VRA Update: Should We Stay or Should We Go?

As I wrote last week, with less than 3/4 of traders expecting the FED to raise rates on Thursday, the risk in the markets is clearly to the downside. 

It's exactly this kind of scenario that beckons all card carrying contrarians to ask the obvious question; should we act with the majority... those expecting the FED to stand pat...or should we take the flip-side of the majority view, sell everything and then go 100% short stocks? Should we stay or should we go?

As uncomfortable as this makes me, everything that I see tells me that there is little chance that the FED acts to increase rates. Instead, this is the most likely scenario that I see playing out. I'll go out on a limb and assign an 80% probability to the following, when the FED announces that they are NOT raising rates:

1) The FED will announce that they will break protocol and will meet again in October (their next scheduled meeting is in November, as they meet every other month). The "hint" being that they may raise rates in 30 days. The drama continues...just as these self-appointed, financial masters of the universe, prefer it. 

2) In their official statement, the FED will announce their reasons for waiting to move; which will highlight a) recent domestic and international (China) volatility/weakness, and the forward affect on US GDP b) continuing slack with inflation expectations, c) US dollar strength d) ongoing destruction in oil (commodity) prices and resulting job losses, and finally e) US wage growth, which continues to lag.

3) The FED will be lambasted widely for the spectacle of it all...just as they should be. Central banks have taken complete control of every sector of the global economy. They can pretend all they want that their desire is to return to a "normalized" interest rate environment, but it's exactly their previous actions of the past 7 years that make this desire impossible to achieve. 

4) Finally, regardless of what the FED does, we will see a massive "relief rally" following the news. Importantly, should the FED raise rates, this rally will only kick in once the initial fall-out is over. At most, I see a decline back to the 8/24 lows, but quiet likely, not to that extent. 

Should the FED keep rates unchanged, as I expect, the relief rally will begin immediately, with gains of 500 points + in minutes...followed by add-on gains in the next 1-2 days. 

This is as "on the record" as I can be. And no, you will almost certainly not find these kinds of exact and specific predictions elsewhere. If I am wrong, our portfolios will take an immediate hit...there's little doubt about that. Either way, I encourage everyone to keep some powder dry...because the trading opportunities following the FED news should be "special". 

To add credence to my precious FED predictions, there’s a very interesting article in the WSJ this morning about central banks that have increased rates since 2008. More than a dozen central banks have raised rates, only to have to reverse course and then cut them again aggressively…with each now being far below the initial interest rate level where they first raised rates.

But this is the most important point that I could make, regarding the FEDs decision on rates; the Bernake and Yellen FED is the most market & politically driven FED that we have seen...certainly in our lifetimes, if not all time. It's for this reason, above all, that I expect the FED to keep rates unchanged. 

Let's keep some powder dry…gonna be an interesting week. 

 

Kip

vraletter.com

VRA Update: The Perma Bears Are Out AGAIN!

Beginning this week, I have started to see all of those same perma-bears calling for ’The Big One”…the global stock market crash that they have been predicting for years. 

Once again, they will be proven wrong. Here’s how I know this to be the case; VERY FEW experts ever see a "big one" coming…in fact, in my entire career, I have yet to see more than 1-2 people get this kind of prediction right. Let that sink in….because right now, all of those same “little boys that cry wolf” are calling for THE BIG ONE.

 

Folks, crashes are called a crash because they tend to catch almost everyone off-guard. That just ain’t the case right now….

 

As to China, I have just finished reading some incredibly interesting analysis by the IMF (intl. monetary fund) on the recent moves out of China, and the devaluing of their currency. Turns out…and this is pretty big guys and girls…that this is EXACTLY what the IMF and World Bank had been recommending China to actually do.

 

Why? Well, in order for China’s Yuan to be included as a so-called "world's reserve currency", they have been advised that they MUST join in with the rest of the planet, and they must weaken their currency.

 

Having said that, I STILL want to see a selling climax before taking aggressive action on the long side. Ideally, that would mean a Monday morning major sell-off….on big volume. THAT would be “seeing the whites of their eyes”. Also, we just haven’t reached big time oversold levels yet…as crazy as that may seem.

