VRA Update: Miners, Dow Jones And Overbought Levels - What To Do

I WANT TO LOAD UP

I'm talking about precious metals and the miners...of which we already own (Gold/Silver, miners and ETF's). So, I guess I'm saying I want to load up even more.

I'll walk you through my thinking next, but this is also a good time for a "portfolio mindset check".

These are most valuable exercises...for all of us...whether veterans or newbies.

Now, your first thought about the miners might be "yuck...the last 3.5 years have been brutal...next subject, please". Believe me, I get it...but that mindset would also be a mistake...a huge one in my view.

Let's revisit the past...admittedly, this applies more to longer term VRA Subscribers, but everyone can benefit from it. Over the years, VRA Subscribers have made a fortune in the precious metals and mining space. In my second-ever VRA Update, I recommended gold and silver ($350/oz, $5/oz)...back in 2003...with gains of roughly 380%. Not too bad...but it gets MUCH better.

We also bought/sold a large number of mining stocks over the last 12 years, with over 2500% in gains to show for it. We made more than 1350% in Ivanhoe Mines, in two trades (now Turqoise). We used the same approach with Vista Gold (NYSEMKT:VGZ), Newmont Mines (NYSE:NEM) and Silver Standard (NASDAQ:SSRI), etc.

My educated guess is that your default mindset on the miners is less than positive...that's your call...but my job is to position you for major gains. Take a look at this 1 year chart on GDX (mining ETF):

First...yes, GDX is highly overbought...buying the miners at current prices could result in short term buyers remorse. However, it's also clear (to me) that this brutal bear market in the miners is over (which will only be confirmed once we are well above the 200 dma, and headed higher still). Let me also make this point; gold/silver could drop another 25% in price, yet the miners would STILL be cheap...just based on long term historical trading correlations.

I'll have more when the timing is right...but you can bet your bottom dollar that we will be adding to mining positions. Just in case you haven't noticed, the world is awash in debt, far more QE is on the way, and our politicians have little will-power for fiscal constraint. The only true currencies on the planet WILL win out...that's been the case for thousands of years...and as gold/silver begin to ramp higher, the leverage from the miners will result in stunning moves.

(click to enlarge)

MARKET UPDATE

Here's the short term, macro picture on the broad market...in this case, the Dow Jones:

(click to enlarge)

Notice the horizontal blue line that I have drawn above...the Dow has reached significant overhead resistance, which has also come with every indicator that I follow reaching overbought levels. Yes, the worst of this bear market is over...sure looks that way to me...but we are still well below the 200 dma, and new buyers at these levels are taking a much higher risk than they likely have any idea.

Overbought markets can certainly become even more overbought...but again, the reversal risks at these levels are high.

Until next time, thanks again for reading...

Kip

VRA Update: ABYSMAL September Jobs Report - More QE On the Way!

Thank You Bear Market Rally!

Oct 02, 2015

Good Friday morning all. ABYSMAL is me being nice...Septembers job creation figures of just 142,000 new jobs came in a full 60,000 lower than the estimates. In addition, and this is just as big, both July and August job figures were revised lower by a total of 59,000 jobs.

Yes, the "official" rate was left unchanged at 5.1%, but we know that this number is as phony as Caitlyn Jenner's drivers license. NO WAY the FED can raise rates now...the question now becomes, what exactly has Janet Yellen been smoking??

I hate to pat myself on the back...but as I've pointed out a couple of times in the past, how is it that the FED has more than 1000 economists on their payroll...each with PHD's and making well into the 6 figures, when a guy with a bachelors degree (business) from Sam Houston State Univ. is able to make far more accurate economic/interest rate forecasts??

For those that may not know much about SHSU, I can share that we Bearcats are a feisty bunch...we are named after the great General Houston himself, after all...but it's also safe to say that we're not commonly known as the Harvard of the South. Regardless, I have consistently said for years that the FED will be forced to launch far MORE QE going forward...rather than less...and any talk of raising rates is just wishful thinking. Folks, in no time at all, we could be right back in a recession...this is NOT when you raise rates. Maybe its just me, but this seems like a simple concept.

MARKET UPDATE

Dow futures were up close to 100 points before the number, but following the surprise (the market hates surprises) we saw a complete about face, with losses of 200 points + at the open.

The question we have to ask ourselves now is; was that it for the bear market rally? Are we about to drop more than 2000 points (as my article yesterday discussed)?

I do not think so. First, the markets remain highly oversold...this doesn't mean that we cannot drop further from here, but with most investors overtly bearish, the odds are against a massive drop from current levels. But hell yes...I will be watching closely, should we need to exit our new leveraged ETF positions.

But here's what I believe might be more likely; once the markets settle...and everyone realizes that higher rates are now several months away, and that easy money policies are likely here to stay, stocks may well find their footing and begin to move higher.

And has that ever happened today...following the opening losses of 230 points, the market has spiked sharply...with current Dow gains of 70 points. 

Current gains in the VRA Portfolio will soon push us past 2000% in net profits since beginning of 2014. Imagine how well we will do when stocks enter bull market territory again...

Have a great weekend all.

