MUST watch videos

I watch quite a few videos, George Gammon does a great job of breaking down financial forces and keeps it entertaining.   I recommend watching all the videos he has on this list here:  

This video explains the situation America is in, it should start at 18:00.  IF it doesn't skip to that time.

This video does an EXCELLENT view of the forward next 3-10 years.  I don't agree with all conclusions for market valuation targets, as people will react.

The Central Banks will try to capitalize on the crypto revolution and put out their own.  Bitcoin valuations will take a massive hit, but from the ashes I think Bitcoin as a value store will prevail.

Market Cracking on target

 Finally, FINALLY the markets are going to revert back to true value.  As I posted in December "Resuming the March decline Ahead" on December 2nd, I gave at most 3 months until the last bull blowoff ends when I emailed friends.  We are close to the 3 month mark, and the downturn has finally started.

Over the last year we have kept the bull running, but I FINALLY think the top is in for a while, potentially years.  Why? Because as I posted in "Resuming the March Decline Ahead"  President Trump pressed every last easy button  to get "the worlds strongest economy" in January 2020 with a 1 trillion a year deficit.   There is no easy road ahead, which will not play well with stocks.

The bond market is losing control, now the FED and the US government has to convince the world we won't continue the reckless finance.   Its going to be a hard cell.

How do I know I am wrong? Its simple, if the S&P 500 closes a mere 4% higher then I am wrong.  We need a closing print above 3,951.  If I send this to you, I recommend you dump it all, and on a closing print for a solid week (to avoid a fake new bull), and buy back.  If not cash is best.  Since bonds rates have gone up, you can buy bonds ASAP and hold watching your bonds rise in value as the bond market reverses.

So how far does this market fall?  It of course, like everything in life depends on the actions of countries and institutions.  However using history as a guide, and all easy buttons pressed,  I think a 50% cut is in our future in the years ahead before a final bottom.  Some of the Hedge fund manager I respect target as much as 80%.  Although this should happen, I don't think it will.  The governments and the FED will do anything to stop that from happening.

Given what I said above, calculate 33% loss as the target.  Why? As I posted on January 25th "I am tapping out", the leverage using loans to buy equities is at materially higher all time highs.  Quite a bit of this leverage is being used by Millennials who have not experienced a bear market.   Many will get squeezed out with margin calls with forced losses, and this will cause a cascade problem.

I am not convinced another 2008 crash is in the cards, but I do think a trend change of new lower lowers in the year ahead is here.  One of the reasons NOT for a 2008 crash is the new free money the Democrats will give to people.  Many will gamble in the market, and the best way to take that money is to have a long drawn out loss.

I think there will be many reversals in the months ahead, as most will think we are going to resume a bull.

So for short term trading, you can buy into the markets at S&P 500 of:

3700 - around the previous dip level.

3600 - around first Fibonacci level, 
3300 - strong resistance due to past market action.

After that its pretty murky, next major level is March 2020 level of 2200.  I'd expect a minimum bottom around 1900.  We would need a capitulation moment, and going lower than March 2020 would do it.

What about Bitcoin? Unfortunately I think it cannot escape the deflationary downturn.  The exception could be once again , the Millennials.  At some point, they will give up on the market (SPX 22000 break?) and just buy Bitcoin in disgust for a buy and hold.

Since Bitcoin is a pure wildcard, its harder to say how low it may go.  I am looking for a low of 22,000, maybe piercing 20,000 in a day.  Thats my level to rebuy.

What tells me I am wrong? A new bitcoin high for more than 1 full day.  I will start to get optimistic at Bitcoin over a day at 53K.

When this market route ends, I will be looking to buy into India, Bitcoin, some gold miners, global index funds, emerging market funds, and a little bit of a US ETF (TBD which).

The markets may resume the rally, but we are close to a terminating end with the borrowing and debt.

Good luck!

If you want to learn more, learn about the bond market, although its not in favor, it drives everything in USA as a debtor nation.  Here is a good video:

https://youtu.be/fNwd-UuE3Dg

BitCoin Charts

 Chart of last 6 months, notice once Bitcoin broke the first red trend line on Feb 22nd, it went down quickly.

Zooming in since Jan 22nd, when I went suddenly bearish in post "I am tapping out", we can see over night it violated 46k briefly over night. (orange into green area)  we also broke slightly lower than the Feb 23rd low.  If we go through the 45K then next target is 42k-38K for support.  If we violate 38k, then we can return to 32K, from Jan 22nd.

A material print above 53K starts to turn me bullish, and a new high is obviously bullish.

When investing, think, when can the big money make more money from the small guy?  When the small guy is piled up onto the same side of a trade.

Dont get trapped, but also if we bottom, also get brave.  My target is 26-22K, but at 29K I may start to add or if we go above 53K.   The stock market is weak, and I expect to go much lower, all assets usually get pulled with it.

NASDAQ at a critical level

 I am very unsure if the top is in, once democrats give free money to 'everyone', my concern is that free money makes it way to gambling in the market.

With that said, it could also be the good news was built in, so the markets will fall as the 'free money' enters, meaning, they catch the downside. 

In any event, today the NASDAQ is at a critical level, on a market CLOSING basis.  Breaking intra-day doesnt count.

The support line below dates back to Biden getting elected.