 

Finally, and this is pretty compelling….as of this week, 56% of all S&P 500 stocks are already in correction territory, with more than half of these down over 20% from their recent highs. The current sell-off isn’t actually new….and it may well be entering its final phase soon.

 

I want to act…I see 2-3 really interesting opportunities, but not quite ready to catch a falling knife. This does feel like lower prices need to occur first…the question is, how much lower?

 

Kip

vraletter.com

 

1500% Gains In 18 Months - Here’s What Happens Next

1500% Gains In 18 Months - Here’s What Happens Next 1558% to be exact…this is the “net” gain of all Buy/Sell VRA Recommendations since the beginning of 2014. If another investment advisory has done better, we have yet to find it (every buy/sell documented). Regardless of how busy you may be, take a few minutes to read THIS update. It is that important. Even if you don’t subscribe to the VRA, following my "4 Point Investment Outline" will help to ensure you are on the right track...because I have yet to meet anyone over the last 30 years that wanted to have “less" money.  Bottom line: over the next 1-2 years, it's my strong belief that the points below WILL happen... Everything You Read Next is Based on My 30 Years of Experience, Combined with VRA Trading & Investing System Analysis  ONE: Stocks are going MUCH higher. I have been covering the reasons why for some time, but consider the following; a) Only 35% of the public is invested in stocks...conversely, bull markets end when everyone and their mother's Uber driver is giving out stock tips. b) Even IF interest rates begin to rise, they could actually double from here and stocks would still be cheap...where else is there to invest and get a decent return? c) With 3 major central banks using massive QE programs (Europe, China, Japan), and another 20 countries slashing rates, this flood of fiat currency will continue to find its way into stocks. No...stock prices will not go straight up (they never do) but I expect US markets to ramp up to 30% higher. This is a stock pickers environment...this is MY environment...and I am targeting gains of several thousand percent before a final top is in place (and yes, we will also make a fortune as the markets reverse course). TWO: Are you positioned in the VRA Stock of the Century? I have followed it since the company was formed and know it extremely well. While no one can tell you exactly where its share price is headed, I can tell you that I am highly confident that it's going 1000% higher, minimum...(specifics for VRA Subscribers). THREE: With interest rates in the US finally ready to begin moving higher...yes, for the first time in 9 years...the conditions are becoming perfect for the next major bull market in precious metals. My forecast is that this will be THE bull market for PM's. I may not be the smartest gold bug around (because I'm really not one), but VRA Subscribers have made several thousand percent in PM's and mining stocks since 2003, and we will have have you positioned extremely well as PM's zoom to levels that many cannot fathom today.  FOUR: Buy Europe. Again, the ECB has just gotten underway with their $1.2 trillion in QE, and trust me...it will total $2 trillion + by the time they are done. European stocks are still well off their highs (as opposed to here in the US), but just as with US QE, European stocks have huge amounts of liquidity coming their way.  As the VRA also predicted (to the exact day), the dollar has topped out versus the Euro, and this will add even more leverage to our gains.  FINALLY...as I said earlier...nothing goes straight up, and it will take some work to beat the last 18 mo’s 1500% + in gains, but with the VRA Trading & Investing System and 30 years of unmatched experience, my goals are set even higher. When the markets get too overheated, we will take profits and then use the VIX Index (fear index), put options and ETF's to hedge ourselves, as well as make further profits.  I've said this many times over the last year, but I have to say it again: this is the exact investment environment that the VRA was created for. We have one..."maybe" two years before the market tops out. We will have already booked massive profits...just as the public finally jumps back in with both feet. Until next time, thanks again for reading... Kip PS: for those that are serious about investing, but have been hit hard in the past by Wall Street “experts”, ask us about the  “VRA Financial Recovery Program”, by emailing to: verticalresearch@mindspring.com   Kip Herriage Founder/Publisher, VRA (est. 2003) vraletter.com @kherriage (Twitter)