VRA Investment Update: Ugly Trading But Fed Chair Decision is an Opportunity.

Good Thursday morning all. Rather ugly day yesterday with a sell-off throughout the smart money hour into the close. And it was the 3rd day in a row with negative A/D for NYSE. It’s been a couple months since we’ve seen that. Weak internals across the board; 2:1 losses in both A/D and volume.

Here’s what we see at the VRA, for the very short term. In addition to coming off of extreme overbought readings, the markets are on edge about the Fed decision. Will we have more J Powell, the money printing rock star or will it be the newbie, Lael Brainard, the MIT financial engineering prodigy? 

Know this; that decision has already been made. There is a near zero percent chance it has not. The smart money is of course fully in the loop. 

This looks to be setting up as a “sell the rumor, buy the news” event. That’s how we’ll likely be playing it in Parabolic Options. I believe, regardless of the choice, the markets head higher. The question is timing, as they’ve only said that the decision will come in the next few days, according to Biden. 

It’s likely, in my mind, that this will be a weekend announcement. They like to make news like this on Sundays. 

I give the edge to Powell…but its close. Brainard will be teed up should Powell forget who he answers to (the permanent ruling class). Now that the world has been re-inflated to the tune of $35 trillion in fresh monetary and fiscal stimulus, the fact is that more liquidity is not what the markets need, not at this juncture. That may tip the edge to Powell.

Again, I think the markets rally on the news…depending on VRA Investing System readings we may add a new position headed into the weekend. 

As our markets continue to bounce around off of extreme overbought levels, new buying opportunities are beginning to present themselves. We remain aggressively bullish over the medium to long term, as we apply discipline in waiting for our VRA System buy signals to establish new positions. It’s doubtful…with these melt-up levels of liquidity…that any pullback will be more than a blip.

We like energy a lot here.

The chart below is of XLE (the underlying, non-leveraged ETF to ERX. We use the un-leveraged ETF’s for charting purposes)

Here we see XLE is nearing heavily oversold on stochastics with near perfect trend line pullbacks in both RSI and MFI. We also see below what tends to happen when an investment hits extreme overbought…the pauses tend to take some time. XLE also continues to track its 21 ema…another closely watched ST timing signal.

The Biden administration can talk all they want to about their concerns for the American people re inflation. But like everything else this communist admin does, they are not to be trusted. 
They care about the American people only to the extent that they can cloak their true intentions; enriching and empowering the elite while enslaving the population. 

This is how they really feel about energy prices. They want them MUCH higher. They’re going to get their wish, as oil soon cracks $100. Obama admitted exactly this in 2011.

Finally for today, some excellent news on the CV Insanity front as OSHA has backed completely away from mandating the jab for co’s with more than 100 employees. Bravo!

Until next time, thanks again for reading…

Kip

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VRA Investment Update: Repeating Pattern From March. The Best 3 Months of the Year. Trump Media, Own It.

Good Thursday morning all. 

Yesterdays trading…actually the last 2 days of trading…have served as an important reminder that until we break the pattern of market sell-offs/pauses that’s been in place from March (once reaching extreme OB on VRA System momentum oscillators), we must continue to respect this pattern. For the 2nd day in a row we’ve seen weak smart money hours and poor market internals. Yesterday, even when the Nasdaq was +120 (it finished flat) Nasdaq advance/decline was 2:1 negative. Not good. NYSE finished especially weak, with 3:1 negatives in both A/D and volume. Markets finished at their lows of the day. 

We’ll be watching the internals plus the final hour of trading for signs of a reversal back higher. In addition, the Fear & Greed Index just hit 71 (Greed)….not far now from extreme greed. Just 1 month ago the reading was 21. 

We don’t think it will take long for this pause to play itself out….we are entering the best month of the year and we continue to expect the markets to melt up into year end. Any pullback will likely be short lived.

With thanks to Stock Traders Almanac, below we see the hard evidence that we are entering the best month of the year and the best 3-month span of the year, for the Dow, S&P 500 and nasdaq.

