VRA Weekly Update: J Powell with the Rare Win. Fed Meeting Bluster & Takeaway; $2.2 Trillion in Additional QE. Buy Buy Buy.

Good Thursday morning all. As we have covered in previous updates, as bad as J Powells track record is (once his pressers begin the markets immediately start to tank), JP actually scored a win yesterday. When he began speaking the Dow was -309 and Nasdaq -104, but by the close the Dow was -265 and Nasdaq down just -33. Not much of a W, granted, but a W nonetheless.

Markets are mixed this AM but off the lows. Gold got smoked below $1800/oz (last $1780), now trading below its 200 dma of $1843/oz. 
GDX (miner ETF) just broke its 200 dma at $36.54 (last $35.40). The golden cross in GDX has yet to produce the sharp move higher that I expected. I continue to look for that to take place.

Post Fed-meeting shake-outs are infamous, in both equities and metals, but they have a high probability of being just that…a shake-out only…with the primary trend quickly reasserting itself. 

We are buyers of every VRA Portfolio Buy Rec (Check it out with our 14 day free trial at VRAinsider.com). 

There’s been quite a bit of bluster from this Fed meeting but only 2 things really caught my eye; 

1) the Fed raised their inflation estimates this year to 3.4% from 2.4% (even as actual human beings know that inflation is running “at least” 10%)

2) there may be 2 rate hikes in 2023 instead of only 1

Did you catch that sports fans? We’re still talking about NO RATE HIKES for 2.5 years, and more importantly, there won’t be any tapering of the $120 billion of QE a month until “substantial further progress” has been made toward the Fed’s maximum employment and price stability goals. What does “substantial further progress” mean? Well, we don’t really know. 

But what does $120 billion x 18 months mean? We absolutely know that answer. It means $2.2 trillion in additional QE.

And where will it go? It will go into equities, housing, cryptos and commodities.

A couple of final points on the Fed and the eventuality of higher rates (sometime in 2023); history tells us that when the Fed starts raising rates, the stock market actually continues to move (sharply) higher through at least the 3rd rate hike. My mentor Ted Parsons (RIP Ted) called it “3 steps and a stumble”. Were Ted with us today, I think I know what he’d be doing; Ted would be backing up the truck to buy his favorite growth stocks.

And this is important…as we’ve been covering here, this melt-up bull market will continue to be led by tech, growth and momentum stocks. It’s not that we don’t love value stocks too (we’re 60% growth, 40% value in VRA Portfolio), it’s just that we know the personality of a melt-up bull market (like the 1995–2000 melt-up that took the Nasdaq 575% higher over just 5 years), and major moves higher like the one we’ve had and will continue to have will be led by tech/growth/momentum.

The Truth About Inflation and “The Actual Big Lie”

The entire debate about inflation being “transitory” is such incredible bullshit. A heaping pile of gas-lighting and lies. This debate is nothing more than a massive red herring, as the CPI has NEVER reported inflation accurately. As actual human beings, we of course know this, as we’ve been forced to pay rapidly rising costs for healthcare, housing/rent, education/college, elder care, rising and hidden taxes….ETC ETC ETC ETC…for year after year after year after year. 

So, give us a break when you wanna talk about inflation being “transitory”. This is the “Big Lie”. And why does everything cost more? Why do they lie to us about the truths of inflation? Because they’ll never admit the truth. Inflation has been destroying our way of life since the Fed was created in 1913. Since then, the US dollar has lost 97% of its value. It’s properly called “currency inflation”. THIS is why both couples in a marriage have to work, to bring home the same take-home money that just one salary would provide just 2–3 decades ago. Lets hear JP get into this subject matter in his next press conference!

If you’re looking for a great summer read, pick up a copy of THE book on the Fed and our fiat money; The Creature From Jekkyl Island, written by my friend of 20+ years, G Edward Griffin. Statues should exist for Ed.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: ATH's Beget New ATH's. Semis Are KEY. VRA Investing System Flashing BUY

Good Friday morning all. 

Yesterday's trading brought fresh ATH in the S&P 500 with the Dow and Russell 2000 less than 1% from ATH and Nasdaq starting this AM at 1.3% from ATH. And while yesterday's internals were nothing to write home about (meme wars), we continue to like what we see as the semis and Nasdaq/tech/growth/momentum stocks are leading the way higher. SMH (Semi ETF) +1.31%, Nasdaq +.78%. Textbook, really. 

