VRA Investment Update: Bear Market Ending as We Climb a BIG Wall of Worry?

Good Friday morning all. As we’ve covered over the last year, the current bear market…the 3rd in 4 years…actually started in February 2021. That’s when groups such as SPACs, meme stocks, China, biotechnology, etc hit a top and started to decline.

The weakness was contained to small-caps and speculative stocks for a long time but started to spread to the broader market in November 2021. The indexes covered up the brutal action under the surface. The action in mega caps and big tech helped to hide the carnage that was taking place under the surface.

This past week the big-cap technology stocks have all posted weak earnings and their shares have been crushed, with bellwether Amazon joining the crash party last night with losses of more than 20%.

Are we now witnessing the final stage of this bear market? Yes, I believe we are. When the generals get smoked but the broad markets barely notice, that sure looks like it “may” be the action of a market ready to climb a big wall of worry.

And call me a rose-colored Patriot, but I think the red-pilling of America (the world, really) and the soon to be shellacking of a Dem party that has grown to hate America, are highly bullish events.

We’re also entering the best 5 trading days of the year….just as we enter the best month and quarter of the year….just as we enter the best 12 months for investors, period (12 months after midterms)

VRA Market Update

3rd quarter GDP was released Wednesday and came in with growth of 2.6% vs estimates of 2.4% (vs Q2 GDP of -.6%). As we’ve been forecasting for some time, the US economy has not entered a recession. While the signs point to growing risks of a recession in mid-late 2023, its been our view since he left office that the power of the “Trump Economic Miracle” and Trumps stunningly powerful “America First” policies would sustain the US economy for years to come (likely a decade)…regardless of the intentional damage that Team Biden is inflicting on us. 

We’re seeing more proof of the power of Trump's economic policies in Q3 earnings as well. With 263 S&P 500 co’s reporting to date (through Friday morning), 73% of co’s reporting have beaten EPS estimates on 8.75% earnings growth with 63% beating on revenues with growth of 12.17% growth.

As Tyler also got into on his podcast on Wednesday, this weeks trading has been a testament to the bear market rally that is underway and that we expect to have legs into the midterms and into year end. 

This week saw China’s markets crash yet US markets ignored it almost completely. Then we got multiple 8–9% post-earnings meltdowns in the big tech names like Microsoft, Google, Facebook (Meta), and Amazon, yet the Dow Jones and the Russell 2000 have managed to finished with gains. I can tell you with high confidence that this sort of bullish action in the markets sends shivers down the spines of bears. 

As my mentor Ted Parsons taught me some 35 years ago (RIP Ted), “it’s not the news that matters as much as it is the markets reaction to that news”. 

Our forecast…a sharp “bear market rally” move higher (featuring short covering) into the midterms (at minimum) which will likely extend into year end and into Q1 2023. With the combination of deeply bearish sentiment (contrarian buy signal), seasonality (the calendar says “BUY”) and overwhelmingly bullish analytics (post-midterm data and more), this should be a good time to own stocks. 

We believe we have 4 “tells” that point to the near-term lows being in place. Signs that point to a sharp rally into midterms/year end (and into 2023). 

1) Analytics: the most compelling data of my career; “Since 1950, in midterm years, the S&P 500 has had an avg gain of 32% from the midterm lows over the following 12 months (with the markets higher 18 of 18 times). Add that with a divided congress and lame duck Biden, the markets should soon get their wish for gridlock in DC. There’s little more that the markets love than DC gridlock. 

2) Seasonality: November is the best month of the year in the midterm cycle and Q4 is the best quarter in the midterm cycle. 

3) Market Internals and Technical Buy Signals; 10/13 “CPI Capitulation”, featured a bullish engulfing candle for S&P 500 and two breadth thrusts (>90% up volume in both NYSE and Nasdaq…rare) 

4) The semis are leading. Yes, this is a new development, but from the 10/13 lows SMH (semi ETF) is up 13%. When the semis are leading the way higher it pays to be aggressively long stocks.