November, December and January constitute the year’s seasonally strongest 3-month period for the S&P 500, Dow Jones Industrials and the NASDAQ Composite. This seasonal strength is created by a combination of the annual, semiannual and quarterly operations of institutions and the habitual behavior of retail investors and consumers.

The November-January 3-month span has produced a gain of 4.3% for the S&P 500 & DJIA since 1949. October-December runs a close second at 4.1% for S&P and 3.9% for DJIA. Since 1971 NASDAQ has gained a whopping 6.3% November-January with December-February in second at 5.0% and October-December in third at4.4%.

These charts also highlight the Best and Worst Months of the year with the Best running from October/November to April/May/June and the Worst from May/June/July to September/October. Stocks have been firming up since we issued our Seasonal MACD Buy Signal to subscribers on October 8 and look poised for a solid yearend rally that continues into early 2022.

3rd Quarter GDP Comes in Weak

You know our thoughts…we are in Obama’s 3rd term. This mornings 3rd qtr early read came in with just 2% GDP growth vs the 2.7% estimate. Folks, these numbers will only stagnate further from here. When the government takes over the economy the end result is universally the same; economic growth is stifled. The same scenario is playing out globally. Just remember this all important point; the stock market is not the economy. Our views on a market melt-up are unchanged. 

Another major plus is that Biden appears to be a lame duck president (yes, already). Regularly on my podcast I challenge people to name a single major accomplishment of Bidens…not a single taker so far (obviously). Have we ever had a lame duck prez inside of his first 10 months in office?? And this is excellent news for the markets, who like little more than DC gridlock. This will only amplify if R’s demolish in the midterms. Again, gridlock is highly bullish. 

It’s Time for Small Caps to Shine

The #1 performing group from now into year end, going back 50+ years, is the small caps. As we see in the chart below IWM (Russell 2000 ETF) is actually the least overbought of our broad market indexes and still the only index yet to hit an ATH. 

The 8 month channel you see below has been tested 3–4 times on both the upside and downside and we see HIGH probability that the breakout from this channel will be higher. Of note are the rising trend lines on MFI and RSI. Highly bullish. Momentum is building in small caps for a spectacular melt-up into year end and Q1. 

Trump Media (DWAC)

Just giving you a heads up…I’m going to be a dog with a bone on this one. Not going to make the same mistake I made with Tesla. I am pounding the table on DWAC. 
It’s a buy and will continue to be a buy for years to come. 

Login to any stock chat room (Reddit, Yahoo, etc) and these are the types of comments that you’ll see re DWAC;

Trump Media has the potential to be unlike any stock to ever trade publicly. Period.

Lastly, thank you for your feedback on Tuesday’s podcast. Among several topics, Tyler covered Ayn Rand, author of many great books but likely best known for Atlas Shrugged, a book that Tyler first read in high school and which I can attest made a deep impact on his world views. We are living through the dystopian times that Rand envisioned some 7 decades ago. Here’s the link to Tyler’s cast:

https://soundcloud.com/user-640389393/vra-podcast-tyler-herriage-daily-investing-podcast-oct-26-2021?si=29ceefb5d6c249ce9d16defbbc18194a

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: When the Bears Start Growling, Buy Buy Buy. Project Veritas Strikes Again.

Good Thursday morning all. Yesterday brought massive intraday reversals higher, with the Dow Jones gaining 560 points off the lows to finish +102. Seeing follow through this AM with Dow futures + 280. 
Real fear started coming into the market yesterday morning. Music to a contrarians ears. Combined with seasonality, which is about to turn bullish (for 7 months), we like this setup.

