VRA Weekly Update: Anxiety Over Jobs Reports. But Rates Will Only Go Lower, Markets Will Only Go Higher.

Good Thursday morning all. Breaking news from the ADP jobs report this AM which came in at 978,000 jobs created vs estimate of 650,000. I can tell you that there’s some nervousness around the May jobs report that’ll be out tomorrow morning (8:30 AM EST), especially following last month’s huge miss. Estimates are for May are 670,000 new jobs with an unemployment rate of 5.9%. 

I have no clue about these month to month economic reports but I can tell you that the bond market is not signalling this as a “hot” economic report. The 10 year yield is back to 1.6%, even with this mornings big ADP beat. I continue to believe we’re more likely to see 1% yield on the 10 yr again before we see 2.5% (or even 2% frankly). 

We have a 40 year repeating pattern of lower interest rates and disinflation. That’s one helluva of a long term repeating pattern to contend with. 

And if you’re a bit of a conspiracy theorist (where the truth is found, more often than not) a poor jobs report would also make it (much) easier for Biden to sell his stimulus plans. BTW, the action in gold over the last month (+$40/oz, until this morning…gold is down $20/oz this AM) also points to weaker economic reports. Same with the dollar…consistently weak over the last 30 days.

Decent day in the broad market yesterday with each index posting slight gains and with positives across the board in our internals (below). Up-volume was a solid 72% in both NYSE and Nasdaq. 
And once again, primo readings on new 52 week high/low with 582 stocks hitting new 52 week highs to just 30 hitting new lows. 

I’m disappointed in the markets gains of the past 2 days. The readings we’ve had from our internals should have produced more to the upside. Not a reason to be concerned…just an observation. Dow futures are -175, Nasdaq futures -130. Pullbacks continue to be a buying opportunity.

The markets still look higher to us. Nowhere near overbought levels, except for the Russell 2000 which is approaching overbought. 
But Nasdaq, semis and Q’s have solid room to run. All momentum oscillators are still flashing buy signals.

And check out the Fear and Greed sentiment readings. 47…just barely out of fear levels. What?? How that’s possible with the S&P 500 less than 1% away from ATH is beyond my comprehension. But as a contrarian indicator I do know this is VERY bullish.

AMC: AMC just announced they issuing another 11 million shares. One might think the shares would be getting slaughtered on this news…not the case. Last trade $48. AMC is no longer a retail meme stock. This is a battle to the death between big dark money and global hedge funds. And we have the proof to back it up. 54% of yesterdays trading was from dark pools/whales/funds.

The gamma squeeze continues. The investing world has never seen anything like this.

VRA Bottom Line: we are actively looking for the next AMC, because folks, this is hot new investing strategy will almost certainly move from one stock to the next…likely for some time (months/years?). Keep your best ideas and new targets coming. But for now, its still about AMC. My money is still on the longs. $100+ is becoming more and more possible.

Finally for this morning as you may have seen late last night, via the FOIA process we’re now getting large email dumps of one Tony “Fauci the Fraud”. I’d say that the revelations are shocking (Wuhan lab, pointlessness of masks, dangers of experimental vaccines, censorship etc), but if you’ve been here with us over the last year you know that none of this surprises us. In March of last year we first reported the details of the Rockefeller Foundations 2010 document called “Lockstep”, full of the near-exact details we’ve experienced over the past 16 months, to use a pandemic to look us down, mask us up, jab us and destroy our small businesses…TO CONTROL THE GLOBAL POPULATION…gaslight us furiously along the way. 

Like climate change, like domestic terrorism, like racism/white supremacy and of course the applications of CV insanity….it’s all our fault. We did this to ourselves. Shame on us. 

We’ll cover more in the days ahead but if you saw our disgusting excuse for a leader yesterday, Biden took another opportunity to gaslight us yesterday….we’re all racists and white supremacists, don’t ya know. 

But know this….gaslighting is a tool used by those that want to dominate and control us. Full on authoritarianism. 

