In"...heck, call me simple...some may even call it a "rain-man" kind of mindset...but I prefer to call it "making sense of totalitarianism"...because to me, that's pretty much exactly what our global, and increasingly, highly coordinated planetary system of governance (HCPSG for short...hey, we can have acronyms too) has become...or at minimum, is on its way to becoming. 

If you're not really up on modern day totalitarianism, the history books tell us of leaders that did their absolute best to completely "rig the game". Names like Hitler and Mussolini were big fans. Granted, things didn't end too well for them either...but the Nazi Central Bank had to have been at least partly to blame...right? I mean, no way the "NCB" could have had the omnipresence/omniscience of our modern day central banks (before you look, no...there was no Nazi Central Bank...but please don't let that ruin the fun of the rest of this story for you). 

My frame of reference...as discussed above, also helped me to make sense of George "W" Bush, and the puppet role that he played while President, as we went to war in Iraq  (and those pesky WMD's...that of course turned out to be fabricated ). Interestingly, "W" will likely continue to benefit from Americans with poor memories, as polls continue to show that a majority in the US believe Sadam Husssein was responsible for 9/11. And no....he had absolutely nothing to do with it...but W's not complaining if you believed he did.

Obamacare...in the sense that it was passed in both houses of Congress (a tortured definition of "passed", I know), and has since gone on to survive two serious Supreme Court challenges...either that could have derailed the implementation/effectiveness of Obamacare to the point of making it an immediate failure (rather than the longer term failure that it will almost certainly become). You see, when we saw none other than Supreme Court Chief Justice John Roberts (staunch conservative historically...and of course, a Republican nominee) cast the deciding vote in favor of Obamacare on it's initial court challenge, again, my newfound mindset helped me to make sense of it.

Totalitarianism is the concept of a political system in which the state holds total control over the society and seeks to control all aspects of public and private life wherever possible.

I could go on...and in the future I will...but the definition above more and more describes the world that we all reside in today. And yes, it's another major reason that I see Greece remaining in the EZ...but wow, is this newly elected Greek government trying to upset that applecart. More and more, I find myself respecting their fight, even if they want to take Greece further to the left. At least they are willing to fight for their original commitment. We should all fight as hard for our beliefs. 

But, at the end of the day, "The Fix is In" will win...and Greece will remain. In fact, within just a few years the EZ will grow from 19 countries to 22-24. Doubt me? Check back in 2020 and we can compare notes...

VRA Update: Short Term Correction Leading to Next Ramp Higher

For the last 2-3 weeks, a quiet but consistent internal correction in the markets has taken place. Take a look at the chart below on the S&P 500 and you'll see just what I am talking about.

That line across the bottom connects the lows in the S&P 500 since March...and yes, each time that we have come down to this line the markets have bottomed and moved sharply higher. Will recent history repeat? You know my views...the markets are going significantly higher...but don't take my word for it. Take a look at the most recent sentiment numbers from the "Bloggers Poll", which has become the best inverse sentiment indicator that I follow.

As you can see, 56% of all polled are now bearish...which is the most bearish that this indicator has been since the October '14 lows. The Dow was 16,000 then and a quick 13% rally of 2000 Dow points was about to get underway. And yes, this is exactly when the VRA Trading & Investing System was screaming "buy" as well. 

Next, let's take a look at the US Dollar. As a reminder, the USD went parabolic in the 4th quarter of last year...crushing US corp earnings and leading to gobs of so-called top currency experts predicting that the Euro would go to parity versus the USD. But then, the VRA made a bold call...in fact, I was the first that we can find that made this call. I said "the USD has topped out and would reverse course sharply against the Euro"...that exact day marked the top for the USD and the exact bottom for the Euro. Below is the USD chart that I referenced in mid April, with the topping action now clearly in place.

Since hitting oversold levels in May, the USD has now topped out once again...in what I can only refer to as "perfect technical action". 