Investor Sentiment Flashing Huge Buy Signals

This is the fear I’m talking about . The “Investors Intelligence” poll just dropped to 40.4% bulls, the most bearish reading since April 2020. You read that right…investment newsletter publishers (that’s who this poll is made up of) are as bearish today as they were right at the very bottom of coronavirus insanity. I do not have a vote in this survey…I vote each week in the AAII Survey and have for more than 30 years (below)…but just think this through for a moment. Here we are, just 6% from ATH and in just the second year of a new bull market that’s driven by more than $32 trillion in fresh global liquidity and surging corporate earnings…a structural bull market that is “forcing” stock prices higher…yet my fellow newsletter writers are hitting the panic button. Hey, I never claimed that we were the sharpest knives in the drawer. As you’ll also see, this survey also has those looking for a “correction” at the highest levels since March 2020…the exact lows of CV insanity. Back up the truck.

And we’re seeing the same kind of readings in Fear & Greed Index., which now sits at 27 (Fear)

And finally, the weekly survey (AAII) that Tyler and I vote in. AAII. 
Bulls sit at just 25.5%, bears at a massive 36.8% with neutral investors at a stunning 37.7%. 
You read that right sports fans, 74.5% of all investors are neutral/bearish on this market. Even as the Fed and ECB continue monthly QE of $120 billion (each).

VRA Bottom Line: all of the pieces are in place for a rip-roaring move higher into year end. 9/12 VRA Investing System Screens are bullish…once the internals begin to improve we’ll almost certainly be back to 10/12.
And yes, this is contingent on Housing and Trannies…reversing higher from their 200 dma and leading the way higher…which is just what we believe is about to happen.

The VRA Investing System lists Housing and Transports as our two most important leading economic indicators and discounting mechanisms. They lead both the markets and the economy in both directions. 

HGX (Housing Index) has just fallen below its 200 dma and needs to reverse course. Dips below the 200 dma are common, just prior to sharp reversals in the bullish direction. That’s what we believe is about to happen here…that’s what needs to happen here.

We see similar action in the trannies. Recent action below its 200 dma has been followed by a move higher over the last 10 days, and now just above its 200 dma.

This is classic trading action, in Housing and Transports, prior to a renewed move higher in the markets. But again, we don’t tell the markets what to do…they tell us. It’s also a stark reminder of the reality that we are in Obama’s 3rd term.

Finally for today, Project Veritas Strikes Again. Pfizer Scientists Telling the Truth to Undercover Journalists About CV Jabs. 
2.7 million views in just 11 hours. 

“Natural immunity is superior”
“If you haven’t been vaxxed, wait”
“I work for an evil corporation.”
“Our company is run on Covid money:”
“They fire you for saying any of this.”

They’ve built statues to people like George Floyd, but when America gets straightened…that process is underway…we’ll build them for people like Trump, Ron Paul, G Edward Griffin, our boy Wayne Allyn Root and undercover journalists like James O’Keefe. Just amazing admissions from multiple Pfizer scientists. Serious talks about Nuremberg-like trials for CV criminal fascists are beginning. 

https://twitter.com/EricSpracklen/status/1445344182365720577

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: VRA Investing System, 36 Years in Development. Why We Use the VRA System to Time the Markets. 1995–2000 Case Study.

Good Thursday morning all. As we welcome new VRA Members it’s important that we’re all on the same page. That means understanding the VRA Investing System, ensuring that we are positioned to crush Mr. Market. As we begin trading today, the VRA System sits at 9/12 Screens Bullish. Our two bearish screens are a) valuations and b) market internals (valuations look to flip to a bullish screen in the 4th quarter) with 1 screen neutral (VRA Momentum Oscillators). We also note that seasonality is not on our side during September to early/mid October. We are semi-patiently waiting to put funds back to work (after taking profits in 5 VRA Portfolio positions) on any market weakness.

VRA Investing System; 36 Years in Development

After my first few years on Wall Street, reality hit me right between the eyes. Fostered by a series of enlightening conversations with my first mentor (RIP Ted Parsons) I discovered that Wall Street’s primary objective was not to make my clients money. The primary objective of Wall Street was to make the firm money, as research worked hand in glove with investment banking, where the serious money was (and is) made for brokerage firms and their elite clients.

Once this reality set in I had two choices; quit and find another profession or find a way to actually make money for my clients. The VRA Investing System was born out of that decision.