Kip

VRA Update: The PPT: A 30 + Year Lesson I Will Never Forget

(From Sep 29, 2015 VRA Update)

In my most recent updates I've written about two concepts;

1) Bear market rallies are sharp and fast...and we are perfectly set up for one. The market has bottomed and the move higher could be furious.

2) Someone has to be right; either the FED and their ongoing prediction that they must raise rates this year, due to a strong and growing economy. Or, the current bear market will be right...and the action globally has been suggesting anything BUT a growing economic situation.

But there's another issue for us to consider as well, and this one is based on a lesson I've learned well over the more than 30 years I've been following the markets. And folks, this is an issue that you will hear almost NO ONE talk about...certainly not in the mainstream media (MSM). 

The PPT...It's Real, It's Global and it's in the US

The PPT is the "Plunge Protection Team", or the "Invisible Hand", depending on your favorite conspiracy theorist (that would be me, in this case). My first introduction to the PPT came in 1987, following the market crash that almost brought down the investment markets.

In close knit circles in NY, it was almost whispered in dark hallways...but what became clear to me was that some of the brightest minds on Wall St believed absolutely that there was a small group of traders employed by the Federal Reserve, and their job was to ensure that the stock market never reached a level of panic that could snowball into out-of-control, free fall mania.

Today, even while it's never discussed publicly on CNBC, in the WSJ, or other MSM outlets, literally NO ONE that I know/respect doubts the existence of the PPT here in the US. Globally, it's a known fact that mirror image groups in China and Japan exist. In fact, both China/Japan make it very clear that they are active in the equity markets on a regular basis...buying stock for public pension funds and public "entities".

Why do I bring this up today? I've personally seen the PPT at work. Of course, I could never prove this, but when you've done something as long as I've done this, you don't need hard evidence...their fingerprints are all over the weapon, regardless.

Here's why this matters...now. Anyone that is closely following the goings on, both here and globally, know that things are getting VERY close to collapsing. Economies like Brazil and Venezuela are in shambles. China, for the first time since it became the "Chinese Miracle" is teetering on negative growth. Japan, and its negative birth rate and 250% Debt/GDP, could literally have a black swan collapse at any time. Here in the US, junk bond prices are near free fall...led by energy co's that appear to have no way of refinancing their mountains of debt.

Then, there are the geopolitical events of our time. Millions migrating to Europe and elsewhere. The Middle East reaching epic levels of strife. ISIS threatening the world with nuclear terrorism. Falling oil prices have created an historic level of financial uncertainty in countries like Russia, Saudi Arabia, and the previously mentioned Brazil and Venezuela. I could go on and on...

Finally, anyone even mildly paying attention has to have noticed the absolute collapse in commodity prices...sending the clearest of all signals that the global economy is in very real trouble.

Yet, The FED Continues to Say All is Fine.. and That They MUST Raise Rates

Here's my thinking. Again, someone must be right. I am monitoring this very closely, but in the short term, I wouldn't at all be surprised to see a fast and sharp bear market rally higher. Then, in light of the worlds financial nightmare, don't be surprised to see the PPT do their thing...buying stocks on any serious pullback and working their butts off to bring global markets/economies back from the brink.

It was important that I send this to you today. I remain bearish on stocks longer term...because I am bearish on the worlds economic picture. Having said that, stock prices don't always match the economic realities...at least in the short term. My job is to make sure we are positioned correctly, so that we can continue to beat Mr. Market. 

When will I become TRULY concerned about the market collapsing? When gold catches a serious bid, that will my first major clue. Gold has always been the best market insurance, and no doubt, it will going forward as well. In addition, should junk bond prices continue to fall, that's a tell-tale sign of real concern (you can follow this by watching junk bond ETF, symbol JNK).

Until then, I continue to watch for signs of the PPT...once they decide that stocks have bottomed, we have an opportunity to make a fortune...on the upside.

Until next time, thanks again for reading...stay frosty.

Kip

Must Read For Anyone That Loves America

I rarely re-print anyone's work in whole cloth, but in my view, literally every American should read this. Excellent work WAR...you're speaking exactly to the angst in America. And yes, Trump should hire you as his only PR guy and speechwriter. Just one man's views... Kip This Should be Trump's Answer When Asked "Is Obama a Muslim?"