Downside of a market pullback is 10-30% before a counter rally ensues.  We could very well bounce today and kick this to a future retest.

Parabolic blow off?

 It looks like we may be entering into a historic parabolic blowoff.  The stock market indexes made new highs, and the futures look promising for more advancement.

Therefore it is likely we will continue to see various parabolic gains on a variety of fronts.

I am going to put my $ into these items and yes, I am going nervously bullish.

But the charts don't lie, we are going up, until it doesn't.

if DJI breaks below 30,000 or SPX breaks below 3890 on a closing basis, that raises alarms that all bets are off.

The overall market is not yet in solid 100% bull mode, but its pretty close to it.

Areas I'll deploy in are:

GBTC - I have a bit already, not sure if I'll add from here.

ETHE - Ethereum I won't go in as heavy as bitcoin, it promises higher % return in the short term.

AGC (2x etf at 52) or SLV (at 25) - Silver buying continues at a record pace, inventories are expected to be exhausted soon.  if there is continued buying, the silver shorts are notorious, and we may have another GameStop situation here.

Silver is at 30, and 45 is the all time high, i have to believe a 50% gain is in the future.

MJ - the sector is hot, individual stocks will do better, but I can't afford to get cut in half overnight.

If I want to go short, the ETF of choice for me is DOG, simply because the loss over time is much lower than other options.

I am not buying more GDX/GDXJ, GOLD, but not going to zero either,   Bitcoin is the new gold, I am only doing silver due to the heavy purchasing.

I am going to minimize picking individual stocks, simply because when this cracks, a random stock could get cut in half over night.

The ETF's will have a milder hit.

If this parabolic blow off gains steam this all ends very badly, but its all a game of chicken now.

Good luck!!

Bitcoin and the Stock Market

I been saying for a bit, the top is around end of January since my post Dec 2nd 'Resuming the March Decline ahead'. 

 Quote ", I expect between now and February the market to decline materially from the high (unlikely the day I am writing this is the high, but who knows!)  The setup for next year is not good.  The market will need to lose 40-60% of its valuation to be a good buy once again, and will likely take years to play out and fully recover. (a decade? 30 years like Japan?) 

This is excluding the print our way out option as I expect Republicans to enforce fiscal discipline much more than they did with in 2016-2020 during 'good times'.  With a crippled economy they will double down the pain in hopes of winning elections.  The easy money train will end in January, unless Democrats takes the senate in Georgia."

So we have a Democratic leadership, free money for everyone.  As long as the free money flows,  I do think the market downturn will NOT be a decade.  It maybe as quick as a few weeks to a year.  Free money to the people will flow, heavily, to gambling, ala Gamestop style or the market in general.  It will also flow heavily to Bitcoin.

That doesn't mean we wont see a punch in the face, as I stated in "Preparing for a GBTC punch in the face" on January 7th.  GBTC hit 48 on January 8th and hasn't come close to that since.

I am hoping that GBTC hits 22, if it does, I may allocate as much as 50% to GBTC.   The other half will be divided 25% Gold Miners and 25% INDA.   India doesn't have any Fed debt trap, and they have 1.2 billion people.  I think looking ahead this will be the decade of India.

So the week ahead will validate there is a downturn, of weeks or a year (I am not THAT good to know exactly how long!).  But once we bottom, I really do think the market will never look back.  We will see inflation go right to the market, and it will be a rocket that never stops.  But that depends on US pumping free money AND the rest of the world doing things like it. 

If the rest of the world doesn't enter the debt race to keep up with the USA, we will have constraints.  Specifically, the USD will be in danger of losing credibility in the world with new lows in value.   The USD dropped 10% last year and was solely responsible for the rally.  Not Trump, not a real comeback, just free money that devalued the USD.  To learn more see my post January 2nd 'waiting for a new market high".  

The USD bottomed January the 6th, the same time I called Bitcoin top.   This is VERY interesting,  or coincidence, its something to watch for ahead.  And the USD jumped Wednesday , the day of the market downturn, again coincidence? I don't think so.

Lastly, we have a new problem in America, first was S&L debt (90's) , then housing market debt (2008), now stock margin debt.  Each time we blow a debt bubble it must unwind once we reach peak debt.  The question really is was last week peak margin debt? Whenever it is, that is the true top.  And the unwind will be ugly.  

Check out "I am tapping out" from Jan 25th to learn more about how extreme margin debt is.

Everything I posted is just educated guesses, so we will see in the weeks ahead if this is a downturn, and how long and how deep.  At some point Trillions more will be released and we should see markets fly until the USD collapses or we show restraint.   Hence Bitcoin, Gold, and India will be my next multi-year play.

I am tapping out

 The market may keep soaring, but it can do it without me.  I tapped out 1/25/21.  I am net short the market now.  Margin is the ability for a trader/investor to buy more stock than the money they own.  Its a great multiplier for profits going your way, and a terrible multiplier for markets going against you.

I have one picture below, full article by clicking here:

The Pending Market Crash up

 The US has become delusional on monetary policy, and there will be consequences.
We now have a political environment of infinite money, and a new Treasury Secretary Janet Yellen formerly Federal Reserve Bank.    What is happening in the last year is a new union between the US Treasury and The Federal Reserve Bank.  The government prints infinite money, and the Fed buys it to artificially suppress interest rates.  Back in 2009 I called it the bond wall, but since then the government figured a way out of the problem I called out, just have the Fed give itself money and buy the bonds!