The VRA System was built to uncover the best investments (at the best time) and to remove emotion from my investing. It was built to have us out of the markets in times of turmoil (or short) and in the market when the bull wants to run.

The VRA System combines fundamentals, technicals and investor sentiment…the 3 most important elements of investing (in any/all asset classes). We use broad market positions, employing leveraged ETF’s for maximum returns, combined with our ability to ferret out world class, small to mid-cap “growth stock, story stocks” for the opportunity of several hundred percent to more than 1000% in profits.

We rarely recommend more than 15 investments at any one time. If you want to own 30–40–50 stocks, buy an index fund. While technically it would appear that we are aggressive as they come, it is a “controlled aggression”; we know the companies that we recommend. We know their management teams and their business model and we know how to pick winners. Period. I also put my own money in the stocks that I recommend. Anything else would be Wall Street-like hypocrisy. Still, my investment style is not for everyone. I would never recommend placing all of your investment dollars into VRA Portfolio buy rec’s. However, for your “risk capital”…those funds that you put aside to make your retirement account everything that it could/should be, the VRA has been designed to get that job done.

We encourage you to resist the temptation to go “all in” on just 1–2 VRA Buy Rec’s. We only recommend approx. 15 stocks at a time for a reason. Diversification is a hallmark of successful investors and reduces the risk of becoming emotional about our positions. “Loading up” can also lead to large daily/weekly swings in your portfolio…the kinds of swings that can lead to oversized losses. Emotional investors tend to “buy high and sell low”, or just the inverse of what we’re looking to accomplish.

For our broad market positions in leveraged ETF’s, the VRA System employs “trend following” methodology. The game plan with trend following is to capture 80% of the move, in our investments of choice. It’s not about calling market tops and bottoms (although the VRA has caught NUMEROUS significant market turning points over our 15 years). Instead, we want to capture that middle 80% of the move…that’s our sweet spot…that’s where the most reliable and predictable profits reside. This makes the VRA System most important…its the major predictor as to whether a stock/sector/market is in a bull or bear market. It’s been my primary trend go-to for 30+ years.

The VRA System has 12 Proprietary Screens. Today (9/8/21), 9 screens remain in bullish mode, 2 screens are in bearish mode (valuations and market internals) and 1 screen is neutral (VRA Momentum Oscillators).

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

This is how the VRA System works…in bull markets or bear. Sure, its MUCH more fun making money in a bull market; making money as we watch the US economy rock and roll and US stock prices soar. This, of course, is the market we are in today. Making money in a bear market means we’re forced to be “pessimists”. And who wants to be pessimistic? I’ve been a glass is half full guy my whole life…its highly likely that 90% reading this identity the same way…but it’s not our job to tell the market what to do, based on our emotions. Our job is to make money and to beat the markets sizably in doing so.

The VRA has outperformed the S&P 500 in 15/18 years. Since 2014 we have more than 2800% in net profits. We believe we are extremely well positioned positioned currently, with approx 60% of the VRA Portfolio in growth and 40% in value.

Investing Tenets and Observations of the Day

My mentors (Ted Parsons and Michael Metz, RIP) were smart, market savvy and most importantly, patient! Here are some of their top investing lessons…

1) “Don’t fight the tape, don’t fight the FED”. Not only do we have a Fed that could hardly be more accommodating, we have an entire planet of central banks that are forcing untold trillions into the economy and markets. Full on buy signals here from the Fed. And the “rising tape” demands that we remain bullish.

2) “The trend is your friend”. As trend followers, when the major averages are in confirmed bull market status (according to the VRA System), we want to be long. Conversely, in a confirmed bear market, we want to invest primarily from the short side. Today, if you’re not long, you’re wrong.

3) “There is no more bullish sign than an overbought market/stock that continues to rise”. This is exactly what we’re seeing today. Overbought markets that continue to rise, using sector rotations to work off exuberance, are highly bullish.