Why do I seem so obsessed with the action in the USD?? Here's why; if my research is correct, the counter-move higher in the dollar looks to me to be over...which is coming at the exact time that sentiment on stocks has moved from overly bullish to overly bearish...and is also coming at a time when the overall markets are reaching significant support levels (refer back to the S&P 500 chart above).

BOTTOM LINE: as most of you know by now, our most consistent 100-200-300% returns have come from using the VRA Trading & Investing System. More specifically, waiting for "extreme readings" from the System before acting, either on the broad markets, stocks or options. The question now becomes, have we reached short term bearish extremes on the broader markets? 

Here's the answer: I would prefer to see a total wash out day...the kind of day where the markets open sharply lower...on some kind of macro specific bad news...just scaring the sh*t out of everyone. But...the markets don't always give you exactly what you're waiting for, so we may not get that opportunity. For now, just know that the S&P 500, the Dow and the Nasdaq are each at highly oversold levels. On top of that, both sentiment and the dollar look to be giving us strong buy signals for stocks. As I've been saying, make sure and keep some powder dry...we are very close to initiating new positions (most likely call options on the Russell 2000, and a leveraged broad market ETF... IWM). 

VRA FORECAST: BULL MARKET IN JUST THE 7TH INNING

While US stock markets are up just 1% or so this year, intl markets have ripped higher, with Japan, Europe and China up big (mainland China's up a whopping 50%). 

The recent pause/correction has been brought on by macro concerns about issues like: a) the FED raising rates, b) Greece leaving the EZ, and c) potential slowdown in the US/global economy.

Let me repeat: a) stock markets actually RISE when the FED begins to increase rates. I fully expect a 2000 point move higher in the Dow...within just 2-3 months of the first rate increase (likely in September) b) Greece will NOT leave the EZ...I see the odds at less than 20%. My only question is; once a deal is reached, will we get apologies from all of the "same song, second verse global fear-mongerers"? You know, the same "gurus" that have remained bearish on stocks during the entirety of this bull market?? c) Does anyone reading this actually believe that the US economy is contracting in size? How 'bout China, and their middle class of some 300 million...does anyone reading this believe that China is contracting in size? Is Europe and their $1.2 trillion in QE in contraction? Europe's massive QE program that will extend long past their September 2016 end date (again, I fully expect European QE to reach $2 trillion in size and end sometime in 2017/2018).

BROKEN RECORD TIME (my apologies...but these points continue to be incredibly important):

1) Bull markets do not end until the public is fully invested in stocks...with just 35-40% invested today, we have a long ways to go before we hit 60-70% (which has marked EVERY bull market top since WWII). And folks, please don't forget this most important point: the biggest moves in every major bull market (on record) come in just the last couple of innings. My research has us in the 7th inning...by the time the bottom of the 9th rolls around, the Dow will likely top 25k (just 17,770 today).

2) With interest rates near all time lows, where else are investors to allocate their retirement funds? This point should be so powerful that I'll leave it without additional comment (at least in this update...I've covered it plenty in the past).

3) Massive global QE/money printing, stimulus, low rates...it's been clear for some time (5-6 years) that central banks globally want stock prices that are MUCH higher. In what I can only refer to as "stupidly stunning", perma-bears continue to fight the tape and fight the FED...at some point they will ALL throw in the towel...and of course, that's when we will be taking profits and going VERY short the markets. We just aren't anywhere near that point...that's an end of 2016 story (my crystal ball works best over about 3 months, so yes, an 18 month prediction is pushing it...I get it).

VRA PORTFOLIO UPDATE:

The last 3-4 weeks is the least active that the VRA has been in the markets for over a year...and that's not been by accident. Prior to this, we booked net gains of more than 300% in the previous quarter, along with net gains of more than 1500% since the beginning of 2014. No doubt, I'm certain that you would prefer we book these kinds of gains consistently...day after day, and week after week. Hey, who wouldn't?

But folks, I've learned something very important over the years...in fact, its a lesson that we all learned as kids...you can't fit a round peg in a square hole. As simple as this lesson is, if you violate it in the stock market, you'll also experience very real losses...along with very real pain. 