With this trick firmly in hand, we have also had the Fed buy assets from banks, resulting in the Fed owning 1/3rd of all mortgages!  Next up is market indexes and corporate debt.  All of this results in a market infinitely moving up with no downside risk.  To solidify this reality we will need a market crack to motivate a bazooka larger than 2020 to be fired to ensure a market rocket.

The question is, do we have conditions for the market rocket now, or must the market crack first to release a new volley.  Only time will tell.

In any event, my obsession with crypto currencies, foreign investments (INDA), and gold miners is in preparation for this future event.

I encourage you to watch these videos to understand in detail my concern.  If you disagree with the conclusion, I urge you to stop reading or following my stock chatter, for my entire perspective is skewed by this view.

Charts for Bitcoin, Ethereum, SPX500, Nasdaq, IBB, Inda, GDX, Gold, and SPX500

Today we have post of charts!  I created a video with a summary of this post , watch here.

I have a bunch of charts below, all with my own view, I am not a professional trader or financial advisor.
This is just a way to share what I am looking at with those who ask me 'what are you looking at'?

Bitcoin / GTBC - Its the new digital gold, to learn more about excitement in crypto read article on Defi .  I want to buy and sell GBTC based on bitcoin action, and also to sell GBTC when the premium is high and buy when the premium is negative or very low.

S&P 500 / Nasdaq - Stock market indexes that represent USA stocks and technology.
IBB - Index for Biotech, a growth sector in the decade ahead.
INDA - I am a huge fan of India growth in the 20 years ahead, perfect for my retirement account.
           - It is also a play outside of USD valuation.

Gold/GDX - Gold and gold miners, I am bullish only due to the money printing in 2020, Europe changing gold reserve requirements for European banks, plus India will be buying more gold.

updated Ethereum 1/24/21

Asset                           SMA reading                Level to watch                              4 year reading

Bitcoin                         negative                       Stop loss 29K, buy 35k+               very positive
Ethereum                     positive                    Stop loss 1280,                                negative (for value)
S&P500 / Nasdaq        Positive                        SPX stop loss 3150                        negative 20%+
IBB                              Positive                        Stop-loss at 129                               neutral
INDA                            positive                        Stop loss at 36                                very positive
Gold (barrick)              low negative                  Stop loss at 21                                positive, 40+
GDX                            low negative                  Stop loss at 33                                positive, 80+ 

Bitcoin

Bitcoin over the 4 years ahead I believe will hit 100K, and may hit up to 1 million a coin in the decade ahead.  However, my opinion isn't a certainty, but in my head its likely.  Perspectives can change with new information.  Bitcoin this past week  had news of a 'flaw' called double spend.  it was not true.  Janet Yellen made comments about regulating bitcoin.  this is actually a plus providing the US Government doesn't view bitcoin as a threat to itself.  Better regulation equals higher trust, equals higher investment.  

Since it is a great long term buy, the first area is short-term view for direction.  

Bitcoin punching below 28974 is of a concern, next levels of support are 26,000 and 21,000.

We need bitcoin to go above 35000 to get optimistic, and above 40k to aim for moving to new highs.

For this reason, I put sell orders for most of my bitcoin in at 34500, if I had did this charting yesterday I'd probably had my sell in at 33k.  This chart does not look good, I may sell my GBTC on Monday and wait for Bitcoin to have the 24/48 hour SMA cross in a positive trend before buying again.

Examples of buy/sell if using 24/48 hour SMA, I want to start using it for buying GBTC.
I'll be late in, and late out, but the trades are favorable.

Ethereum

Why?   Ethereum is the basis for all the DeFi innovation that got me into crypto in 2020, to read more, click here.   I am not convinced Ethereum will go to 10K or higher.  Its purpose isn't a value store, but to enable financial automation.  I believe the destiny of Ethereum in some future revision to sell an Ethereum token for a price, when the contract is executed, the coin is burned.  This will enable users to pay upfront for 'gas cost' at a known price.  It is the ONLY way to enable Ethereum to take over global finance.  In the near term, the attention to Ethereum is causing price variance.

One opensource effort to fix this 'gas cost' can be found here.  To see how pervasive this problem is, check out this open insurance project switching to xDai.  This is unsustainable, and therefore I am not a believer in Ethereum as a value proposition over the 5 year horizon.  Ethereum is controlled by a non-profit trying to maximize its utility value, therefore high Ethereum prices and unpredictable gas costs are not wanted by those who control it.  There is no limit to Ethereum coins, unlike bitcoin.  They could issue 5x more coins per month starting tomorrow if they wanted.

Now, to the charts! Below is a pulled back view of a Fibonacci fan since late 2020, and then a close up of recent price action.

Summary:  When the 48 hour SMA crosses above the 24 hour SMA, Ethereum is a buy and hold until it flips.  It has been a very good indicator. As of this chart, it is still in a down trend.  (1/23 @10 am est)

Crossing above 1320 indicates a target of 1500 for Ethereum.   Crossing below 1080 will likely bring a target of 880.   Right now the key line is about its current value , ~1200.  It need to push up to  have the 48/24 hour SMA cross or risk another downturn to test 1080. My gut says more pain before it gets better. I put a stop loss in at 1210-1200 to sell 5 of my 7 Ethereum.  Two Ethereum is at a sell limit of 1490. 