As Tyler’s been known to say on our podcasts, “new ATH’s beget new ATH’s”…and he’s exactly right, as analytics prove that there is rarely a better time to invest than when markets are hitting ATH (no resistance!)> 

As we’ve covered in these pages, rather religiously, the 5/12 capitulation lows in semis/tech/growth have served as the springboard for this short covering move to new ATH’s. Since 5/12 (twenty trading days), SMH is up 13.4%. Semis lead Nasdaq, Nasdaq leads the broad market. 

What Happens Next in Semis is KEY

In the chart of SMH below we see a trend line that has served as hard resistance from those mid-Feb highs. Since then, on each rally attempt, SMH has lost the battle to the line, resulting in a series of lower highs.
This pattern must change, IMO, for Nasdaq/growth to continue moving higher and to hit new ATH’s as well. Here at the VRA we’re roughly 70% fundamental and 30% technical but this is one of those times that I’d say “price action truly matters most”. A move through $252 (preferably on strong volume) should help get the breakout in SMH cooking with gas. This morning SMH is trading at $251.30 (+.30%).

A breakout in semis would be a key technical event for bearish investors. A “throw in the towel” kind of moment. A melt-up like event in tech/growth/momentum could then kick in (I continue to expect that will be the case).

On the heels of ATH’s in SPX, our markets are looking higher this AM. Dow futures + 80, higher but quiet elsewhere. 

And here’s an interesting market tidbit. The last 5 Fridays have been green for the Dow and 10 of the last 11 have been green as well. 
Impressive! Investors bidding up markets headed into 2 days where they cannot unload their positions is among the most bullish of votes with their money an investor can make.

Our VRA Investing System remains at 10/12 screens bullish. Anything above 6/12 bullish screens means that we remain buyers on pullbacks. But 10/12 bullish screens means that we want to be “aggressive buyers on pullbacks” as we expect the markets to push sharply higher.

The VRA System has 12 Propriety Screens. Today, 10 screens remain in bullish mode. 1 Screen is in bearish mode (valuations) and 1 screen is neutral (market internals).

70% of the screens are fundamental and 30% of the screens are technical. Here’s the breakdown of our 12 screens:

VRA Quick Hitters:

1) GDX (Miner ETF): immediately following its golden cross (50/200 dma), GDX had a solid day yesterday with gains of 2.5%. We expect a sharp move higher in miners.

2) AMC (AMC). Combined (VRA and Parabolic) we’ve booked better than 300% profits in AMC in ’21 (+148%profits in VRA). But we’re not ready to buy AMC again. We’re looking for the “ideal” buy here…no need to rush. A shake-out in AMC (if we get one) should take AMC back to the mid $30’s (last $44.50) to give us a double bottom. 

Heres’ what happened yesterday in meme war stocks. Steep losses across the board. Of this group, at this point, I only have an interest in one stock; AMC. But also know this; gamma squeeze as an investment strategy is very real and its here to stay. It worked with Tesla, it worked with Gamestop and its working with AMC. Here at the VRA we intend to use this strategy to print profits in the months and years to come. Remember, this is “that” bull market.

3) Finally for this morning, its no secret that we remain hyper-bullish. Here’s some color on that via my Twitter account.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: Inflation Running Hot. Sell The Rumor, Buy The News. Bear Trap.

Good Thursday morning all. Another “must watch” monthly economic report was out yesterday as the April CPI came in hot at 0.8% vs consensus estimate of 0.2%. But let’s be real…like the April jobs report, none of these monthly reports are actually “must watch”. They are heavily manipulated and rarely reliable (as we regularly discover when adjusted data is released). But yes, no surprises here, inflation is running hot. That’s the effect that >$22 trillion in fresh global stimulus/QE and unprecedented currency inflation (aka fiat money printing) has on an economy.

This is one of the times that we agree with the Fed. While inflation will continue to run hot, for at least the next several months, this surge in prices will be “transitory”. We see this as a “sell the rumor, buy the news” event, meaning that many of the commodities that have hit extreme overbought on steroids will begin to fall in price on this news, while tech/growth stocks and the broad market will rally on this news. And interest rates will continue to do little on the upside, while preparing for their next move lower. AKA gravity. And remember, rates were MUCH higher during the best bull market for Nasdaq in history; 1995–2000, averaging >5% 10 yr.

BTW, if you have a used car or truck that you’ve been wanting to sell, both rose in price by 10% in April. Thats a remarkable one-month surge in used vehicle prices (even moreso if this figure is believable)

Yesterday had the feeling of capitulation in tech. We’ll find out again this morning. Remember, hedge funds are “aggressively” short big tech, based on reports just released. Rarely are the majority of hedge funds on the right side of trades. 

