Market Direction

Back on Oct 14th, I posted "Reversal day", and it was.  Until we break below that day,  that could have been the bottom.   At a minimum I think the market rallies into March as I posted that day.  This is because I knew the Republicans would refuse to raise the debt ceiling, and the government would be forced to spend savings.

Normally the Government sells bonds to raise funds and spend into the economy.  This has the effect of pulling some money out of the economy creating savings / bank assets.   The government then re-distributes this money from the savers to whatever the government wants.

Without debt issuance, and new cash entering the world markets without needing to pull money from savers. 

A break above the red down line on a CLOSING basis will spark a continue uptrend, in my prediction, into March.

A break below the green dashed line indicates the party is over.

Good luck!

3d printing

 I am publishing this on 1/8/23, but will be updating it later today.

For those who own 3d printers, I wanted to share some of the resources I use.
Many of these will link to my personal collections

Best commercial site to buy accessories for your printer is Matterhackers.  This link also educates on the different filament types: https://www.matterhackers.com/3d-printer-filament-compare

To create your own objects, I recommend: 

https://www.tinkercad.com/users/5lrItlGzfLg-websurfinmurf

To find objects, the 'google' of 3d printing is: https://thangs.com/

The largest repository for 3d objects is: https://www.thingiverse.com/websurfinmurf/collections

Higher quality Objects, some objects are for pay: https://www.printables.com/social/317093-mike-murphy/collections

Miniatures for D&D, and other board games for purchase: https://www.myminifactory.com/

Another 3d print object repository: https://cults3d.com/

Another 3d printer object repository: https://pinshape.com/

Keep your Filament dry! When not using, put in a ZIP lock bag.  Filament that absorbs water will not print well.  For more info on how to dry: https://www.youtube.com/watch?v=fTLBPUJfTJg

Best free 3d slicer is PRUSA: https://www.prusa3d.com/page/prusaslicer_424/

A good pay one is: https://www.simplify3d.com/

China Demographics matter

 I have posted many times how demographics matter for robust country economies.   China is a country that is about to implode this decade.  China grew what took England 7 generations in 1 generation.  That is why China was such a growth story.  But the bulk of their growth is now in the past.   This video does a good job covering the demographic story.

https://youtu.be/c1tA1WnzU9s

Why the Fed must fail

The Fed is comprised of 7 board members determining their actions into the economy.   While the FED does NOT control the economy, it does influence and affects the emotion of the financial markets. To learn more how the FED is not in control of the financial markets (but does inject emotional influence, click here.

But it is an entity, it does have about 9 trillion dollar in assets. And what the FED tries to do is to remove the variations in the market, 'stabilizing' all assets in one direction, up.   Doing this will have the long term affect of making the financial markets more fragile.  By having 9T in assets is is now a liability of the US Government, in addition to government debt.  This is how we have arrived at today.

The problem with the FED is it introduces human emotion into human financial system that thrives best with an open market.  The open market gives the feedback to companies by investment attractiveness, causing investors to buy or sell based on clear, open, evaluation of their financial health.   The open flow of objective information is essential to help analysts and investors 'judge' a company.   Since 2008, we have abolished mark to market asset valuation, removing visibility into the health of the banking system.  The Fed continues to force interest rates to a place they 'feel' is the right level.  They will not, and cannot allow the market to determine the rate, due to their emotional pressure they must act.  Since Allen Greenspan this has been the FED has taken.  Decades of intervention has brought us to today, a fragile ecosystem.

Below is a you tuber summary of Nassim Taleb book "AntiFragile". If you rather listen to the author summary, a great one is here:

Uptrend is back, what is the target?

Oct 13th was "Reversal Day", as I posted on my blog.  The best time to get in long was Friday EOD (or exact bottom Thursday!).

So what now, all clear?  I expect the market to float higher, with the bear market resuming in earnest in 2023.   I expect between Feb and May the market to start to break down, with an epic plunge between June and September.  Think Circa 2008, a market trying to fight to survive and finally throwing in the towel.

Between now and then, everyone, including me, will say the worst is behind us.  But what we started in 2019 under Trump, releasing 2 trillion in free money, will continue to ripple through the world economy.   First deflation (before 2T given away) then inflation, and now the FED is tightening rates and will trigger an earnings collapse.

The up trend should hit ~440 range as a high.  A close above 502 violates everything I am writing.
Please remember, The FED is announcing a MATERIAL change to its operations around June 2023, a private blockchain called Central Bank Digital Currency (CBDC).  This is the first step to overhaul all money in the world based on Dollars to centralize control to the FED.  NEW tech takes time to be effective, it isn't flipping a switch, so I think the market will follow the pattern I outlined.

I added a purple line that I expect the market may return to, but not pierce on a closing basis.  Even if the market does pierce, it doesn't violate the thesis.   What will indicate a market decline is breaking the lower dashed horizontal green line.  Once that happens, US equity indexes is the last place your saving should be in.  The Market will decline to the up sloping green line, then  bounce again, then on a turn around could go down a full 80% on SPY from the top made in Dec 2021.  I'll do another post on what my plan is for safety.

Reversal day

Quick post, we opened lower from previous reversal, but closed much much higher, this was THE reversal that I was expecting, it was a long bottoming process.   It could be a reversal that lasts for a year before hitting our much lower destination.   If you like going long, buying Friday SPY, with a stop of yesterday’s low of 349 as a stop loss.  Good luck!