Update 1/24/21

S&P 500

I use the S&P 500 because it better represents a wide array of stocks, not just the top 30 like the DOW.

We are in an upswing that started in November, and it remains intact.  The last few downturns have been short and 5-10 %.  The downturn in Feb was more extreme.

Until the indicator crosses, the market is smooth sailing ahead.  I am concerned with the new administration actual real facts must be stated and 'hard choices' articulated to clean up the economic disaster of the last 4 years.

Critical levels: 

Below 3200-3100 range is bad, next stops are 2700 and 2200.

Outlook: Mixed leaning negative.

Upside is infinite , however using historic measures for the market, the ROI should be -2% over the next 10 years.  I expect the new Treasury Secretary, Janet Yellin, who headed the Federal Reserve Bank under Obama, is going to mix things up a bit.  She is a strong proponent of helping the bottom 90%, and she must realize the trillions of free money to the top 1% has exasperated the financial divide.  I expect instead of advocating trillions more to the top, she will advocate 'free money' to the people via government handouts and work in concert with the Fed to minimize the negative distortions.  The question is, were will the free money flow to (aside from basic living costs)?  It maybe the stock market, cryptos, people actually paying down their debt, or a mix of all of these things.   If the top 1% doesn't get their free handout, we will see if the market suffers.

Just to put the S&P 500 into historical perspective.

NASDAQ

I decided to add the NASDAQ index since US based economic growth maybe better represented by this index than S&P 500, since it is comprised of newer technology based companies.

What an explosion since 2016!  View for NASDAQ is similar to S&P 500, except there are core companies that are very well positioned for growth ahead.  I would like to think the downside is a lower risk.

Critical Levels

10900, 6880-6000,  then 4185.  At this point 4185 would be an economic destruction, so I have to even list it.  But it is the high of the 2000 bubble and now its a floor.

To bring context to the chart above, below is NASDAQ movement since 2000.

IBB

Biotech has been huge over the last decade and it should continue to extend as new processes continue to improve to develop better products.   Right now the IBB ETF is positive, with levels to watch are 129 with good support between 85-96.  

INDA

I am a huge fan of the prospects of India.  They are the worlds largest democracy, with a population 4 times larger than America.  It is also a good play to diversify outside of USA and produces income. (unlike gold/Bitcoin).  

Stop loss levels are 36, 32, and 24.

GOLD - Barrick Gold

I am tracking Barrick gold separate from GDX simply because it is a company that has been getting positive press.  Warren Buffet who famously never buys gold miners, recently bought their shares.

This is at a good spot, not great for a buy.  Its at 23.4, and we have a stop loss level at 21.80, with additional levels at 20 then 15.  On this chart I added stochastics, and indicator for overbought or oversold.  GOLD is in oversold territory.

GDX

GDX is an ETF of gold miners.  The reasons why I follow gold miners is before Bitcoin became the new gold, gold has been an a way to hedge against financial uncertainty, fiat currency challenges, and countries like India and China as they get wealthier, they historically buy more gold.

Critical levels

GDX is a buy right now, with a stop at 33, and a major stop at 26.  The stochastics are favorable for more upside.  The upside in 2021 is about 50, with an upside by 2024 of 90-100.

.

Bitcoin patience vs greed

 Buying GBTC around 15-20 and selling most of it at about 44 was the best trade in the last year.  

It is very hard to sell when everything is going your way, it looks like the rocket will never end.   In this case most of my funds was in GBTC.   The tell that drove me to sell was the very high premium GBTC was trading at vs the underlying fund value.    On January 6th the premium was 33%, I figured the premium would come out which would result in a lower GBTC price.   But GBTC kept going, Thursday trading at 24%, culminating Friday at 17% with GBTC hitting $48 a share.

There was a market euphoria that hit both Bitcoin and GBTC.  Honestly when I looked at GBTC I thought every sell was a mistake.  But at the end of Friday Jan 8th I sold more.

To see the premium you can go-to Grayscale web site to view the data.  I found another site below.

https://ycharts.com/companies/GBTC/discount_or_premium_to_nav

 Bitcoin and GBTC are starting the capitulation process. My hope is to buy GBTC  26-33 range.  I believe things will ramp up once democrats give more free money to people.  The extra money will go to bitcoin and certain stocks as people try to make a quick buck.

As of Thursday nite, the 21st,

I am 75% back into btc and eth coins, and looking to get 75% into GBTC Friday, especially if it's a gap down open.

Good luck!

I

Went HEAVY short the market

One of the chart people I pay for issued an unusual recommendation, short the market index.  I have previously wrote I expect the market top around the 20th through 28th, a Bradley turn date.

Because I was already predisposition to short the market around this time, I went in a little heavy short.  Purchased SDOW and bought some March dated puts, and sold a call dated pretty far out in the market.

I am watching Bitcoin tonight to break down lower or higher out of a trading channel it has been in.

I am extremely light bitcoin ATM, with about 1/5th the bitcoin I had a couple of weeks ago.