Gaslighting is a form of psychological abuse where the perpetrator tries to convince you that you can’t be trusted and that you’re probably even losing your mind. The perpetrator’s main goal is to gain power and control over you. The more someone can convince you that the problem is you and not them, the less likely you are to discuss it or ask questions about it. This is exactly what the gaslighter is banking on…that you will keep quiet, out of a feeling of shame. 

We don’t roll like that here at the VRA. America is the best country on planet earth, full of extraordinary people that love helping one another. 

We won’t allow them to deceive us over CV insanity…and we won’t allow them to gaslight us, regardless of the issue. 

The truth resonates…which is of course why our planners are desperate to shut us up. 

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: ATH's Beget New ATH's. Sentiment Flashing Buy Signals. Bear Trap in the Works?

Good Friday morning all. Following a solid intraday reversal higher into the close that sent multiple indexes and sectors to ATH (including SPX, Nasdaq, Housing and Transports) the Dow Jones is giving back 2/3’s of yesterday's gains this AM. Earnings continue to destroy their comps of Q1 2020. As Tyler covered in his podcast yesterday, Wall Street analysts were expecting Q1 ’21 to beat Q1 ’20 with 12.2% EPS, but with 40% of the S&P 500 reporting EPS growth is putting up a remarkable 29.3% EPS growth (over Q1 ’20).

Yes, we’re getting a bit of buy the rumor sell the news on the heels of these massive earnings beats, and yes, the internals were weaker than we prefer to see yesterday, but this smells like a “bear trap” to us, in advance of the next catapult higher.

Here’s why:

- Today is the final day of April, meaning fresh fund flows from pensions/retirement funds will enter our markets come Monday. In addition, share buybacks are all the rage again, now posting the biggest buyback totals since before the start of CV insanity.

-We know that May, in post election years, has historically been one of the best months of the year, with avg Nasdaq gains of 3% and 3.9% in Russell 2000, with markets higher approx 90% of the time.

-And we find this data compelling; Going back to 1954, when the S&P 500 is higher by 10% + in the first 4 months of the year (it’s happened 18 x), the rest of the year has been positive 88% of the time with avg gains of 7.4% over the remaining 8 months. As we start trading today, the S&P 500 is up 11.7% for the year to date.

And we have new fundamental research from the all-stars at Evercore that continues to point to a US and global economy that is in early stages of “soaring mode”:

-Retail sales for the month of April (year over year) look like they’ll post stunning gains of 50%, with employment up a big 11%.

- S&P 500 Q2 earnings estimates are $205/share, vs Q2 ’20 of just $112/share, an almost impossible to believe 83% increase!

In major bull markets like this one, dips will continue to be short-lived. We remain long and strong.

Investor Sentiment Flashing Buy Signals

Investor sentiment continues to flash VRA System buy signals. First, the Fear & Greed Index sits at just 62 today.

And last nights AAII Survey came in at 42.6% bulls to 25.7% bears (bulls down a big 10% from last weeks readings).

Before we see a significant peak in the markets we’ll almost certainly see the Fear & Greed index approaching 90 and AAII at 60% + bulls.

“Frothy markets”, to borrow a phrase from the rock star himself, are not commonly associated with readings like above. When we actually get close to a serious market top, every investor and his mommy will be “all in”, believing that there is NO WAY stocks can go lower. Does it feel like we’re in that kind of market today? Or, when the market drops, do you instead get a pit in the bottom of your stomach?

When we’re near the real top, that sinking feeling will be miles away. Circa 2025. Quite possibly Dow Jones 100,000.

This is that bull market.

Fed Update

This week’s FOMC minutes went as expected (no change, anywhere), until Fed Reserve rock star J Powell’s presser where he went off script…again. Powell’s quote that “there is froth in the equity markets” sent the Dow from -40 to -164 at the close, reminded me of Alan Greenspans 1996 line about “irrational exuberance”, which many thought at the time was a warning from Greenspan and would mark the highs for stock prices. It did not. As it turned out, Greenspans warning instead acted as a rocket launcher for higher prices, with markets surging for a full 4 more years into dot-com mania, prior to the 2000 market top and dot-com meltdown.