This bear trap looks to have been well constructed. Hedge fund short covering combined with a deeply oversold tech sector, an investing public that is back in the market and return of massive share repurchases…not to mention the gazillions in stimulus/QE…will lead the next move higher.

We saw “absolute” signs of capitulation in yesterdays trading. Covered these in detail on my podcast yesterday.

Here’s a few:

-We’re in just the second year of a new bull market. Extremely bullish macro set-up in tech. Sell-offs in tech are a buying opportunity. Tech will lead for “years”.

-Put/call ratio traded over 1, most of the afternoon

-The VIX just rose 44% over 2 days.

-The TICK hit its worst reading in 20 years.

-Nasdaq, QQQ and SMH are hitting extreme oversold on VRA momentum oscillator (stochastics), while hitting heavily oversold on most all others.

-Sentiment Surveys have flipped from bullish to neutral/fear. This is the case in both AAII and Fear & Greed (now at 37).

-And this repeating pattern has worked like clockwork; prior to each fresh round of stimulus, market weakness has served as motivation for congress to get these deals done. On the table now is $4 trillion in fresh stimulus.

Remember, rising rates and rising inflation are “bullish” for stocks, certainly early on. For the statistics on this, check out our update from last week.

Why We Should Pray for Higher Rates.

https://kipherriage.medium.com/vra-weekly-update-do-not-sell-in-may-and-go-away-55e565d98ef2

I’d have preferred a lower open this morning but futures flipped green an hour ago. We are either at a bottom or very near the lows.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: W.A.R and T Herriage. Coinbase IPO. Meme Stock Short Squeeze, Part 2. Early, Rising Inflation and Rates, Hyper Bullish For Stocks.

Good Thursday morning all. Last night Tyler joined our great friend Wayne Allyn Root on the Wayne Root show, talking bull market of markets, the liquidity/stimulus nearing and why “every” business owner should submit their apps for this new round of PPP. Here’s the link: https://soundcloud.com/user-640389393/tyler-herriage-live-on-war-now-with-wayne-allyn-root-022421

Hitting the wire this morning that the Amazon of the crypto-world, Coinbase, will soon file for its IPO (actually a direct listing, like Spotify did). If you’ve been here for a while you’ll know I’ve been eagerly awaiting the opportunity to add Coinbase to the VRA Portfolio. I doubt it will matter where they price the deal and where it starts trading. This is that company. $1000 investment could turn into $1 million inside of 30 years. This is the one you buy and never sell. We’ll alert you in advance of Coinbases direct listing.

BIG move higher in the markets yesterday. Our extreme overbought pause looks to be over, certainly in the sectors/holdings we care most about. Yesterday brought our second Dow Theory buy signal inside of 1 week, as both the Dow Jones Industrials and Dow Transports hit ATH together. Technically, last weeks Dow Theory buy signal is all that matters. The US and global economy is on fire. 8–10% full year GDP growth is in the cards. 8% GDP growth has not occurred in the US since 1944. This market is headed much, much higher. We are in that 2010 time frame, just a year after the market bottomed during the financial crisis, but this time we have a macro set-up thats set to propel both the economy and markets into the stratosphere. Listen to the permabears at your own peril. Granted, these long term bears may sound smart, but its only an illusion. Permabears are not investors. They are list building clickbait artists that prey on the emotions of investors. That is their business model.

The short squeeze meme stocks are flying again. GameStop and AMC are soaring again. AMC hitting $11 this AM. GME,really hot, hitting $160 this AM. Both have major short positions, most of it via illegal short sells. Were it not for the Biden Admin, with Janet Yellen acting as point person, with scum firms like Robinhood and their hedge fund brethren, AMC would have likely hit $100/share on the previous squeeze. I have no real thoughts on GME but I know that with 70% of the float sold short, as it is today, anything is possible. We’ll alert on when to sell positions in AMC. With approx 1/3 of the float sold short, like GME, anything can happen here. But we will be selling AMC on this go round. Next up, a short squeeze in silver. It’s coming…can’t you feel it?