To watch the bitcoin channel, click here:

UPDATE:

If the DOW does start to go lower, the low should be above 25K, there is a very good chance we can even go lower.

Watching Bitcoin

 I am watching Bitcoin to send a signal of a new lower low, or moving to next level of highs.

The range I am watching is depicted below.  Any new high would force my hand to buy back into GBTC.  I am waiting to see what direction bitcoin chooses.  My hope is to buy back into GBTC at 26-33 range.

If/when the stock market does to move lower, I do expect Bitcoin to follow.

When to buy back into Bitcoin

 On Thursday I wrote post Preparing for a GBTC punch .  Looking at the price of Bitcoin Sunday, I expect the punch to arrive Monday.  We shall see!

Last week I sold a little less than 60% of all my GBTC by Friday.  I did actually sell more into Friday's close, not liking the price action.  I also sold BLOK and some Bitcoin miners I repurchased Thursday.

So the next question is, is it over for bitcoin? The high is about 43K for 2021?

Hardly!  I expect this downswing to get plenty of public news.  Friends who know you had Bitcoin say something like "how are you doing?".   But fear not! I think there is more Bitcoin upside til January 28th.  Why then? In the stock market that day is a Bradley turn date which indicates +/- a few days should be the stock market top.  If the market does turn, unfortunately, all assets go down, including likely bitcoin and gold.

So right now we are looking for a bitcoin capitulation day this week, for the rally to resume.  I am thinking Bitcoin should make a high for the quarter around 50-60 k, before we re-enter a consolidation period over the months ahead before 100K at end of this year or early next year.

How can we figure out when is the right time? One was to help with a guess is stock charting.

My stock charting says these are the Bitcoin buy levels : 33K,  26.5K, then 21.5K.

I really have no idea how far this bitcoin correction will go in the week ahead.  I say week since I think by next week the rally will resume in earnest ahead of the 28th.

My gut says 33K will be the low area and we will resume back to new highs.  I believe 26.5k is probably the lowest it will go before new highs, but theoretically 21.5K is possible.   If Bitcoin hit 21.5K, I would feel the urge to sell my other stock positions and just buy all bitcoin.

For GBTC, unfortunately, what we will see is a LOWER price than bitcoin.  If there is a run, Bitcoin may hit 33K and GBTC maybe $29 a share.  The reason is GBTC isn't a peg to bitcoin, but can swing higher or lower depending on supply/demand.

I am looking for a price of GBTC to hit 33 for me to start purchasing, with expectation it could hit 21-25 range.  So I can't go all in at 33, and see if it can get down to 25.  Key is to go in slow, and go out slow, always buying on a down and selling on a material up.  A good trade is good, it doesn't have to be a buy at the low and a sell at the top.

Bitcoin to me is destined to 100K in the year ahead.  So in some ways, all buys are good.  But holding a position seeing the price cut 30-50% is pretty hard to hold.  And new news can come out to change my view that Bitcoin will not hit 100K.  An example is if Biden puts radical tax laws or regulation in to stifle Crypto currencies.

Good luck!

Preparing for a GBTC punch

GBTC had an epic run late two weeks.  I sold positions over the last two days, but I did keep my core positions.  If GBTC his 33, it is a must repurchase.  

I think the highe for GBTC will be 50-60 this month, but nothing runs into a straight line.

Good luck!

Sold Crypto Miners

 I am out of all crypto miners, initial buy started in July in post What Next Gold, Crypto, or Both?

RIOT ~17, initial buy at 2.19 , gains of  776%
HVBTF ~2.30  , initial buy at .60 gains of  383%
HUTMF ~ 3.25, initial buy at .80 gains of  406%

I did not go all in at these prices, nor did I hold and sell all at these prices.
I started to buy in at these prices, and eased out on heavy up days.

With the new year, I am consolidating my positions in:

GBTC
GDX
GDXJ
JNJ
IBB
MJ

Various shorts, Wynn, Tesla, DVA, and own some SPXS, and 2023 'puts' on the DJIA.

Small positions in:
BLOK, OGI

Bunch of small miners, GPL, HL, GOLD, FSM, FFMGF, LUNMF, SVM, AUY, HMY, etc.

Waiting for a new market high

CORRECTION: 1/5/21 - admitted to SPX 500 not DJIA

The press has called the market at new all time highs, some indexes are.  I always use the S&P 500 for it represents the top 500 companies presenting a more realistic value in the market health, over cherry picking the top 30.

Recently Tesla and Etsy have been admitted to the Dow Jones Industrial average AFTER they had an epic run in value appreciation.   Would have been nice if they put these stocks into the index BEFORE their epic run.    We will see if in 2021 these two stocks beat the value appreciation now that they are in the index.  I suspect smart money is unloading their positions at a profit to the people buying the index.  We shall see.

Back to my point about the S&P 500, currently SPX stands at 3,756, which beats the old high in February 19th 2020 at 3,386.    The USD was valued at  99 compared to other currencies, and is now valued at 89.   That is a full 10.1% drop in US based asset values.  Adjusting the latest high at 3,756 we get  3,380.

So the overall US stock market still hasn't beat it's old high after the US Government spent Trillions of dollars, with the FED spending 4 Trillion buying private assets.