I look at Powells “froth” warning in the same light as Greenspans. Yes of course, our markets are becoming frothy. But like 1996, our current bubble is just beginning to expand. Without question, Powell and his merry band of global central bankers know this. Trying to slow down a bubble in its early stages with verbal warnings will likely have just the opposite affect. The markets know that they have a green light for much higher prices and we saw evidence of that yesterday in the internals, which were solidly positive across the board, even as the broad markets were lower (only the Russell 2000 finished higher).

This market wants to go higher. Much higher. These Q1 earnings have just been stunningly good.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: Bullish Consolidation Into Q1 Earnings. Jamie Dimon Joins the VRA as Hard Core Bulls.

Good Thursday morning all. Yesterday marked the 3rd straight day of less than great internals with negative across the board in A/D and volume, while the bright spot continued to be new 52 week high/lows at 341 new highs to just 39 new lows.

These readings need to improve. Thats what we believe will happen into weeks end and into next week, in advance of Q1 earnings reports kicking off in style. Q1 estimates indicate 30% + year over year beats.

It’s important that our internals begin to improve…we look for that to occur beginning today…along with continued solid action in semis and nasdaq. Nasdaq futures are +110 this AM and FANG stocks are once again resuming their leadership role, with ATH’s yesterday in Facebook and Google, with Apple and Amazon heating up right behind them. S&P 500 closed at an ATH, but Nasdaq remains 2% below ATH and Russell 2000 remains 6% below ATH. We expect Nasdaq and small caps to lead the way higher into next week.

Note: A large percentage of the charts we’re following look almost identical. Constructively bullish. This looks to be the lull before the next breakout higher.

And 90% of all SPX stocks are above their 50 dma. A very big 95% are above their 200 dma. This is both bullish and extended. Some consolidation this week will help to work off this overbought short term status.

It’s not uncommon after several days of above average market strength to see a short term pause. We expect that’s the case here.

And while we may rarely quote JP Morgan head Jamie Dimon (likely the leading Wall Street firm, along with the vampire squid Goldman Sachs, for financial/market manipulation), Dimon’s annual letter to shareholders is out and we find ourselves in “lockstep” with his views on the economy and the equity markets.

From CNBC this AM;

“Jamie Dimon is bullish on the U.S. economy — at least for the next few years.

In his annual shareholder letter, the long-time JPMorgan Chase chairman and CEO said he sees strong growth for the world’s biggest economy, thanks to the U.S. government’s response to the coronavirus pandemic that has left many consumers flush with savings.

“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon said. “This boom could easily run into 2023 because all the spending could extend well into 2023.”

Dimon, who managed JPMorgan through the 2008 financial crisis, helping to create the biggest U.S. bank by assets, pointed out that the magnitude of government spending during the pandemic far exceeds the response to that previous crisis. He said the longer-term impact of the reopening boom won’t be known for years because it will take time to ascertain the quality of government spending, including President Joe Biden’s proposed $2 trillion infrastructure bill.

“Spent wisely, it will create more economic opportunity for everyone,” he said.”

Here at the VRA we are optimists at heart (what we think about we bring about) but we’re also realists when it comes to the economy and the markets. In this case we are in near complete agreement with Dimon. The combination of liquidity (Don’t Fight the Fed/free money), excess savings (15% savings rate), momentum (Don’t fight the tape) should continue to result in surging US and global stock markets. We’ve just kicked off a new month (best month of the year) and a new quarter (equity inflows are flying in), with what should be stellar Q1 earnings reports kicking off in style next week, as banks begin to report.

Any short term pause should be just that. Dips are to be bought.

Our friends over at Macro Charts are out with some interesting and unique work that we’re seeing nowhere else.

In what is clearly a contrarian view, but they back it up with hard data, options activity remains extremely pessimistic.

