"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

SUBSCRIBE TO OUR BLOG!

* indicates required
Journal Archive
Twitter: @kherriage

Entries in vertical research advisory (202)

Thursday
Nov032022

VRA Investment Update: J Powell, the Embarrassment. Is The Bear Market Over? R's Are Surging!

Good Thursday morning all. If you were as confused as 99% of Wall Street and the English speaking people of the world were by Fed Chair J Powells presser yesterday, where he reverted to previous form and crushed the stock market, I encourage you to listen to Tylers podcast from yesterday afternoon: https://anchor.fm/podcast-c2cff90/episodes/VRA-Investing-Podcast---Tyler-Herriage---November-02--2022-e1q55gc

No J Powell, you are not Paul Volcker. You are instead an embarrassment to the office that you hold. 

The Fed statement held important clues and once the markets saw this in the Fed’s written statement, a near immediate 400 point rally in the Dow Jones kicked in; “we will take into account the affects of cumulative rate hikes and the lag effects of our inflationary indicators”. That sounded very much like a “pivot” to a data dependent, common sense approach to Fed policy. 

But then the money printer in-chief started talking and to this observer it sounded very much like someone that deliberately wanted to take the air out of the room and indicate that the Fed was going to be anything but data dependent. Powell’s hawkish stance screamed “we don’t care what we break…and we’re just getting started”. 

But know this; I’ve done this too long to believe the Fed about much of anything. They are deceivers, liars and frauds. Ron Paul nailed it 30 years ago….”we must end the Fed”. 

Here’s What The Bank of England Just Said…. 

“If the market's expectations are right (about much higher rates) we are going to have a two-year recession”. The BOE is saying that the market's expectations are wrong. J Powell, are you listening??

Here’s what I expect; just over 1 year ago the Fed told us “inflation was transitory”. They were adamant about it…and they could not have been more wrong. How embarrassing. 

They’re going to be wrong again. That’s my call. And here’s how we’ll know. 

The Fed never leads….they always follow. Always.

And here’s what the Fed will be following; the 10 year yield. As can be seen in this 30 year chart, each time the 10 year has hit its upper trend line it has then reversed lower. Frankly, this chart is even more powerful when you zoom back to 1980, but I doubt that it will matter much. Rates will soon head lower…and the Fed will follow the 10 year yield lower.

To be clear, the Fed’s future interest rate decisions MUST be data-dependent, as even Powell has insisted in the past. Monetary policy is hard to predict merely because the future is so uncertain. The trouble is, Powell seems to forget his uncertainty once he gets in front of a microphone. The truth is, he is more confused than just about anyone in the room. Watch. 

Final point about Powell’s presser; does this guy detest Joe Biden and the Dems or what?! Just 6 days before the midterms the Fed chair destroys the markets and kills what was shaping up to be one-helluva melt up into the midterms, a rally that would have almost certainly helped the left get more votes. I find this very interesting…the Uniparty and elite ruling class typically protects their own.

A Chart That Matters

Wall street insiders (that we respect) are pointing to this chart of the S&P 500, compared to the massive bear market rally of 1962 (I also like this comp because its the year of my birth).
You can see the chart has matched up fairly well this year and if it continues to play out it will mark a further move higher in the SPX to 4500–4600, or an approximate 18% higher from here.

Is The Bear Market Over??

Our forecast remains unchanged…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. When the semis are leading the way higher it pays to be aggressively long stocks.

Portfolio Note: 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%.

And yes…now is the time to be adding to your holdings in physical gold and silver.

Midterm Update: The Betting Sites Are ALWAYS The Most Accurate

PredictIt has R’s with their highest lead yet in the race for the Senate

Just So We Stay on Track and Keep Our Eyes on the Prize (immediately after midterms). Go ‘Merica!
#Nuremberg2

Until next time, thanks again for reading….

Kip

Join us for two free weeks at VRAInsider.com

Please join us each day after the market closes for our Daily VRA Investing Podcast!
Sign up for email alerts @
vrainsider.com/podcast

Also, Find us on Truth Social and Rumble

 

Friday
Oct282022

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

Join us for two free weeks at VRAInsider.com

Please join us each day after the market closes for our Daily VRA Investing Podcast!
Sign up for email alerts @
vrainsider.com/podcast

Also, Find us on Truth Social and Rumble

Thursday
Oct202022

VRA Investment Update: Sentiment & Seasonality Flashing Buy Signals. Q4 Rally, Here We Go.