While we remain in a bear market (and below the 200 day moving averages) we will continue to look for trading opportunities in our selected ETF’s (using the VRA Investing System for timing) while using market weakness to dollar cost average each month into VRA 10-Baggers, our top ranked growth stocks with the potential/promise to produce gains of more than 1000%. Learn more at VRAinsider.com

Until next time, thanks again for reading….

Kip

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VRA Investment Update: Is This The Pivot?

Good Thursday morning all. 

The short-covering move higher to start the week marked the best start to a 4th quarter since 1938. The move may have been fueled by short covering and the extreme oversold (on steroid) conditions that we’ve been pointing out.

As investors remain shell-shocked from the first 3 quarters of the year in the short term all eyes are focused on tomorrow’s jobs report. If its disappointing, the 1600 point move higher in the Dow Jones on Monday/Tuesday will make sense, as the much anticipated Fed pivot might finally be here. I expect that to be the case.

While I’m going to resist the urge to call a top in either the dollar or yields, what is clear that is yesterday's PMI (Purchasing Managers Index) showed a surprising level of weakness in manufacturing and economic growth and sent the equity/debt/currency/commodities markets into sharp reversals. 

I’ve been wrong over the last 3 months about the Fed pivoting, but with the bizarre financial events in the UK over the last week (featuring a near meltdown in pension funds), and with clear/convincing signs that inflation has collapsed and growth has slowed, the Fed may well be blinking here. Once again, kudos to Jeremy Siegel for his “they know nothing” moment about the Fed from his CNBC interview. That was as good as it gets…it may have just helped to start turning the right heads at the Fed. 

Here is Jeremy Siegel’s interview…

https://www.youtube.com/watch?v=9Xnwh_9KV3o

And you know my longstanding view; the markets were always going to rally into the midterms. Team Biden/Uniparty needs all the help they can get. Even moreso after the conservative Prime Minister of Italy was elected and then Bolsonaro’s strong performance in Brazil on Sunday. And yes, it’s all connected. 

Now, we’ve entered the best month and quarter of the year, which is especially the case in midterm election years. Following the meltdown of the first 3 quarters of the year we highly recommend using pullbacks to be long this market (at least until we hit extreme overbought on VRA System).

In our view, not only should the markets rally into the midterms but we also expect that rally to continue into year end. We’re now in the best month and quarter of the year and we have reams of analytics that tell us the 12 months after the midterms are the strongest period on record for US stocks; 18/18 x higher since 1952 with avg gains of 32% in the S&P 500 (from the midterm lows).

The visual below makes it clear; over the last 70 years, in midterm years, Q4 has been a juggernaut for US equities. A 15% move higher into year end sounds about right to me.

Thursday's action was also bullish, the kind of days that bears hate the most, with a more than 400 point reversal higher in the Dow. The move higher was led by…once again…the semis, which put in another important reversal, from losses of 2% at mid-day to a closing gain of 1%. So far in Q4, SMH is up almost 10%. The semis lead…the markets follow. 

The action in 2022 has been so brutal that the vast majority of the “what ifs” investors have considered have been of the ultra bearish variety. 

But what If the “what ifs” are about to pivot as well?

What if?

- The war ends…or stalls

- Rate hikes slow/stop

- We don’t have a recession

- Q4 Earnings don’t disappoint 

With losses of 24% (SPX) to 32% (nasdaq) have the markets already built in a near worst case scenario? 

Because in my view….

- This is not 2008 (not even close)

- Housing, banks, credit, and consumer/corporate balance sheets are in great shape

- An increasingly red-pilled world is great for humanity

- This may be a “great reset” of a different variety, with central banks now in a position to jump right back to a rate-cutting cycle 

- With years to “rinse and repeat”

- And yes, after the midterms, “Biden as Bill Clinton” from 1994 remains my sleeper pick

VRA Bottom Line: I see a world of reasons that the markets could ramp higher. All while a “wall of worry” is perfectly set up to climb.

Until next time, thanks again for reading….

Kip

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Ugly Action, Seeking Capitulation - Quick Hitters

Good Friday morning all. After Wednesday’s 2–3% ramp higher (S&P 500, Nasdaq, R2K) it sure felt like the lows were in as we had a 90% up-volume day in NYSE with 7:1 advance/decline and as S&P 500 put in an outside day (technical buy signal). 

