Embrace strong pullbacks or live a life Of regret
Don’t be a fool and do the same thing you did last time and end up missing another opportunity, like the previously missed opportunities in your life.
We approach closer and closer to the MOB (mother of all buys) signal. Do not make the mistake of thinking this signal is based on price. It has nothing to do with that. Three of the factors that play a pivotal role are; technical indicators should be trading in the extreme to insanely oversold ranges on both weekly and monthly charts, and sentiment reading should be strange. Strange as in very high bearish readings or unusually low neutral sentiment and the gauge on the anxiety index should be deep into the madness zone. If the Dow trades to the 20,700 ranges within the next four tradings the odds of triggering a MOB signal are above 96%.
Investors are still pouring way too much money into bonds, indicating that they are just as uncertain about the markets as they were when the Dow was crashing back in March and early April. From a contrarian perspective, this is a very bullish long-term development. It’s a missed opportunity for bong investors instead of embracing stocks, they are embracing bonds and will bank mediocre gains at best. This bull market is in the early stages of a massive run, and no market trends up in a straight line. Hence expect pullbacks ranging from mild to wild, but as long as the trend is positive every pullback has to be embraced.
The VIX. has pulled back from a reading of almost 100, something that we have not seen for years to the mid-’30s. The pullback took place too fast, so the ideal set up would call for the VIX. to surge upwards again but put in a lower high. A move to the 65 to 74 ranges would set the perfect bedrock for the Markets to mount their next rally. If the VIX rallies to these ranges don’t let this moment pass you buy, otherwise you will be forced to file under the category of missed opportunity.
Missed Opportunity and the Deflation argument
The deflation argument was dead before the coronavirus; dead in the sense that no one wanted to cover it. Now everyone can’t stop talking about. Welcome to the new world order. An order where what used to make sense no longer does. Creating more money is supposed to push prices higher, yes but you can prevent that by knocking out a few peons. Well peons to the Fed, to us they appear to be big people or big corporations. However, the super trend was against them, to begin with. The Fed threw Lehman brothers under the Bus during the 2008 crisis, and that is what made things a helluva lot worse. They knew it would cause the markets to meltdown, and they just pretended they did not know the effects would be that bad. However, they also knew it would trigger significant changes, and these changes would force more people to take lower-paying jobs as a massive array of former high paying jobs would vanish. In doing so, they kept inflationary forces at bay while running the printing press.
Forget the figures; just look at the inflation rate. In 1980 inflation with manipulated statistics, the Fed puts out was at 13.5%. Since then the money supply has gone ballistic and lo and behold inflation stands at 0.33%. Spooky economics, you say; we say it’s the new world order because it requires one to take a multimodal and multidimensional approach to understand what is going on.
The markets mounted an incredibly strong rally, so in light of that, we are going to adjust the universal trigger. The new universal trigger entry points for the Dow fall in the 20,550 to 21,000 ranges. Positions can be opened in all the pending plays we don’t have a position in. So, we have two trigger points; the first trigger point is for the stock to trade in the suggested ranges. The second trigger is for the Dow to trade in the above-suggested ranges. Market Update May 2, 2020
he same ploy is underway today. In the name of coronavirus, the Fed will employ a demand destruction strategy; destroying demand in what appears to be key sectors, but they know in the long term many of these sectors are dead already. There are too many malls, too many stores, too many restaurants, too many badly run airlines, too many oil companies, too many movie theatres (in fact movie theatres are going to go the way of the dinosaur) and the list goes on and on. With proper technology in place, we only need half, and that technology is already here or close to coming online. The hard money fans and gold bugs will be shocked as to why inflation is not a big issue even when the Fed goes on to create several more trillion dollars. As we stated almost two years ago, we would not be surprised if the US deficit hits 100 trillion dollars before the crowd smells something is amiss. The next sharp pullback/crash should be embraced otherwise one will be forced to file it under the missed opportunity category as has always been the case with the crowd.
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