Good Thursday morning all. After solid back to back days our markets gave a bit of it back yesterday but we remain buyers into what we expect to be a solid move higher into the midterms and year end. Sentiment, seasonality and analytics are combining to make a strong case for a significant bear market rally. And, as Tyler covered on his podcast yesterday (sign up for alerts at vrainsider.com/podcast), the power of the midterm election year cycle is overwhelmingly bullish, featuring a 32% move higher (on avg) from the midterm year lows to 1 year later, with the markets higher 18/18 times (post 1952). 

We may also be seeing an interesting development in the semis (SMH), which closed 1% higher yesterday even as Nasdaq closed lower by .90%. If the semis are going to begin leading higher, you most definitely want to be long this market.

As of yesterday's close, 62 S&P 500 co’s had reported Q3 earnings with 76% beating analyst estimates on earnings per share and 61% beating estimates for revenues. Overall, corporate earnings continue to grow, albeit at a slower pace than in the first two quarters, as balance sheets remain remarkably solid for both consumers and corp America. As always, its not the news that matters as much as the markets reaction to that news. The question we’re pondering now is, “how much of any bad/recessionary news is already baked into the stock markets cake?”

Ed Hyman, Evercores Chief Economist and likely the best on the street for close to 50 years, is out with his strongest language yet for the Fed, saying that they may be “playing with fire” with their aggressive rate hikes and monetary tightening. Of course he’s right….the Fed is always most comfortable when they are breaking things. As a reminder, the Fed hiked rates 17 straight times from 2004–2006, for those that may have forgotten why we had a housing crash and market meltdown that came close to frying the global economy in 2008. Since their creation in 1913 the Fed has caused every boom and bust cycle. It’s what our money printers do best.

We Remain Highly Bullish on Energy Stocks. 

Below we see that XLE has dramatically outperformed oil over the last 4 months, which tells us that oil is about to scream higher (the equites lead the underlying commodity).

We bought ERX (2 x Energy ETF) 3 weeks ago and have current gains of 20%. As you’ll see below, ERX is nearing extreme overbought levels on the VRA Investing System. We would hold ERX here.

 

Small Caps Lead Coming Out of a Slowdown/Recession

Small caps have outperformed large-caps coming out of recessions 6 out of the last 6 times with average outperformance of 14%. We see it happening now (below) in this relative strength chart of IWM (Russell 2000) to S&P 500.

The Trend Line That Matters

This chart of 10 year treasury yields (going back to 1991) shows 4 previous points where this dominant/descending trend line was hit with yields then reversing sharply lower. 

And I’ll make one additional observation about the chart below (and rates). Check out the time frame from 1995–2000…as US stocks had their biggest bull market in history (dotcom)…while 10 year yields consistently traded in the 5% to 7% area. Same with the big bull market “post 9/11/01, pre Financial Crisis” when 10 year yields traded between 4% to >5%. 

As we start trading today, the 10-year yield is 4.15%.

Know this: I am not calling a top in rates. They are in fact acting like they want to go higher. But I am making the observation that “higher yields” (from current levels) have not been the kiss of death for either the stock market or the economy. Quite the contrary, in fact.

 

CDC Panel Votes to Make Covid Posion Jabs Mandatory for Kids

Remember folks, however they try and spin this, once this decision is made most every blue state and several red states will make it mandatory for grade school kids to be force-jabbed. And yes, this will include kids/babies in day care too. IMO, this “red wave” that we’re hoping for in 3 weeks will mean nothing unless R’s stand up “unanimously” and “forcefully” against this decision from the CDC. 

The CDC should be dismantled to the ground. Criminal levels of child abuse cannot be allowed to stand. And we MUST have Nuremberg-like trials for all of the criminals of the plandemic.

Midterms Solidly Favoring R’s. It’s The Economy Stupid!

When the left-leaning CNBC and far-left globalists at Bloomberg come out with pieces on the same day reporting the likelihood of R’s taking both the House and the Senate, you know that Dems are in real trouble.

GOP holds big leads on key economic issues ahead of the November elections

 

Until next time, thanks again for reading….

Kip

Join us for two free weeks at VRAInsider.com

Please join us each day after the market closes for our Daily VRA Investing Podcast!
Sign up for email alerts @
vrainsider.com/podcast

Also, Find us on Truth Social and Rumble

Friday
Sep302022

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

Join us for two free weeks at VRAInsider.com

Please join us each day after the market closes for our Daily VRA Investing Podcast!
Sign up for email alerts @
vrainsider.com/podcast

Also, Find us on Truth Social and Rumble

Thursday
Sep222022

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

Please join us each day after the market closes for our Daily VRA Investing Podcast!
Sign up for email alerts @
vrainsider.com/podcast

Also, Find us on Truth Social and Rumble