Then, news broke that Apple decided not to increase production levels on their new iPhones, followed by BofA’s downgrade on the stock from buy to a hold rating. Just like that, Apple fell 5% and took tech/semis and the broad markets indexes with it. All of our major indexes finished lower yesterday, and the Semis (SMH) hit new lows for 2022. Seeing the semis hit new lows is not great…Apple news being the culprit. 

We continue to expect a near-term move in the other direction (higher) for US stock markets. Here’s Why:

VRA Quick Hitters:

1.) We learned this week that the AAII 4 week moving avg of bears just hit 55.25%, the highest reading of bears since the financial crisis lows of March 2009 (which marked the bottom). 

The AAII sentiment survey also just put up back to back weeks with more than 60% bears. Thats never happened before in the history of the survey (1985) and which I’ve voted in since 1988. 
Before this week more than 60% bears had happened only 5 times and the avg move higher in S&P 500 was 33% over the next year.

2.) We are about to wrap up the worst month of the year, which beginning on Monday will be followed by the best month of the year (in midterm years) along with the best quarter of the year (Q4).
Monday, being the first day of a new month and new quarter, will also bring with it significant equity inflows as well.

Also, remember this, in just over a month (midterms) we enter an extraordinarily bullish 12 month period, where since WW2 the markets have been higher 100% of the time with an avg gain of >15%.

3.) The US Dollar had an outside day yesterday…what is called a “bearish engulfing candle”. These often result in a reversal move lower. if so, big for stocks and dollar based commodities (gold, silver, oil, copper, etc). Not a guarantee the top is in just yet, but the one-way dollar trade is starting to look very extended IMO.

4) This morning economist Jim Paulsen, another of our favorites, was on Bloomberg, reiterating that the Fed has gone too far and that stocks are a big buy here. His primary points:

- Cash is not the place to be
- Looking for a rip in stocks
- Early cycle stocks. Consumer discretionary & growth/tech. Small cap growth stocks are a great buy. 
- Dollar is too high (good short)
- Really close to a Fed blink. Something is close to breaking. 
- Powell’s Volcker moment after 15 yrs of inflation? 
- US corp and consumer balance sheets are in great shape with cash and liquid with banks squeaky clean. 

5) Of note, our FIFO stocks (first into bear market, first out of bear market) are still holding up above their bear market lows. 

- ARKK is still 8% above the lows. 
- XBI 25% above lows. 
- KWEB 20% above lows. 

FIFO is still holding up. 

Yesterday was ugly but not as ugly as Wednesday was pretty.

6) Lastly, here are the bullish theme’s we have been covering with VRA Members

- We’ve hit extreme oversold on the VRA Investing System on each major US equity index. 

- Put/call ratios hitting “reversal” levels

- BofA global fund managers have more cash than at any point since 2001.

- Investors have $5 trillion in cash in money markets accounts and mutual funds (record)

- The DSI (daily sentiment index) is at “5” for both the S&P 500 and nasdaq. AKA extreme oversold.

- Investors globally are saying “what if”. “What if we have WW3 and nuclear war….what if currencies collapse…what if a global crash takes place…what if the Fed is crashing the system intentionally, etc”. 
 I’m not saying that these risks aren’t real…because they are. What I’m saying is that over my career, when investors get this overwhelmingly bearish and start asking the ‘what if” questions it has meant we are near a significant turning point. 

- And yes, team Biden absolutely wants the stock market moving “higher” into the midterms. 

At this point it’s time for the question to be asked; “Do J Powell and his merry band of money printers at the Fed actually WANT Democrats to be wiped out in the midterms?

As Compelling as Compelling Can Be; Stocks Must Be Owned Headed Into the Midterms

Until next time, thanks again for reading….

Kip

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VRA Investment Update: WAR Tonight. Our Psychotic Fed. Real Fear Leading to Great Buying Opp.

Good Thursday morning all. I’ll be on with our great friend Wayne Allyn Root tonight on the Wayne Root Show at 8:30 PM EST. Listen in on USARadio.com or via Wayne’s site; RootForAmerica.com. 