By Wayne Allyn Root  Donald Trump is now being asked "Is Obama a Muslim?" I have a few answers for him. First, why does it matter? Obama is destroying America, American exceptionalism, middle class jobs, and America's respect and standing all over the world.  Whether he's a Muslim or Christian is meaningless. The real question is "How Do We Make America Great Again?" How do we pay off $18 trillion in debt before it implodes the US economy? How do we create an economy offering something besides low-wage, part-time jobs? How do we save the middle class from Obamacare's doubling and tripling of health insurance premiums? How do we save the world from Muslim radicals? Whether Obama is a Muslim or Christian won't solve any of the disasters he has so deftly put into motion. Secondly, although Obama claims to be a Christian, it's certainly not dumb or ignorant to wonder if he's telling the truth. After all, he has a history of lying with impunity about so many things.   He looked the American people in the eye and lied when he swore "If you like your healthcare plan, you can keep your plan. If you like your doctor you can keep your doctor." At the moment Obama made that promise he was lying. Internal White House documents reported that 93 million Americans would lose their plans. And, he promised Obamacare would reduce the cost of health insurance premiums. Wrong. And, he promised Obamacare would reduce the deficit. Wrong. The CBO has walked that line back. And, he promised "Obamacare will create 4 million jobs." Off by 6.5 million jobs in the wrong direction.  He lied about all of it. Then there were his lies about Benghazi...or do you still think it was a spontaneous uprising based on a movie no one ever saw? The facts prove it was known to Obama as a terrorist attack at the moment that he announced it as a protest based on a movie offensive to Islam. Obama lied about the IRS scandal. It's not small...it wasn't a mistake...it wasn't based in one office in Cincinnati. If you believe either Obama or one of his political operatives wasn't giving the orders to persecute conservative groups and critics (like me), I have a bridge to sell you in Brooklyn. Obama called Bush "unpatriotic" for adding $4 trillion to the national debt and promised to cut the debt in half during his first term. This was such an audacious lie that once in office Obama never mentioned it again and instead added triple the debt of Bush ($12 trillion) and more debt than all the Presidents in US history COMBINED by the time he leaves office. Third, Christianity includes a broad range of religious beliefs and practices. Obama chose to attend a church in Chicago where he followed, befriended, and looked to its minister, Jeremiah Wright, as a spiritual advisor. This is the same Jeremiah Wright who preached hatred for America, white people, Jews and Israel... and screamed "God damn America" to his congregation.  Most American's would call such a church led by someone like Jeremiah Wright a cult, and his followers (as a best case scenario) weird, bizarre, radical, America-hating Christians. Fourth, my blue-collar butcher father had great common sense. He always said "Actions speak louder than words." Let's look at just a few of Obama's actions: There is a worldwide war on Christians. Christians are being persecuted and murdered. Not only does Obama say and do nothing, he has taken numerous actions (the Iranian Nuclear Deal being the most obvious), that directly put Christians (as well as Jews) in more danger. Strange behavior for an American president, whether Christian or not. Why does Obama refuse to use the words "Muslim" and "terrorist" in the same sentence?    He refuses to even admit that ISIS is a Muslim group even though their name stands for "Islamic State."  Obama has quietly imported over 250,000 Muslim immigrants into America per year during his presidency. How many are terrorists? How many want to live under Shariah law? How many are on welfare, thereby overwhelming our system? Obama claims we're winning the war against ISIS, when the facts show we are losing.  He appears to be purposely doing nothing and buying ISIS valuable time to grow stronger. Soon they will be impossible to stop. One Muslim boy was offended by his teachers and Obama immediately invited him to the White House.  Has any child of a police officer murdered in the line of duty, or the child of any of the U.S. soldiers murdered by a Muslim at Ft Hood ever been invited to the White House? When American heroes were shot by a Muslim terrorist in Tennessee, why did Obama refuse for almost a week to lower the White House flag to half staff? With Iran, Obama agreed to the single most pathetic and dangerous treaty in American history...a treaty that lets a terrorist state monitor itself. A treaty that gives a terrorist state a massive $150 billion reward that will be used to support Islamic terrorism all over the world...and kill Americans. A treaty filled with secret agreements Obama won't even show US Senators. A treaty that left behind four US prisoners.  He then re-wrote the rules of the Constitution that require the support of 2/3rds of Congress to ratify any treaty. Even those Americans who are unwilling to admit they were wrong with their votes in 2008 and 2012, and want to keep their heads buried in the sand, must admit that this is bizarre behavior for an American President, even one who is a member of a bizarre, radical Christian cult. So...Donald Trump's answer should be... With friends like Obama, Christians don't need enemies.

VRA Alert: Market Reversal Likely - Ugly Technicals, Pullback Coming

Good Friday morning all. The FED's news came in with a bang and went out with a whimper...now it's time for a correction from the near 1300 point move higher in the Dow since 8/24.

Important Point: I am not looking for a retest move to those 8/24 lows. However, I would not be surprised to see the market give up half of that amount.

In addition to continuing uncertainty about the FED, and their moves going forward, the market looks to be facing several new risks, directly ahead.

1) we are STILL in the risk-filled September/October time frame...fireworks are common, each year.

2) With Congress about to come back into session, the likelihood of something stupid coming out of DC is high, with talk of a government shutdown very real...again.

3) If you've been following the news out of Syria and the Middle East, then you know that the US has boots on the ground in Syria. And, Russia has taken over a Syrian airport and sources indicate that they have moved attack helicopters and forces, essentially staging a forward base. Should Russia attempt any move similar to their actions in Ukraine, this could very quickly devolve into military escalation.

Finally, consider the S&P 500 chart below. In addition to the one that I sent yesterday, this one breaks down an ascending wedge that has formed...these are bearish technical formations, and when combined with the 4 technical points from yesterdays chart, not to mention the fact that we remain well under the 200 day moving average, downside risk is upon us...

Here's the chart...

Until next time, make it a great Friday...

Kip