4) “It’s not a stock market….it’s a market of stocks”. One of the best investing lessons my mentors taught me. There’s always an opportunity to make money, by focusing on both VRA fundamental & technical research and good old fashioned stock picking. This rule is at the heart of the VRA System.

5) Major bull markets, especially those led by liquidity and corporate earnings, do not end until the public is wildly in love with stocks and aggressively buying every dip. Euphoric. Until the public believes that “the market cannot go lower”, the path of least resistance remains higher.

6) We are medium-long term investors that believe in position building (monthly dollar cost averaging) in our top growth stocks and VRA 10 Baggers and using the VRA Investing System to time buys/sells of our favorite ETF’s. We refer to it as the Peter Lynch school of investing. This is how we crush Mr Market and build long term capital gains.

We had a question yesterday that helps to shed some light on our approach to timing the markets/sectors/stocks, via the VRA System;

“Kip, Tyler and team. Not that I have a problem with taking profits but if your research says this is a melt up market like dot com was, aren’t we taking a big risk being out of your favorite ETF positions?
Thanks, Jeff from NC”

Thanks Jeff. Great question and one that Tyler and I talk about often. The best way to answer it is by looking at this chart of the Nasdaq from 1995–2000, as it soared 575%.

The 4 blue circles below represent corrections of 15% to 32% (bear market) that took place in the Nasdaq, right smack in the middle of the 5 year dot-com melt-up.

1) In mid-96 the nasdaq fell 19%

2) in early 97 the nasdaq fell 15%

3) in late 97 the nasdaq fell 16% (yes, two 10% + corrections inside of 9 months)

4) in mid 98, the nasdaq fell a huge 32% (a 4-month PAINFUL bear market that most everyone today has forgotten about) 

5) then the biggie; a 275% move higher from the late 99 lows to the final peak in March 2020.

This era, 1995–2000, played an important role in the development of the VRA Investing System. I knew several brokers that actually lost money during the best bull market ever. It drove several to quit. You can tell from these big swings exactly how that could happen. Most investors tend to wait until major moves higher have occurred before jumping in…the water feels safer then…only to panic sell as the rug is pulled by Mr Market (he’s a heartless sadist).

Our game plan is simple, as it applies to ETF’s and market timing. We buy low…using the VRA Investing System as our guide…then we take profits when our VRA readings hit extreme overbought. Rinse and repeat. 

BTW, those people you’ve heard say “no one can time the markets and make money doing it”. These are the people that lose money in the markets…because everyone times the market. As human beings we time every buy and sell that we make, of most everything. The key is having a system and the discipline to stick with it.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: ATH Broken Record. Small Caps Are Leading…Next Up. VRA Rate Forecasts. MSM is Waking Up to CV Insanity.

Good Thursday morning all. Yesterday marked the 51st record close in S&P 500 this year and another ATH in Nasdaq, as it holds above the 15,000 plateau. And our internals put up another positive day…that’s 4 in a row, which hasn’t happened in several weeks. And this biggie; for the 4th day in a row small caps led the markets higher. How bout that sports fans….just 5 days after hitting the 200 dma and extreme oversold on our momentum oscillators, the Russell 2000 is now leading higher. 

Our friends at the Stock Traders Almanac have some interesting seasonal research this AM on the small caps (I first met STA founder Yale Hirsch in 1988 over dinner at Tavern on the Green. Yale is true Wall Street legend….one of the fathers of analytics). STA says small caps should outperform here, have a tough September and then really pick up speed in October, as they melt up into March.

“In the below chart, daily data since July 1, 1979 through August 20, 2021 for the Russell 2000 index of smaller companies are divided by the Russell 1000 index of largest companies, and then compressed into a single year to show an idealized yearly pattern. When the graph is descending, large-cap companies are outperforming small-cap companies; when the graph is rising, smaller companies are moving up faster than their larger brethren. The most prominent period of outperformance generally begins in mid-December and lasts until late-February or early March with a surge in January. This period of outperformance by small-caps is known as the “January Effect” in the annual Stock Trader’s Almanac.