So...we will remain patient...we've done far too well to give back our gains.

Kip Herriage

vraletter.com

1500% Gains In 18 Months - Here’s What Happens Next

1500% Gains In 18 Months - Here’s What Happens Next 1558% to be exact…this is the “net” gain of all Buy/Sell VRA Recommendations since the beginning of 2014. If another investment advisory has done better, we have yet to find it (every buy/sell documented). Regardless of how busy you may be, take a few minutes to read THIS update. It is that important. Even if you don’t subscribe to the VRA, following my "4 Point Investment Outline" will help to ensure you are on the right track...because I have yet to meet anyone over the last 30 years that wanted to have “less" money.  Bottom line: over the next 1-2 years, it's my strong belief that the points below WILL happen... Everything You Read Next is Based on My 30 Years of Experience, Combined with VRA Trading & Investing System Analysis  ONE: Stocks are going MUCH higher. I have been covering the reasons why for some time, but consider the following; a) Only 35% of the public is invested in stocks...conversely, bull markets end when everyone and their mother's Uber driver is giving out stock tips. b) Even IF interest rates begin to rise, they could actually double from here and stocks would still be cheap...where else is there to invest and get a decent return? c) With 3 major central banks using massive QE programs (Europe, China, Japan), and another 20 countries slashing rates, this flood of fiat currency will continue to find its way into stocks. No...stock prices will not go straight up (they never do) but I expect US markets to ramp up to 30% higher. This is a stock pickers environment...this is MY environment...and I am targeting gains of several thousand percent before a final top is in place (and yes, we will also make a fortune as the markets reverse course). TWO: Are you positioned in the VRA Stock of the Century? I have followed it since the company was formed and know it extremely well. While no one can tell you exactly where its share price is headed, I can tell you that I am highly confident that it's going 1000% higher, minimum...(specifics for VRA Subscribers). THREE: With interest rates in the US finally ready to begin moving higher...yes, for the first time in 9 years...the conditions are becoming perfect for the next major bull market in precious metals. My forecast is that this will be THE bull market for PM's. I may not be the smartest gold bug around (because I'm really not one), but VRA Subscribers have made several thousand percent in PM's and mining stocks since 2003, and we will have have you positioned extremely well as PM's zoom to levels that many cannot fathom today.  FOUR: Buy Europe. Again, the ECB has just gotten underway with their $1.2 trillion in QE, and trust me...it will total $2 trillion + by the time they are done. European stocks are still well off their highs (as opposed to here in the US), but just as with US QE, European stocks have huge amounts of liquidity coming their way.  As the VRA also predicted (to the exact day), the dollar has topped out versus the Euro, and this will add even more leverage to our gains.  FINALLY...as I said earlier...nothing goes straight up, and it will take some work to beat the last 18 mo’s 1500% + in gains, but with the VRA Trading & Investing System and 30 years of unmatched experience, my goals are set even higher. When the markets get too overheated, we will take profits and then use the VIX Index (fear index), put options and ETF's to hedge ourselves, as well as make further profits.  I've said this many times over the last year, but I have to say it again: this is the exact investment environment that the VRA was created for. We have one..."maybe" two years before the market tops out. We will have already booked massive profits...just as the public finally jumps back in with both feet. Until next time, thanks again for reading... Kip PS: for those that are serious about investing, but have been hit hard in the past by Wall Street “experts”, ask us about the  “VRA Financial Recovery Program”, by emailing to: verticalresearch@mindspring.com   Kip Herriage Founder/Publisher, VRA (est. 2003) vraletter.com @kherriage (Twitter)

VRA Update: USD, Precious Metals and Miners On the Move - This is Why and What You Should Do

Make sure and pay attention to what is happening right now in the USD (US dollar) and precious metals (and overall market). We are entering a potential "cycle reversal"...the exact reversal that I have been writing about...and should the move confirm, you will want to make sure you are positioned for significant profits in the coming days and weeks.