I wrote this previously in Resuming the Market Decline ahead on December 2nd, I am of the opinion once Biden takes office the Republicans will start to beat the deficit drum and curtail all government spending after the worst economic downturn since the Great Depression.   The irony of course is during the greatest economic era ever declared in January 2020 we had an annual deficit spending of  1 Trillion. (984 Billion on the books).

So with the fragile economy, its a no brainer 3 Trillion isn't outrageous with such huge economic challenges.  If the Democrats win both senate seats in Georgia, the market should stay within a 25% lower low in my opinion as the Democrats dish out free money to everyone.   Assuming they don't win those seats, the cut in spending will result in sky rocketing foreclosures and cascading deflationary outcome. A stock market 60% lower over the next 4 years would not surprise me.

I am writing this for the benefit of my future self, when I can hear as we enter the 2024 election how the Democrats wrecked the economy  and we need to elect a super-right wing person to whip this nation into shape.  For the record, above is what will determine the outcome.

If the Democrats do get full control, I do expect the USD to hit new lows relative the the world.  We could have a market that hits SPX 4,000 but USD is down 30% from the highs.  In a deflationary collapse the USD will regain its value but the market will suffer greatly.  Remember all imports get more expensive as each USD is worth less.

Either way, that is why I am in Gold and Bitcoin.  Bitcoin hit 33K and I still think 100K is a possibility in 2021.  My target date to get nervous is after Biden assumes office and Trump has admitted he is no longer president.

Good luck!

Employment of the Future Revisited

In 2015 I projected ahead rapid change in employment, which also included impact from autonomous cars in the post Employment in the Future .

From the post quote " Already this year (2015) Nevada is allowing trucks to run on highways that drive themselves.  At the moment a truck driver must be in the driver seat available to take over. But how long until its proven to be safer than a person?  2 years? 5? not 10! "

In 2021 , Walmart will begin replacing drivers with robotic driven trucks.  I stand by what I wrote in 2015, and in a little under 6 years later driverless trucks have arrived.   I had friends who said I was way too aggressive, that it would take 20 years or more before driverless trucks would be allowed.  Extending the prediction made in 2015, I think by May 2026, about 80% of the long haul trucks will be driverless, 10 years after that post.  If I am correct, the next 4 years will start to see escalating adoption.  Its true that local truck driving is next, but I'll raise this question, once long hail trucks are 80% driverless, how long until local trucks start to become 50% automated?  2 years? 5? not 10!.
So yes, severe impact all drivers may take 10-15 years from the 2015 post, but not 20+ years as others suggested.  And in 2021 there will be LESS truck driver jobs due to automation, and it will escalate.

In 2020, it should be apparent the dramatic change in our economy that was in progress in 2015 has been accelerated.   Due to COVID, we will see more automation, (robots don't get sick), more change (work from home using technology) and all of this will be a depression on the service economy.     There will be less gas stations, motels, fast food (servicing trucks or people going to work).

Consider going back and re-reading the 2015 post Employment in the Future .  It still applies, but the visibility should be more apparent for the decade ahead.  This country has structural problems that need addressing in 2017, and even more so in 2021.  I am hoping that America creates initiatives to find a way to save the lower 80% of Americans from a lower economic future.

Low interest rates, high market valuation, and the road ahead.

 Hedge fund investor Hussman is one of my favorite hedge fund managers.  In his most recent post he summed up the financial market situation quite well:

"In the high interest rate, low valuation situation, investors face outstanding prospects for long-term returns. In the low interest rate, high-valuation situation, investors face dismal prospects all around."

To learn more I urge you to read his posts every month, it is one of the best sources of a reality based view.  Of course fantasy views can last years, but eventually the truth manifests but not always the way it is expected.

His blog is at: https://www.hussmanfunds.com/comment/

Crypto, taking a closer look

Recap
On March 30th I posted Net Long.   Unfortunately I didn't play big Zoom and sold early, but I did catch most of the upside in other stocks, including GDX/GDXJ.

GDX went from 16 to 45 in  August.
Then I switched to Crypto in the post in July, What Next Gold, Crypto or Both?.
Crypto near term gains.

HVBTF was .60 , recently hit 2.40, (I sold most of my position in this. )
RIOT was 2.19, today its trading at 12.06
HUMTF was 0.80, today its trading at 2.96
GBTC was at 10.39 and today its at 31.61 (largest current position)
Bitcoin was at below 11k, trading today above 23k.

Obviously, all good trades, congrats if you participated.

However, I am concerned about a market correction as market valuations are at levels YEARS out.  This is attributed that if a stock may get 2% ROI over the next 10 years, its better than a 10 year treasury note.   The issue is, at some point, all of this excess will be priced into the market.  All that is required is the 'wrong' piece of news to spook the market and putting capital hoping for 2% ROI over 10 years in a stock seems like high risk vs 1% in a 10 year bond.  To read more of my concerns read 'Resuming the march decline ahead'. 