In recent years, another sizable move is quite evident just before Labor Day. One possible explanation for this move is individual investors begin to return to work after summertime vacations and are searching for “bargain” stocks. In a typical year, small-caps would have been lagging and could represent an opportunity relative to other large-cap possibilities. As of today’s close, Russell 2000 is up 13.4% compared to the Russell 1000 being up 19.0% year-to-date. Lagging small-caps and resilient U.S. consumers could be the ideal setup for a repeat of this pattern this year. However, the small-cap advantage does historically wane around mid-September.” — — 

Here’s the relative strength chart of small caps (IWM) to S&P 500 (SPY) over the last year. Talk about a tale of two seasons. From last September to March, small caps trounced their large cap brethren. But since the March top, small caps have been battered hard. Here at the VRA, where we own multiple small caps, we are adding to positions aggressively for the next melt up move higher. A rising tide lifts all boats…we see little chance that this bull market continues without taking the small caps with it.

Amazing value in our small caps (to learn more join us free for 14 days at VRAinsider.com)

All eyes are on our money printing rock star J Powell tomorrow as he graces us with his presence at the annual Jackson Hole Wyoming celebration of our financial masters of the universe. Last year at this time the 10 year yield was 1.9% and as our PHD economists (most all employed by the Fed in one way or another) reminded us daily, “without question” the 10 yr was headed to 2.5%…then 3%. Then higher still. Oops!

The VRA forecast remains unchanged. 

- Rates will only go lower. This is Obama’s 3rd term (slower growth is “the way”).

-The Fed doesn’t raise rates when a Dem is prez. So it is written, so it must be. 

-We’re about to enter the flu season…get ready for mass hysteria fear mongering…which of course sets the table for mail in ballot and drop box vote rigging in next years mid-terms. Rates CANNOT rise during CV propaganda season. 

- And continued lower rates will only be a positive for US equities. And if we had to pick a single reason to be hyper-bullish, it would have to be investor sentiment. The AAII sentiment survey sits at just 39% bulls…the fact that it’s not 60% bulls with ATH after ATH is both stunning and fully understandable (the last 20 years have fried our minds…and the last 19 months have charred our souls). 

But seeing the Fear and Greed Index at just 37 (fear) just drives the point home even further. This bull market has FOREVER to go.

And even the infamous Martin Armstrong is actually getting positive. Martin agrees with us…R’s will steamroll next year and Bidens reign of cowardess will soon be neutered. 

“I know it can get depressing. I really hate this nonsense. But when I look at the charts, all the markets are indicating that this merry band of Climate Change fanatics who has organized the biggest scam in human history over COVID to change the economy suggests that they will FAIL. Yes, there are climate concerns, but those are natural. That is the imminent collapse in the Gulf Stream which will send Europe into a much colder period.

Our Yearly Political Models on the combined Left (House & Senate), have shown Panic Cycles in 2021 and 2023 with the biggest turning point being here in 2021. The numerous Directional Changes also show a conflicting pattern so I do not see that this Democratic Trend is some new direction that would even last into 2024.

When we focus just on the Senate, here we have Panic Cycle in 2022 and 2024 in both the Republican and Democrat databases. So, once more, this does NOT look like this is going to be clear-sailing for Biden. Given his unbelievable handling of Afghanistan, his approval rating fell below that of even Trump. He is now asking for contingency plansbecause like everyone I knew in Washington, on both sides, always had the same opinion. Biden was never a leader. Meanwhile, the Democrats have totally lost their mind proposing a $3.5 trillion bribe they think will secure their election in 2022.

So Cheer up! They will fight hard, but they will lose this battle. Their entire idea of crushing the economy to Build Back Batter is absurd. At some point, even the sheep wearing their masks in the car will wake up when it comes to the loss of their entire future. Resistance is NOT FUTILE! The police in New York City are refusing to comply with these mask mandates and we see similar rejections by the police in Switzerland and Italy.

So Cheer UP! — We are going to win this immediate battle.”

CV Insanity. The MSM is waking up to actual science.

Until next time, thanks again for reading…

Kip

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