Market Update

We are seeing a bit of a rotation is occurring in the markets as travel related stocks are joining the existing move higher in the commodity/energy space. The market cap for energy stocks is equal to that of Bitcoin. Energy stocks are still incredibly cheap here. AMC Theatre (AMC) is catching a decently solid bid as well, as NY Governor Andrew “killer” Cuomo announced yesterday that theaters will reopen at 25% capacity on 3/5. 20% of AMC’s float is sold short. Coronavirus insanity ended, as far as reality and the markets were concerned, in the 2nd quarter of 2020. The question now becomes…and its a question smart money investors are asking themselves right now….is this a “buy the rumor and sell news” market event? Should we be selling stocks now that it’s beyond clear that the worst of cv insanity is behind us.

We see the answer as crystal clear…US and global stock markets are headed much higher. This is a structural move higher, driven by insane levels of global liquidity…with up to $7.9 trillion more in US fiscal stimulus if the Biden admin gets their way (who exactly is going to stop them) and an economic and earnings recovery the likes we’ve not seen in our lifetimes. Full year GDP growth could top 8–10% this year. The last time GDP rose 8%? 1944 and WW2. S&P 500 earnings could top $210/share, which would reduce the current p/e multiple for the planets largest and most important equity index from 30 (year end ’20) to approx 19. Not cheap, necessarily, but certainly on the cheap side with what looks to be up to $30 trillion in fresh global stimulus by year end. Two primary factors move the markets; liquidity and corporate earnings. Everything about this combo points to a melt-up environment.

At some point there will be a price to pay for these insane levels of stimulus but as Tyler pointed out in yesterdays VRA Podcast in the lead up to Weimar, Germanys hyperinflationary implosion the shock to the economy was largely unfelt for “years”. The melt-down, featuring annual inflation of 10 million percent, occurred in the final year. We continue to believe that now is the time to be aggressively positioned. A solid strategy is to reinvest half of your profits back into new positions while taking the other half and purchasing physical gold and silver. At the end of the Weimar Republic, a single ounce of gold was enough to purchase prime downtown real estate. We’ll cover this strategy more going forward. We cannot recommend this enough; the monthly purchase of physical gold and silver.

The biggest current concern, certainly of this new wave of bears, is the impact on the markets from higher interest rates and inflation. At some point, we’ll no doubt share in their concerns…but that time has not yet arrived. Early rounds of higher rates and inflation aren’t just bullish for stocks, they are in the wildly bullish cap.

Rising Treasury yields might have investors concerned about highflying tech-related stocks but history shows that when yields are rising “for the right reasons,” tech shares and cyclically sensitive stocks tend to thrive, according to Raymond James.

The right reasons are “improving economic growth and a ‘healthy’ rise in inflation,” said Larry Adam, chief investment officer for the private client group at Raymond James. And those reasons have driven the yield on the 10-year Treasury note to just shy of 1.4%, or about their highest in a year. Yields also are coming off their largest weekly rise in six weeks.

“Since 1990, during rising rate environments, the more cyclical sectors have outperformed,” Adam noted. “The average annualized outperformance relative to the S&P 500 is largest for the tech, consumer discretionary and industrials sectors — three of our preferred sectors,” while higher dividend-yielding sectors like utilities, real estate and consumer staples tend to underperform.

Adams also argues that inflation not only is unlikely to “short circuit” the rally, it may be a welcome development for stock-market bulls.

“When analyzing how the S&P 500 performed under varying levels of core inflation, equities performed above-average in an environment where core inflation was between 1–4%. Inflation at those levels is generally considered healthy when it coincides with improving economic activity. The reason is because companies have pricing power, allowing them to lift prices, while also reaping the benefits from productivity gains, which helps to boost earnings growth.”

When core inflation runs between 1% and 3%, the average performance relative to the S&P 500 on a year-over-year basis has been strongest for the technology (+6.8%), healthcare (+2.3%) and consumer discretionary sectors (+2%).

VRA Bottom line; as long as VRA Investing System readings hold up as solidly as they have during this extreme overbought pause, we will remain aggressive buyers on pullbacks. 

What would get us concerned? Negative volume readings of 8:1. SMH (Semis) losing 5% on a single day. Until and unless these readings occur, extreme overbought pullbacks are healthy.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: 2021. A Year of Opportunity and the Return of Inflation.

Good Thursday morning and a big, bright and beautiful hello to 2021. At this time last year the potential for a great 2020 seemed (very) high probability. Huge stock market gains and a second term for Trump, seemed all but baked in the cake. Turned out our planners had other plans…2020 became the year of coronavirus insanity.

Here at the VRA we have two primary goals for 2021.

1) Crushing Mr. Market

2) Staying locked in for the entire year, with 100% of our attention on our VRA Community.

