All of this is just opinion, for your consideration. No one knows exactly what next month or year holds. I want to do my part in sharing my thoughts at this time. The question should always be risk vs reward vs time you have in life to recover from a downturn. Downturns can be years to get back to old highs. (2001-1009 for example)
For interest rates, housing starts, unemployment, gold/bitcoin, and market valuations look at the chart and assess risk/reward yourself. Consult a professional adviser.
Market Direction Indicator
First is an old indicator of the market direction, read more here. Looking at weekly moving averages when the 20 SMA and 50 SMA cross, the market is changing direction. Since 2008, there has been a couple of crosses that have reversed. Even if you sell, you can buy back on reverse and not miss a significant portion of the market rise. This helps remove the emotion from market trading and focus on a market direction indicator that historically has been pretty accurate.
The market has NOT crossed down currently. If you stay in the market, please consider checking this indicator periodically by clicking here and respecting it.
Federal Reserve & The President
The stock market is at an all time high recently, with unemployment at a low. But two major indicators of issues ahead was recently shared with the world.
First, President Trump was calling for the federal reserve to make major interest rate cuts as early as May. I assert the president was informed the market outlook is very weak, and he was positioning politically that a market turn is 100% the fed and 0% political policy. This announcement by the president is what they call in poker a TELL, he is signaling all is not well, are we listening?
The 2016-2019 rally WAS politically caused with cutting taxes to the rich, and enabling international corporations to transfer profits overseas to buy back corporate stock. The president has claimed the market boom was Trump driven. And this is key, for what 'easy buttons' are left for the president to pull for another leg up? And if there is another easy button, why not press it? I cannot think of an easy button, but then again I didn't expect in January 2016 that politicians would trigger all easy buttons left with a rising market.
Second, the Federal Reserve cut rates last week by a quarter of a point! With the market at an all time high, the Fed is easing, why? Again this is a tell, all is not well, are we listening?
This is very dangerous territory, when we mix private (the fed is private banking organization) with politics, historically countries currencies fail. One can hope the structure of the US organizations can resist this political attack.
Interest Rates
Contrary to popular belief, the federal reserve cannot arbitrarily set federal bond interest rates. We live in a world with a wide variety of global investment options. If the Fed raises rates, it can definitely increase purchasing, with a higher rate of return. If the fed lowers rates, US bonds must be purchased to finance rolling forward debt and 1 trillion dollar a year deficit. If these bonds are not purchased, rates organically rise to get buyers. The recent fed cut in some ways is following, not leading when it comes to US Bonds rates. If the market can support a lower rate, it is in part an indicator of higher 'safe play' purchases.
Unemployment Rate
Unemployment rate is at an all time low. Since the fall of 2018, the rate has been influenced by unusual 'seasonal adjustments', I find this troubling. The question is do we expect rates to go down to 3% or up to 5% as next likely level? Generic observation seems like mass layoffs are on the rise. Overall it can't be assessed until later this year with the data compiled.
Housing Starts
Housing starts seems to have peaked a few months back. Chart for your consideration. Housing starts are often a reflection of the health of the private sector.
Hedge Fund Commentary
I follow hedge fund manager John Hussman and Jim Chanos. If you can find a reliable source of latest Jim Chanos thoughts, please post in comments! Mr. Hussman does post his thoughts on his hedge fund web site. Recently he gave thoughts about the market topping in post "They're Running Toward the Fire". Its a good read, I highly recommend it.
Another great article is estimates rate of return of 60 / 30 / 10 of S&P 500 / Treasure Bonds / T-Bills predicted for next 12 years and actual returns. Spoiler: Current outlook is 3%.
Recently Gold has been on the rise, I assert the new highs since 2012 is an indicator of a trend change in this resource. While bitcoin I consider a 'collectible', it is along the same lines as Gold, a limited resource that is purchased as an alternate reserve of wealth. It also is on the rise.
Both of these are 'fear alternate play' indicators.
Bitcoin
Market Charting
Market charting is a questionable methodology of using stock chart analysis to predict future results. While I don't put 100% faith into this arcane art, it can have effect of influencing professional traders to follow the indicators. This can make it self-fulfilling. It also has benefit of zero emotion, just analyze the data. For these reasons, it is worth considerations.
I follow a market chartist called "The Technical Indicator". If this is of interest to you, I highly recommend a subscription. Some of their language in their newsletter is pretty out there, but they do seem to be consistent with chart analysis.
Recently, their indicator has flipped to down for the next year. The 1-2 year indicator has yet to flip down.
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