We’ll be talking about this (bear) market and the soon to be extreme oversold conditions that will lead to the best 12 months of the year for stocks, along with new details about a psychotic Federal Reserve that’s intent on breaking sh*t and getting millions of people fired, and of course politics…with the midterms fast approaching. 

We have a VRA community that listens to, reads and follows WAR closely. And because of that you know that he’s been on the leading edge of the plandemic, the rigged election and now this communist government that’s been installed. No ones been more accurate than Wayne…and he sees things getting worse. Wayne said something to me a couple of weeks ago that stuck with me; “when’s the last time you saw communists willingly leave power?”

Wayne thinks things could get ugly headed into the midterms. Frankly, and as I told him last night, I’d like to be the one interviewing him. With that in mind, Wayne has agreed to join us next week on a VRA Investing VidCast, where Tyler and I will get to do just that, for an extended interview. Look for those details soon. Until then, please join us tonight at 8:30 PM on the “Sir WAR Show”. 

VRA Market Update

If you watched the Fed presser yesterday you saw a preachy J Powell, from his ivory tower, making clear to us peons that it didn’t matter how many millions of Americans lost their jobs, the Fed is intent on raising rates and will continue to do so until the “terminal rate” (final Fed Funds rate) reaches 4.6%, vs the 3.25% Fed funds rate today (following the .75% hike from yesterday). 

Tyler covered the Fed’s forward signaling on his podcast this week, along with the reminder that the inflationary problems we’re facing today are entirely of the Fed’s own creation. If we had an honest media in this country the questions would be so direct and laser-targeted that J Powell wouldn’t have the courage to stand in front of the reporters and try and answer them. #EndTheFed

A stark economic slowdown is nearing, with millions of laid off Americans, and as we listened to Powell it was clear that this is exactly what Powell and his team of “lockstep” Fed members are salivating for. This was the talk of a psychotic person. Especially when we know that a 1% rise in unemployment is 10 x worse than a 1% rise in inflation. And again, there are essentially no dissenting voices among mainstream economists. As my mentor Ted Parsons (RIP Ted) taught me some 35 years ago, “when all of the economists agree on something, don’t walk…but run in the other direction. Aggressively take the other side of that bet.”.

And that’s just what we will be doing here at the VRA. The Fed has made 4 major policy mistakes in the last 6–7 years…this will be number 5. What does the backend of this latest mistake look like? Well, the Fed likes to break stuff. At this point I would not be surprised to see a retest of the 6/17 lows (roughly 4% lower from here). That should get us to “extreme oversold on steroids” on the VRA Investing System, just as we head into the last trading days left in Q3 and in the month of September, routinely the worst month of the year (especially the 2nd half of the month).

Soon the markets will begin preparing for rather enormous fund flows back into equites (new month/quarter) along with the fact that the 4th quarter is the most bullish of the year…even more the case in midterm Q4’s. And as we’ve reminded often in these pages, we’re also approaching the best 12 month period for investors, period (the 12 months following midterm elections).

Real fear is building…and that’s exactly what we want to see (as contrarians). We learned last night that the AAII investor Sentiment Survey percentage of bears just broke 60% for only the 5th time in history. The average return a year later for the S&P 500 has been more than 33%.

VRA Bottom Line: the Fed is not going to melt the markets down into the midterms. In fact, I continue to expect just the opposite. We will be aggressive buyers here soon.

Finally for today, a must-read piece today from Edward Snowden. The facts contained herein will make anyone who considers themselves a decent person, sick to your stomach.

 “America’s Open Wound. The CIA is Not Your Friend”. 

https://edwardsnowden.substack.com/p/americas-open-wound?utm_medium=email

Until next time, thanks again for reading….

Kip

Join us for two free weeks at VRAInsider.com

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VRA Investment Update: The PSYOP Keeping Most Investors Bearish. Buy Signals Confirming Move Higher Into Midterms.

Good Thursday morning all. In my 36 years in the business I’ve never seen this many people bearish on the markets, the economy and our future. Fear levels are extraordinarily high. And it's not that I don’t get it….I get it, believe me. 

