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

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

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

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

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

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

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

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

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

We like energy a lot here.

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

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

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

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

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

Until next time, thanks again for reading…

Kip

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

Good Thursday morning all. 

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

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

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

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

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

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

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

3rd Quarter GDP Comes in Weak

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

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

It’s Time for Small Caps to Shine

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

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

Trump Media (DWAC)

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

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

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

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

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

Until next time, thanks again for reading…

Kip

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

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

Investor Sentiment Flashing Huge Buy Signals

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

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

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

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

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

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

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

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

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

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

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

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

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: We Recognize This Repeating Pattern Playbook. Investor Sentiment Flashing Buy.

Good Thursday morning all.

It has been a mixed week for our markets as higher interest rates and our leadership tech/growth stocks tend not to be besties. As we are wrapping up the worst 30 day period for the markets but also as we prepare to enter the best 7 months for the markets (October- May, going back some 70 years) where approx 93% of all gains have taken place over the last 70 years..

So what’s going on here? This market weakness has the look and feel of a repeating pattern we’ve gotten to know pretty well over the last 18 months. It’s right out of the big gubmint’s playbook when they’ve attempted to get massive new stimulus approved from the onset of CV insanity. Crack the stock market lower, then miraculously, congress come together and voila, trillions in new stimmy get passed. 

Team Biden…actually in this case its more Team Pelosi and Schemer…are having major issues with the squad. The left can’t get their coalition together on raising the debt ceiling, the $5 trillion + full-on communist budget, and now even the previously approved infrastructure deal appears in doubt. Add it all up and the markets are getting nervous. God forbid the govt shut down. Oh no Mr Bill! Whatever shall we do? 

First, and this is the obvious, the US is not going to default on our debt. The debt ceiling WILL be raised, likely through continuing resolution. As to the $5 trillion + budget? We’ll file this in the “no one really knows” category just yet. They’ll like kick the can down the road. But for our purposes, we see the market turmoil from this drama ending soon. This repeating pattern playback ends with the market going higher. We remain aggressive buyers on pullbacks.

But what’s increasingly captain obvious, obvious, is that Biden has no coattails. And everyone in DC knows it. The right has most all of the (real) power right now.

And consumers feel the shift, under a leaderless country, with consumer confidence falling to a 7 month low.

With thanks to Ryan Detrick, the S&P 500 is about to be up 6 quarters in a row. Two quarters later the markets have never been lower. A full year later the average gain has been 15.5%.
And in none of these cases did we have a fresh $32 trillion in global liquidity “forcing” asset prices higher.

Investor Sentiment

The overwhelming bearish sentiment continues…one of our most important VRA Investing System indicators that continues to flash the “we must be long and strong” signal.

AAII has just 28.1% bulls to 40.7% bears (the highest reading for bears in over a year).

The Fear and Greed Index remains in “Fear” mode, with a reading of 28. Keep backing up the truck.

We remain extremely bullish.

The melt-up to Dow 100K is on. Our mega trends include unprecedented liquidity, surging corp earnings and outliers like the Millennial Generation, which has fallen in love with stocks, has tons of cash to invest, is the largest segment of the US population and is in the process of inheriting $72 trillion. Plus…currency inflation will continue to force stock prices higher.

Until next time, thanks again for reading…

Kip

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VRA Weekly Update: Confirming Capitulation. Significant Lows Look to Be in Place. J Powell and the Future Moves of the Fed.

Good Thursday morning all. Not only was yesterday a big up day across the board, with gains of 1% to 1.5% in each of our broad market indexes (small caps led the way, +1.51%. Importantly we had confirmation from the internals, namely in NYSE up-volume, which came in a big 85.6%. Roughly 3:1 positives everywhere else. After Mondays 90% down volume day in NSYE, which looked to us like a clear sign of capitulation, yesterdays stellar readings were ’significant”. 

I’ll repeat; Monday’s sell-off, which had the Dow -950 at one point, should mark the lows for this cycle move higher (into year end at minimum). Remember, we really didn’t just have a 1 week sell off or capitulation. Most stocks have been declining for months. Through Monday more than 50% of all NYSE stocks had declined by about 15%. And it was worse among small caps, with more than 60% down more than 20% from their March highs. Thats why Mondays capitulation was so important. It represented a true wash-out. And it’s exactly what every great bull market needs in order to begin its push higher into the next levels of the stratosphere. 

Important point to remember: when investor sentiment reaches extreme fear levels (as it did this week) just 2 years into a new bull market thats driven by a) unprecedented global liquidity ($32 trillion) and b) surging corp earnings, as investors we must be prepared to back up the truck and add to our favorite positions. 

J Powell and the Future Moves of the Fed.