According to their options flow oscillator, net options volume is among the most negative of the last 30 years but has begun to turn up, indicating an uptrend continuation.

As they cleverly state, not only are we not seeing complacency, but instead this is a “wall of worry” in full force. As a side note, Macro Charts has tended to be on the bearish side of the markets for some time.

Seeing them flip to straight up, hard core bullish, is interesting. Of course, we see them as being exactly right. Never in my career have we had a runaway bull market like the current one, while at the same time the VIX was at 18 and the Fear & Greed Index sitting at just 62.

We fully understand the reasons for investor anxiety…the last year (plus) has been both gut wrenching and flat out depressing. That’s the “wall of worry” that Macro Charts is referring to…the markets almost always tend to do the exact opposite of what the investing public believes “should” occur.

Know this; “several” big name market timers are on the wrong end of this move higher, having recently been stopped out of their tech/small cap positions, as each had a 10% intra-quarter correction.

As they are forced to repurchase their positions, and as shorts are forced to cover their positions, this added buying pressure will serve as additional fuel for this move higher.

At some point in the next week or two we’ll likely reach the kind of overbought levels that will see us take some profits, but again, this market has plenty of room to run…especially in tech and small caps.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: We Must Be Long and Strong. Liquidity, Earnings and Momentum Demand It.

Good Thursday morning all. It seems the Dow and Nasdaq have decided to have massive moves higher, but on alternating days. On Tuesday, the Nasdaq soared 3.7%, while the Dow lagged. Then yesterday, the Dow ramped 464 points higher (+1.5%) while Nasdaq was (slightly) lower by 4 points.

So it makes sense that this morning it must Nasdaq’s turn to rock and roll…and so far we’re getting just that with nasdaq +1.8% in premarket. And let’s not forget the Russell 2000, which has been a house on fire this week, up a big 1.8% yesterday and now just a fraction of a point away from fresh all time highs. 

Know this; the lows are, in our view, most certainly in place. We must be long and strong here. And you know the drill…two things move the markets more than anything else; liquidity and corporate earnings. With our latest round of CV insanity stimulus, which Biden (or his stand-in or his Mission Impossible sci-fi masked version) will sign into law tomorrow, we now sit at approx $22 trillion in combined global fiscal/monetary stimulus. Next up, word of a $2.5 trillion infrastructure deal. And across the pond, the ECB’s Christine Lagarde is having her presser as I write, where she’s talking about ramping up ECB bond buying and more helicopter money throughout the EU. 

It is a stimulus driven global stock market melt-up folks. Period. When QE was first launched (08/09), I sat at this very desk in awe of the seeming ridiculousness of it all. Monetizing the worlds debt by printing more fake paper…what?? Over a 6 month or so period I was on the wrong side of the markets, thinking this could end only one way…in financial disaster. That was the most wrong I’ve ever been in my career. Had Tyler been with me then, instead of being a senior in High School, he would have slapped me out of my shock and awe and reminded me “stop fighting the tape and stop fighting the fed!”

I won’t make that mistake again…and neither should anyone reading this. We are in a liquidity/momentum fueled bull market that’s just in it’s infancy. It won’t be straight up…they never are…but we just had a 10% correction in nasdaq. Next up, nasdaq will be back to ATH, in short order.

This is a great time to put new money to work in the market. It’s boom time, economically. Our leading economic indicators could not speak to us on this more clearly.

Tyler got into this on his podcast yesterday, and as JC Paret’s writes below, the set-up in our internals and broad based market breadth looks very similar to 2016, just after the election. 
The markets soared in 2017, with very little volatility. Based on VRA System readings, we agree completely with JC.

All time highs in more US indices and sectors than we can count (along with global markets) yet the Fear & Greed Index sits at just 50? Another buy signal…neutral investor sentiment is “not” the sign of a market that wants to go lower.