Cash maybe the right play in the next 6 months.    But 'irrational exuberance' can sustain much longer than anyone thought.  It's impossible to know when the top is, to sell and avoid the downside risk.  So I do think its a good time to be in very conservative plays.  But I caution do NOT invest in old companies like EXXON or IBM, Casinos,  but into the future.  Stay away from hype stocks like TESLA. This is a list of stocks I am looking at:

Crypto direct investing

Bitcoin direct, with smaller positions in Ethereum,  Lite Coin, Bitcoin Cash, and Compound.
if you consider buying some bitcoin, I recommend coin base, use this link to sign up.
https://www.coinbase.com/join/murphy_b9f

Bitcoin I think is being positioned as the new gold alternative.  It is starting to take hold into mainstream investing, and Bitcoin I think is a 'no brainer' to hit 100K, cases can be made it will go to 400K, and I do think briefly it could hit 1 million a coin.  To be clear, Bitcoin is like gold, its value is as a buy and hold 'ponzi' like scheme.  The biggest downside to Bitcoin is the same as Gold, its a collectible, like a baseball card or rare whisky.    It has no intrinsic value or money creation like a business such as Amazon or Apple.    So it is a terrible 10-30 year investment, but I do think the transition of moving into public ownership is a good investment bet.  I strongly recommend having a target to actually sell at.

Crypto Stocks

Grayscale is a company that is PRIVATELY owned, I would really like to be able to invest in the company.  They take only large scale investors like Guggenheim or Mass Mutual to the tune of up to 500Million for a buy in.

There are several ETF's Grayscale offers.

GBTC - its an ETF proxy to buy actual Bitcoin - Word of caution - it will trade HIGHER than the underlying intrinsic value, to see the chart click here.

GDLC - It  is an ETF proxy to a variety of crypto currencies including bitcoin, rebalanced every quarter.  Again, it can trade ahead of its intrinsic value. (click)

Grayscale offers ETF's for specific cryptos , click here to see current list.  Some notables is ETHE or LTCN .

Crypto Miners

All of these miners are very high risk, none make any material profits.  They are all only short-term plays and should be sold after a good rally.

HUTMF - Reported gross Revenue of 63M in 2019, posted a profit of  28M.  Doing best in this sector.

HVBTC - They report annual gross revenue of 30M into March 2020, they posted a 7m profit.  Compared to most other miners they are doing well.

RIOT - On the plus side, most self directed 401k's let you purchase, on the downside, its turns a razor thin profit.  Total Revenue in 2019 was under 7M

Crytpo ETF's and other stocks

SI - Silvergate - Provides banking services that include Crypto. Earned 25M on 81M gross in 2019.

BLOK - invests in blockchain companies 

MARA - Mara Patent Group - 1 Million in revenue,  1 million in losses.

BRPHF -  Galaxy Digital Holdings -  An asset management firm, operates in the digital assets and blockchain technology industry.  No reported financials. Earnings.

Gold Miners

GDX   - Gold Miner ETF - Wide array of gold miners, decent play to protect purchasing power of your USD assets relative to the world.

GDXJ - Smaller Gold Miners with some silver ETF - Wide array of smaller gold miners, decent play to protect purchasing power of your USD assets relative to the world.

GOLD - Barrack Gold based in USA - A well run Gold mining company, even Warren Buffet has invested in it.

Betting on the future - BIOTECH - 10 year horizon

If I had to pick one non-crazy investment (crypto/gold, etc) its Biotech.  Big Data & AI mixed with evolving technologies supporting medical advancements (DNA, etc) is a recipe for huge win in solving many medical challenges.  Its not if, but when.  So for a 10 year hold, no brainer, this is a winning sector.  Click here for list of ETFs.

Stay away from 3x ETFs like LABU, unless the market has corrected and you are buying near a bottom.

IBB - iShares Nasdaq Biotech, today at 157  (10 billion invested)

GNOM - Global investing ETF in Biotech , Today its at 25.

XBI - SPDR Nasdaq Biotech , today at 150  (8 billion invested)

Insane high risk - Shorting

Just a note, as of today I am short TESLA, NIO, WYNN, DVA, have puts against the DJIA, and I am buying SPXS as a counter play to my longs.  These positions are small compared to my other plays.

Resuming the March Decline ahead

The Past 

What a year!  Back on January 30th I posted "ACT NOW!, Sell the market!", on Feb 4th President Trump asserted America's economy is stronger than ever and the future is blazing bright and the years of economic decay are over!   Please keep in mind in 2019 the deficit was 984 Billion dollars.  The deficit in 2016 was 585  billion.  Therefore at the greatest economy ever, our debt spending as materially higher than the new administration took over.   

Note: We now know that the President was briefed on the impending pandemic, which makes sense he would know if I knew.

The market rallied a bit more before the decline.  Shortly after the President addressed the nation, the USD dollar was valued at 99 against other fiat currencies. The SPX market top was shy of 3,400, for this post lets call it 3,375.   I then went net long March 30th.

The SPX closed at 3,669 today, but the USD is valued at 91.  So to adjust the current market to the world, the close to the valuation of the USD back in February we are at 3,375.  So today isn't a new high, but a little under the high in February.

The USD has been declining, and we may continue to see the USD fall.  The USD was valued at 149 in 1985, and achieved a low of 72 in June 2008.   So we have room for the dollar to continue to fall and the market to appear to rally.  However things don't usually go in a straight line so I expect the dollar to rally, that means fear is ahead.