If there’s one thing we know about Fed Chair J Powell, the money printing rock star of our financial masters of the universe, it’s that he has a massive tell when it comes to his pressers. When JP starts talking, the markets start falling. It happened again yesterday as the Dow fell from +510 points to a close of +338. This was actually outperformance from JP. Reminds me of one George W Bush over the last 18 months of his presidency. We aggressively shorted the market beginning a couple minutes before Bush was due to give an address. To this day I believe Bush’s speeches made us more money as traders than any single one-off trading strategy over my entire career. Just another example of how horrible W was as a president. And now he’s the darling of the liberal media…of course he is. 

But investors locked on to two specific things that Powell said, and folks, it’s the markets reaction overnight (overseas markets) and in trading this morning (Dow +210) that looks to be another important tell.

1) Tapering of their $120 billion/mo in QE will be announced at the November meeting with it beginning in December and ending in 6 months, a reduction of $15 billion in the taper per month. Here’s the schedule, with thanks to Zero Hedge

2) Half of the voting members of the Fed believe that rate hikes will begin by year end 2022.

One would think that the markets would dislike both of these announcements but that’s not been the case. Why is that? It’s because the markets don’t believe it. 
Take this to the bank folks; once we have our first 10% correction, the Fed will pause any taper. Should we have a 20% correction, the Fed will act to increase QE.

This is our brave new world of financial engineering. Our financial masters of the universe know that this is QE Infinity. 
Take this to the bank too; as rates in the US ultimately head towards zero percent, the Fed will announce they are (officially) buying stocks too. Just like the Bank of Japan. Just like the Peoples Bank of China. 

And for all of this, TINA will continue to apply to US stock markets. This bull market has “forever” to go.

VRA Playbook: Our broad market macro views on the economy, market, bonds, energy, precious metals and cryptos….along with some top buy rec’s for the next year.

BIG PICTURE: We have entered the 3rd term of Obama’s presidency. Get ready for slower growth, lower rates, more QE/stimulus and a melt-up stock market driven by central bank financial engineering.

ONE: Stock market (remember, the stock market is NOT the economy).

We’re in just the second year of a new bull market that will take the Dow Jones to 100,000 +. Three times higher from current prices, in approximately 5 years (by 2027).

This melt up will rival the Dot com melt up and is being driven by two major factors:

a) unprecedented global liquidity of $32 trillion; fiscal (government stimulus) and monetary (central banks)…with much more on the way. TINA (There is no alternative) and FOMO (fear of missing out) will continue to force stock markets higher. Don’t fight the tape, don’t fight the Fed.

b) surging corporate earnings that won’t peak for 5 years (the power of a new economic cycle…they last more than 5 years, on average)

Best ways for a long term, more conservative equity investor to invest: a 50/50 mix of $SPY (S&P 500 ETF, plus dividends) and $IWM (Russell 2000, plus dividends) should produce gains of 30% + per year. More aggressive investors should of course use the VRA Portfolio. And oil/nat gas prices will soar with the insanity of The Great Reset depopulationists climate change.

And remember, cash is trash!

TWO: Bonds

If you’re a true contrarian, you MUST believe that interest rates will continue to plummet. While 99% of PHD economists (most all employed by the Fed) are telling us that rates will rise sharply from here, here’s why they are wrong:

*the majority of PHD economists are NEVER right.

*rates have fallen for 40 years. It’s hard to find a more powerful repeating pattern.

*We are in a new world of financial engineering, run exclusively by central banks. The financial masters of the universe. They cannot stop QE, ever, or the system implodes.

* We believe rates in the US will be negative, likely by 2025, just as they continue to be in Japan and Germany (broadly throughout Europe)

Best way to invest: Use the VRA Portfolio in recognition of TINA. Buy real estate/homes. As rates continue to fall, home values will continue to skyrocket.

THREE: Precious Metals

- We’ve just entered the most bullish seasonal period for gold and silver (now through year end).

- Central banks have resumed buying at record levels

- The publics ownership of gold is right at all time lows (as a percentage of investable assets). As a contrarian, there is no bigger buy signal.

- Record Currency inflation demands that precious metals move higher.

- If/when it all blows up, precious metals will be the only real place to hide.

Best way to invest: physical gold and silver and gold/silver miners

FOUR: Cryptos

Bitcoin is the top play (with Ethereum #2).

Because they will never create more than 21 million BTC, this is a unique “supply and demand 101” story.

Timing wise, BTC is now below its 200 day moving average at $42,000…its important that BTC regain this level.

BTC also just had a “golden cross” where the 50 day moving average crosses over the 200 day moving average. Golden crosses are highly bullish, high probability technical events….to date, not so much.

Regulation is becoming a larger risk to cryptos. The SEC just started targeting them as “securities”. This is a battle that cryptos have been trying to avoid.

Until next time, thanks again for reading…

Kip

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