New: VRA Forecast on Interest Rates

I see it as a near impossibility that with negative rates in Japan (-.10%) and Europe (Germany -.28%) that US rates will continue to spike higher from here. I first made this call some 3 years ago when we forecast that the 10 year yield was headed below 1%, for many of the same reasons that exist today; the combination of the safety of US debt plus MUCH higher US yields (10 yr of +1.6%) will continue to act as gravity for US yields. In addition, and this is a big wild card that no one is talking about, with Biden’s $1.9 trillion coronavirus insanity stimulus having been approved, along with the fact that there remains $1 trillion in unspent previous CV stimulus, much of these funds will need to find a home over the short to medium term. That home should be US government debt, where the increased demand will act as additional gravity for US yields.

In this updated chart on TLT (20 yr T-Bond ETF) we see that TLT is hitting almost identical oversold levels that have marked a significant low from 2013, 2015, 2017 and 2018.

While I am not top-calling interest rates here I am saying that this repeating pattern has a high probability of occurring again; namely that “gravity”, with a continued steady inflow of foreign money into US debt to capture higher yields and safety, will continue to keep US rates low-ish.

Importantly, as US rates plateau/decline, growth stocks will come back to life. Another reason we are buying and recommend adding to positions in VRA big tech buy recs.

We view this as a significant buying opportunity. Some of the many reasons;

1) Don’t fight the Fed…don’t fight an entire planet of Feds. As a reminder, the Fed has an ongoing QE program (QE4) of $120 billion in monthly asset purchases (not including their leveraged programs and not including the shadow banks that mimic the Fed)

2) We’ve just entered a new bull market, from the 3/23/20 lows. Like the birth of the last bull market (March 2009), this bull has years to run…and its being juiced by FAR more fiscal and monetary stimulus ($22 trillion in total and counting).

3) We’ve just had multiple Dow Theory buy signals. These act as leading indicators for both the market and the economy.

4) Every major stock market on the planet now has a rising 200 dma, indicative of new bull markets, rather than the end.

5) March/April are highly bullish, as is the November-May time frame, where more than 90% of gains take place.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: That 1995–2000 Vibe. Collusion in Precious Metals. $1000 Silver During Commodity Supercycle.

Good Thursday morning all. Earnings continue their solid beats, both on the top and bottom line, as it looks increasingly clear that we are early in the economic and earnings recovery cycle. If we’re right, pullbacks going forward will continue to be shallow and short-lived.

This is not the time to take profits. This feels like 1995–2000. If I had known then what I know now, I would have had my clients using leverage (margin), would have focused on co’s with exposure to tech and to value stocks that were historically undervalued, with the realization that a quality management team matters more than everything else combined. The markets reward leadership.

Of course, back then if your company name had dot.com in it, you were almost assured that your stock price would soar. One of the co’s I helped take public (Edge Petroleum) called me into a board meeting a year after their IPO because certain board members wanted to change the company name to Edge Petroleum Dot Com, an idea that only sounded good for about a half second (my advice was to pass on the idea…which thankfully they did). But that was the level of euphoria about the markets…co’s entertained ideas they otherwise would never had. We’ll get there again…just not there yet. Kind of like Tesla buying Bitcoin. Here. We. Go.

As much as this might feel like a bubble, we’re yet to enter that phase for this bull market. It might be beginning, but with $20 trillion in fresh global liquidity (fiscal and monetary), surging corporate earnings and record amounts of global money supply growth, “crazyville” lies just down the road. More than anything, we think the markets begin to wake up to the “high” probability of the return of inflation. Remember, early inflation is mega bullish. And the Fed has stated early and often that they will let inflation run hot.

And as always, with the return inflation; we want to own gold, silver, copper, miners…and essentially all commodities…with major exposure to oil/nat gas and E&P stocks. Most certainly when real rates remain deeply negative, as they do today.

Market Update

Even as the market was a bit soft yesterday, market Internals remain solid. Near 2:1 positive Nasdaq volume. Flat elsewhere, but check out new 52 week highs/lows; 860 to just 18.

Yes, all of these SPAC’s are causing some havoc in the internals, as SPACS have common stock, units and warrants all being reported…it skews the readings…but we prefer not to rationalize market indicators.