The Present

We still have record unemployment, record deficit spending, an estimated 100,000 businesses have failed, 12% unemployment, and potentially 19 million people losing their homes in January.  the US Federal Reserve created 3 trillion dollars circumventing the money creation process in place since 1913, by simply giving itself 3 trillion dollars with no bond collateral.  The US government has spent in 2020 2 trillion with COVID relief programs, on top of the already high deficit spending, forecasted at 1 trillion before the pandemic.  In 2020 we are adding 18% to our debt to GDP and forecasted 10% in 2021 before any new COVID relief plan is passed.  It is expected the Federal Reserve Bank to buy up about one third all home mortgages before the year is out.  When normal returns we expect material shifts in human behavior including commuting, which will affect commercial real estate and commerce.

The current forecast of ROI on the stock market over the next 10 years is -1.7%.  Yes, you read that correct, if you keep your money in the market based on the last 100 years of stock history, you should see your ROI be negative over the next 10 years.  (Full article here)

The stock market valuation does NOT reflect the health of the nation, rather the froth of the money creation give away.

The Future

Lets assume Trump doesn't have a coupe and end democracy, but rather Biden does take office.  There is a material number of Americans who view the Democrats as stealers of the election, are communists and/or running a pedophile ring.   When Biden takes office the assault of conspiracy theories will continue.  Trump will continue to tweet, and do everything in his power to make Biden fail, along with loyal Trump Republicans.   There is a possibility Trump is prosecuted and the negative emotions escalate even more. The Democrats must convince Republicans to double the deficit annually over the next four years to 2 trillion a year even after COVID ends to match the deficit spending increase during the best economy ever between 2016-2020, in addition to trillions more to soften COVID impact.   If they can't, the economy will solidify its downturn for years to come.  Raising taxes into a downturn is suicide, we should have been saving 'in the greatest economy ever' instead we doubled down on debt.

What looks ahead is pretty grim, and there really isn't any low risk options.  Bonds are yielding 1% for a 10 year, and with a backdrop of the USD falling 10 ~ 30% more it isn't a great option.  Stocks with a historical norm of -1.7% ROI in the next 10 years isn't great.  This will cause problems with pension failures and other groups relying on ROI.  The only option I can see is to divest from the USA, but other countries are really not a great investment either.

Anther option is to print our way out of all debts, which will risk a dollar collapse and to lose world reserve currency status we have enjoyed  since WW2.    In this scenario the market may advance as the dollar continues to devalue, but I would expect inflation to cripple most of the American economy.

The middle ground is to have the FED continue to destroy capitalism by privatizing all assets with the banking system with 'granting' itself trillions of dollars.  Japan has done this for 30 years and still hasn't hit a new high in the market.  The Japanese Central bank owns about 80% of all ETF's. (article from 2018 at 77%)

The easy button is create new bubbles.  I have been planning for this easy button dating dating back to 2014.  Granted I was way too early on this call , but here we are.   GDX has moved from 18 bucks in 2018 to 45 in the summer.  I expect it to resume the rally and may hit GDX 100.   It also, shouldn't move in a straight line, but future looks bright in the near term.  It should fall if the market falls but at a lower percent.  Recently I have written about how 2020 is the year Crypto currency came to age, and since then Bitcoin has taken off.  My favorite stock GBTC has moved from 10 to 23 in the last few months.  I would not be shocked to see GBTC move to $1000 a share in the next 10 years.

What to do?

At anytime President Trump could initiate a war either via attack (like this assassination) or by troop withdrawal, or some other act to send the markets down.   Even if he doesn't, I expect between now and February the market to decline materially from the high (unlikely the day I am writing this is the high, but who knows!)  The setup for next year is not good.  The market will need to lose 40-60% of its valuation to be a good buy once again, and will likely take years to play out and fully recover. (a decade? 30 years like Japan?) 

This is excluding the print our way out option as I expect Republicans to enforce fiscal discipline much more than they did with in 2016-2020 during 'good times'.  With a crippled economy they will double down the pain in hopes of winning elections.  The easy money train will end in January, unless Democrats takes the senate in Georgia.

I think hedging out of the market and fixed income in the next 6 months is lower risk than dollar devaluation in the near term.  If you hear a new FED bazooka, like now printing 6 trillion dollars, then that maybe the end of bonds and cash as a safe haven.

Paying off debts is paramount, lowest risk with highest secured ROI.  Individual companies like Amazon are good bets, as their competition fails.  Companies like Exxon are bad  borrowing huge sums to pay their dividends, as Democrats won't like oil and companies, I expect Exxon to fail in the next 10 years.  So be careful to not buy historically good companies but instead forward looking companies.

I do think diversifying into GDX now at 36 and GBTC now at 23 is a way to hedge out of USD and the US overall market.  I don't think GDX has a 10 year bright future as crypto will win. (disclosure my primary play is stock GOLD/GDX (miners), Cryptos are second)   

If the government decides to resume mailing checks directly to Americans, then all best are off, the stock market will be fine and the economy recovers in record time.  I really doubt Republicans will let this happen.

IMPORTANT!

PLEASE don't invest blindly in what I said here, I am an IT guy, not a financial advisor.  Use it to prompt understanding that inaction is actually an action, a choice to remain invest in the most over-valued market in US history.   Instead look at your finances, pay down debts, take a conservative stance, and invest a little (10-20%?) in alternate plays (cryptos, gold, global ETF's)

Good luck,  it will be a wild wild ride into and through early 2021.