I’m the guy that’s gone there about 9/11, the Patriot Act, WMD’s, Iraq/Afghanistan, the housing crash and financial crisis, Obama the communist and health care destroyer, Russia/Russia/Russia, the plandemic, the poison jabs, the rigged election and 1/6 false flag. 3 bear markets in 4 years. 

I’ve been right there with you. And like you, I’ve been right. Over the last 20 years only the conspiracy theorists have been right. That’s because they’ve been conspiracy facts. We lay all of this out in “The Big Bribe”, our new book (available now on bigbribebook.com). 

But as we also lay out in our book, there’s an important distinction between everything laid out above and investing and making money in the markets. Not only is the stock market not the economy, but our imagined realities via PSYOP aren’t the stock market either. Stay with me here folks…its an important point. 

I’ve written about this since the financial crisis. Saw it playing out first hand starting in 2010. There is a coordinated psyop in place designed to demoralize the people of this country, thanks to the likes of Cloward-Piven, and its certainly in place when it comes to investing. A psyop to help insure as many Americans as possible are frazzled, negative, demoralized and that they sell their stocks and stay out of the markets. The bad news is everywhere, even as corporate earnings continue to grow by 8–12% year and as entrepreneurs continue to start amazing new companies, using innovation to make their millions/billions. 

Watch: months from now, when interest rates are markedly lower, the markets are sharply higher and when the buzzword is deflation rather than inflation, investors everywhere will be asking themselves; why did I sell my stocks right at the bottom of the 3rd bear market in 4 years?

I think that’s where we are today. On the cusp on a major, multi-year move higher in the markets. Just as most everyone believes that America's best days are behind us. I reject that. Never bet against America or Americans.
Things just aren’t that bad. Ed Hyman at Evercore sees an economy that is weakening but that is still growing. Ignore the permabears. And why is it that these permabears….who sound so smart…just disappear into nothingness when the markets ramp higher?? 

Take yesterday. Massive move higher in the markets, on the heels of some somewhat decent inflationary news. Nasdaq +2.9%. Semis +4%. 3 month highs in the markets, even as most investors want nothing to do with the market. Sentiment remains painfully bearish. 

But here’s the real attention getter. Yesterdays internals. Wow. NYSE up-volume was 92%. Full on bullish thrust buy signal. NYSE advance/decline was 5:1 positive. 

The TICK (advancing/declining stocks) at the open yesterday hit the levels that we typically see in advance of major moves higher. 

We’ve been aggressively bullish since late May as the VRA Investing System caught the turn (internals, FIFO, semis/tech, leadership, sentiment). And we remain aggressively bullish.

J Powell and his merry band of money printers have a new job. It’s no longer about stopping inflation. That mission is over. The Fed’s job today is to melt the markets up into the midterms, while making the economy look as strong as possible. As I told you over a month ago; “the economic news will miraculously start to get better….as the markets begin to melt-up into the midterms”.

And remember these two market timing points of importance:

1) the single best year to be an investor is the 12 month period following midterm elections. 

2) Going back to 1930 the worst 6 month starts of the year (we just had the worst first half since 1970), then saw an average return for the final 6 months of the year of 23%, with the markets higher 100% of the time.

The lows are in. Pullbacks should continue to be used as buying opportunities.

Quick Hitters

- JP Morgan Traders Found Guilty AGAIN of Massive fraud in Metals Markets. The criminal enterprise of JPM lives on. 

https://www.bloomberg.com/news/articles/2022-08-10/jpmorgan-precious-metals-traders-found-guilty-in-spoofing-trial

- Trump Media (DWAC); if you’ve noticed, like Bitcoin, Trump Media has stopped going down on bad news. The Trump raid in MAL, the extension request for their merger…not great news one would think.
I think DWAC is about to have a major move higher. I hear good news is coming. Frankly, they want Trump to be the nominee. That’s clear. And they want Trump Media and Truth Social to exist. Loudly. Keep buying DWAC. 

Kip on Truth Social:

Until next time, thanks again for reading….

Kip

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