We think the key point here that many are missing with SPAC’s and reporting is that its also a two-way street. On bad days, we should be seeing exaggerated negatives in the internals…and that has simply not happened so far.

Bottom line: these ongoing and consistently positive readings in the internals remain as a bullish indicator, both short and medium term.

The Fear & Greed Index remains modestly low with a reading of just 62 (greed). Still not seeing readings anywhere near euphoria in our sentiment readings. We find that both interesting and a bit remarkable. Even with this move higher, the public remains skittish on this market. As contrarians, we like that.

Liquidity

Our friends at Evercore (they’ve nailed the economy and markets from the 3/23/20 lows) are pointing out two major themes that we see few others reporting on.

First, money supply is in absolute beast mode, all over the world. In the US, m2 money supply growth is up 26% year over year, with total nominal growth of $20 trillion (just wow). Globally, check out these money growth figures; Eurozone +12% y/y, totaling $17 trillion. China, +10% y/y and a massive $34 trillion in m2 growth. In the UK, 12% y/y m2 growth, totaling $4 trillion.

And here’s a stunning report on consumer net worth (CNW). CNW is on track to be up almost +20% y/y in 1Q. Evercore’s econometric analysis finds that CNW leads GDP growth by a half year. A +20% increase in CNW lifts GDP growth by roughly +3%, all else equal, meaning that for full year, 5%+ GDP growth is now a very real “likelihood”.

In my career, where I’ve followed/recommended gold, silver and the miners, this is the most confident I’ve been for this group. Massive levels of liquidity and currency inflation (debasement) demand our ownership. Similar to the 3 year period of late 2008–2011, this is a market that should reward both equities and precious metals/miners. Just remember that during that 3 yr period, the S&P 500 rose some 43% while GDX (miner ETF) soared 244%.

And what does a stock market that is on fire mean going forward? Are we due for an overbought sell-off in the near future? No…in fact, the move higher should pick up speed.

We think we’re in about inning 4 of this melt-up run. And as much as we like growth stocks, especially VRA Portfolio growth stocks, we are head over heels in love with precious metals and miners. Ok, I love them a bit more than Tyler…he’s all about the purity of growth stocks…but I’m a life-long believer in physical gold, silver and miners. And they’ve yet to have the bull market they’ve deserved to have. Why is that? Because the banking and fiat currency cartel have kept their prices suppressed.

Great piece on this subject from industry veteran Ted Butler. Not only has the price suppression scheme for gold and silver been uncovered, but the short squeeze that awaits silver will be one for the record books. When you hear people talk about $1000/oz silver, the evidence in this piece is why;

https://silverseek.com/article/cats-out-bag

“Decades of price suppression and manipulation have brought us to the sad state where the sellers can’t allow higher prices because of the large size of their silver short positions. This is the only possible explanation for the absolutely bizarre circumstance of the most physical silver ever being bought in the shortest time without any significant impact on price. If anyone can offer another explanation for how so much silver could be bought with little if any price reaction, please fire away.

Remember, we’re talking about the basic law of supply and demand. When demand suddenly exceeds supply, prices must rise sharply. Period. Silver is a market where 2.5 million ounces are produced and consumed each day, 7 days a week, 365 days a year, year after year. For buyers to suddenly buy 110 million ounces in days and for there not to be a violent price surge is impossible. This is the ultimate proof that silver is manipulated in price.”

And this excellent piece this morning from FT this am on a new commodity super cycle thats building;

Investors Set for Commodities Bull Run Spur Talk of a Supercycle

https://www.ft.com/content/27086ad8-bc84-4e2e-9195-91880fa6916f

We see hard evidence that the bull market of bull markets is building today in precious metals and miners.

Across the board, commodities are up 50% + inside of one year. Oil, as usual, leading the way, but silver is surging higher as well, after putting up 54% gains in 2020.

Just yesterday, copper broke out to new 8 year highs.

Until next time, thanks again for reading…

Kip

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