Within an hour of the market open today, precious metals and the miners began to ramp higher. Within minutes, gold was up more than $20/oz, and silver up more than double that in percentage terms.

Gold is last quoted at $1204 (+2%) with silver at $16.40 (+3.8%).

Of course, the miners moves are accelerated...that's the beauty and beast of the leverage they provide...but this morning we get beauty, with GDX (mining ETF) up 3.8% at $20.10. The question is, will this finally be the move that takes precious metals and miners into bull market confirmed status?

The Answer May Arrive This Week

All eyes are of course on this weeks FED meeting, but the chart below is what the worlds best investors are watching most closely...the US Dollar.

Below is a one year chart of the USD (in blue), along with a one year chart of gold. As much as anything, this chart makes the strength in USD and corresponding weakness in gold, crystal clear.

BUT...take a closer look at the action over the last 45 days or so in the dollar. This is what I have focused on in recent updates, and if the pattern of "rolling over" in the USD continues, near record USD longs could quickly begin to reverse their positions. And yes...this continues to be my forecast.

The fundamentals for a massive move higher in precious metals and the miners have been in place for some time. We may find out this week that the price action finally confirms that the bull market is back.

Here's the chart...we can clearly see how the trend line in the USD is breaking down, along with a corresponding move higher in gold.

Until next time, thanks again for reading...

Kip

VRA Alert: Make Sure You are Positioned - Major Cycle Reversal

Corporate earnings are coming in, and the early read for me is “surprisingly solid”. And remember folks, this is the quarter where a combination of bad weather and a strong US Dollar (USD) were supposed to hit companies and hit them hard.

There is one area where hits from a strong USD have been felt. Take a look at the following commodities since their 2011 highs…

Commodity	Current Price	Recent High	Change
Iron Ore	$59.00	$195.00	-70%
Silver	$15.53	$48.55	-68%
WTI Crude	$44.88	$113.39	-60%
Corn	$358.50	$839.50	-57%
Natural Gas	$2.69	$6.21	-57%
Brent Crude	$55.24	$126.26	-56%
Hogs	$65.21	$133.06	-51%
Soy Beans	$962.00	$1,790.00	-46%
Uranium	$39.25	$73.00	-46%
Wheat	$504.50	$912.50	-45%
Copper	$5,882.00	$10,064.00	-42%
Platinum	$1,121.00	$1,884.00	-40%
Gold	$1,153.57	$1,874.72	-38%
Southern Pine Trees	$395.00	$499.00	-21%
Source: Thomson Reuters Datastream What a “Falling” Dollar Could Mean for Commodities Since July 2014, the value of the U.S. dollar has risen more than 25%. That's an incredible move for any currency. The rapidly rising dollar sent commodity prices falling just as fast... The chart below shows the inverse relationship between the Reuters/Jefferies CRB Index (that tracks 19 commodities) and the dollar. Since many commodities are denominated in dollars, the price of those commodities has fallen as the dollar has gained strength. As I’ve written extensively, I am looking for a major move higher in precious metals…and we are well positioned here with our current positions. Remember, gold shorts are at an all time high.....Euro Shorts/Dollar Longs are at an all time high. NOW is the time to be positioned as a perfect storm short squeeze develops.The chart above is going to reverse completely. And...for all of you that have bought into the argument that precious metals prices will fall in the face of rising interest rates, think back to the late 1970's, and more recently, the 2002-2005 time frame. Gold and silver skyrocketed as interest rates increased...this time would be no different. While it’s too early that say that the move higher in the USD is over, its not too early to take action on companies that will benefit greatly from a weaker dollar. Make sure you are positioned accordingly... VRA Subscribers just booked another 112% profit today. Incredibly, close to 70% of the public wants nothing to do with the stock market. Of course, after the Dow Jones has jumped another 30%, they will all be jumping in...and that's when we will be selling. Kip Herriage - VRAletter.com @kherriage (Follow me on Twitter)