With thanks to Ryan Detrick at LPL, we find this data compelling. Since 1950, when the S&P 500 is up by a combined 10% + in November and December (we just had 14% gains), the following year is undefeated in its bullishness, with average gains of 18%. In addition, when this occurs (+10% in November and December) the month of January is also undefeated in its bullishness, with an average gain of 3%. Hyper-bullish data.

We expect 2021 to be a remarkable year, with major global changes afoot. This year end performance review for 2020 gives us an idea of what to expect. When you hear “experts” tell you that inflation has all but disappeared, maybe send this send to them.

When inflation first returns, as the graph above makes abundantly clear, here are a few important points to remember…points that we’ll be focused on throughout the year;

1) The return of inflation is (highly) bullish for stocks, as pricing power drives corporate earnings.

2) Value stocks outperform growth stocks (see VRA Portfolio)

3) High dividend stocks tend to underperform (utilities, REITS, etc)

One of my favorite (new) macro thinkers is Lyn Alden. Recommended follow with some of the most high level podcasts around. She is (like us) bullish on precious metals/miners, stocks and bitcoin. She expects the period we’re entering to resemble the 40’s and 70’s (rising rates and inflation, but with tremendous upside potential for locked in investors). The chart below is fascinating.

But this is where out attention is hyper-focused in 2021. Precious metals and miners. Gold is soaring as we start ’21, with silver up even bigger. Copper also up big.

The chart of gold is the most interesting of my (now 36 year) career.

We are well positioned in miners, plus physical gold and silver. If you’re looking for the 2021 version of Tesla and Bitcoin, VRA Miners should give us that potential. VRA 10 Baggers plus.

Heads up: My interview with WAR was pushed back to tonight at 7:30 EST. Wayne had politics on his mind after leading a massive, 10,000 + multi mile long MAGA car parade on the Vegas strip yesterday. Look up “leader” in the dictionary and you’ll see a picture of Wayne. Hope you can join us tonight on USARadio.com.

It’s time to move on….

Our days of writing with a focus on DC political goings-on are coming to an end. It’s time. We won’t ignore whats happening in DC, but it’ll take a back seat to investing, our finances and to crushing Mr Market.

However…

Yesterdays “dangerous, mass MAGA riots” were clearly anything but that. What frauds we’re surrounded by in our MSM and yes, in so many spineless Republican circles. So quick to throw America-loving Patriots under the bus, apparently fully recovered from their years-long amnesia, when true terrorists Antifa and BLM burned cities to the ground, pilfered everything not bolted down and assaulted our men and women in blue without fear of consequence.

Yesterday was a classic false flag PSYOP. Tensions were already high…we’d only had a US election stolen…so throw in some well-trained agitators, open the gates for all to enter and the fuse was lit. Gaining access to the capital turns out to be MUCH easier than anyone knew. And the “riot” videos I saw looked like grown men practicing their break dance fighting. Please…

Until an unarmed woman, an Air Force vet of 4 tours and a threat to no one, was shot and killed by capital police…then it became real. If you’ve seen the latest vid (it’s on my Twitter feed), this poor woman was straight up taken out. But she’s MAGA, so no problemo.

Bottom line: The election is over. Biden, soon to be Harris, our new president…but in name only. There’s not an honest person in America that believes this election wasn’t rigged. At the DNA level, it’s my view that Dems didn’t beat Trump. This was an intelligence operation, through and through. Like coronavirus insanity, the totality of what we’re witnessing from our planners is being executed flawlessly. Authoritarian controls were always going to ramp up. Biden was always going to win. The future of America has been written and directed into existence. It’s the same movie that’s been playing out all over the globe for some time (you should see the emails we get from our friends in the UK. It’s much worse).

But I’m an optimist. I want to believe that our planners know what the hell they’re doing. Honestly, when you have a country where 60% cannot read past a 5th grade level and 90% have little to no savings, how much longer could this American experiment go on, without some radical changes…

Our focus now is entirely (mostly) on wealth creation. 9/11/01 changed me as a person. I see angles now that frankly I wish I didn’t see sometimes. But today, I see a world with $15 trillion in fresh liquidity and a bull market melt up that has me genuinely excited about the future, financially speaking. The bull market we’ve entered may be the last big one of my lifetime. Tyler and I fully intend to stay locked in for its entirety…before what will likely be a global hyper-inflationary crash. But that’s later. For now, we have the wind at our backs with a 1998–1999 dot-com like melt-up directly ahead.

Here’s to a great 2021.

Until next time, thanks again for reading…

Kip

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