Mondays Decision, no Market breakdown!

 Friday ended below the line I called out as the 20% lower line, but not by much.

Monday was decision day, and the market is now back into bear rally mode.  However, until the January high is broken, we are in a BEAR market!  So I do expect much, much lower market, but it could be out to fall of 2023 now.

I added a purple line now, and if the SPY closes BELOW 357 on a CLOSING basis, its is finally, game over and a material run lower will happen.  Until then, playing the bull is fine, and I may on occasion go long items.  This rally is a gift to exit long positions, pick your level between 385 to  400ish range.

If you are very optimistic, then a break above the red downtrend line is the first step to BREAK this bear market.  Until that happens, its pure hope, no chart or price support for that point of view.  I'll put some short on if/when we get near 400 for the next material down swing.  Good luck!

Decision day is now THIS Monday?

 It has been 5 DAYS and the market can't break lower!   The S&P 500 has pierced the June low 3 times, but NOT on a closing basis!

Other indexes, not the S&P 500, have made NEW LOWS on a closing basis.  But the SPY is the primary hold out.    The news has been trumpeting new lows, which in charting is really bad at this stage, to scare investors to sell. 

But if its such a terrible market, why is the S&P 500 levitating for FIVE DAYS above the June low, barely, on a closing basis?  This is why I use the SPY as a gauge, it has a broader representation on the core 500 companies in the USA.

The market is either trying to build energy for an epic fail, which would likely be Monday morning, or a 'come back'.  .

This weekend is shaping up to be the decision.  I wrote a week ago we would know Monday, but here we are!  Who could have guessed multiple market indexes would fail, but not the SPY 5 days later?

Don't get me wrong the US and world markets will be sliced 20% lower in the next 6-9 months, and I think 70% lower from here is in the cards.  But for now I am looking to get short on a rally, I may buy some short instruments today incase Monday is the epic fail, but without leverage.  The leveraged ETF's should get hammered on a relief rally due to the various indexes failing this week, and running 'time off the clock' 5 days later.

Charting wise an SPY closing below 362 its bad, indicating going lower 20% in quick order.   But dancing on this June low for 5 days makes a 'new low' squishy now, this line doesn't have the same meaning as it did on Monday.  There is now wiggle room!

A perfect close will be 359.50-361.90 range, making it a coin toss for Monday, nobody will go all in in either direction unless you like to put your life savings on lottery tickets hoping to pay off.

A break below 359.50 on a closing basis is as good as any bet you could make that there WILL be in quick order a 20% haircut! 

Good luck!

Target is 30% lower from the high

I have been posting about the critical points in the market decline, and is has been triggered.

The market has broken the trend line in place since the low in March 2020, I expect fall of 20% lower from here is in the cards.  If you are more optimistic, a VERY strong confirmation is breaking the SPY low of 363 in June 2022 on a CLOSING basis, we are headed to ~300.  IF we break the up trend in place since 2009, on a CLOSING basis, we can see an 80% stock market collapse.

I don't think we will break the up trend since 2009 for a bit, maybe in a year (if ever).

Click on the chart at bottom for greater detail.

So if you want to catch a falling knife, a good place to go from cash to the market is on the up trend from 2009.  The question is what to buy? Why the future of course!

My current list:

India
Mexico
Artificial intelligence & Robotics
Crypto financial companies - SERVING the existing banking system,
Gold / Bitcoin / US Bonds  mix.

Monday is Decision day!

 EOD of Friday the market was 'saved' and it recovered above the line I have been posting about.

Over the weekend the Fed asserted the next raise maybe 1%.  I believe this was done specifically to try to get the market to tank at this critical level.  Why? Because the Fed DOESN'T want to keep hiking rates, but believes it does if we are seeing markets ignore their efforts and inflation comes in higher.

They want to craft a story that when the Fed raises rates, markets and inflation falls.

Today we will get our answer.  Can the market close above the line yet again? If it does the bull is resuming!  If we are below the line today, I wouldn't go all in short just yet.  We need some follow through.   Cash is best right now, good luck!

Breaking support - 20% decline ahead?

 Today is quadruple witching, and this morning we are breaking the trend line I posted about.
If we are going to reverse it will be by EOD today or Monday with an "event" announced over the weekend for a 'save' breaking the trendline.

By EOD Monday we will have a definitive direction of the market, 20% lower ahead or a rally for a bit, perhaps into the midterm elections?

Take bets, get rewarded big (long or short) or wait for the directional choice.

Good luck.

Closer look at support levels

 If you haven't read my previous post Meaningful Support levels, please do so before reading on.

I wanted to pull in for a closer look at the support level, if broken, on a market CLOSE (not a open below and closes above, etc) we can expect a meaningful stock decline. Depending on when, the close must close below the green rising line, range of S&P 500 385 (tomorrow) -395 (oct 24th).  A break above the line is a bullish indicator.

This trend line up has been in tact since March 2020.  A close below we should expect the market to decline by a full 20% over the month(s) following.

On a positive note, the world is worse off, much much worse off than USA.  For this reason, we may see INFLOWS of capital into USA and we may resume the bull for up to 9 months ahead.  I am not convinced the market will fall 20% in the near term.  This is a watch and wait to understand the direction.

Meaningful Market Support Levels

The chart below is the S & P 500 support lines.  Red lines are resistance, if the market breaks above it on a weekly closing basis, we have a bull case for the market.  A break below green support lines, the bear will roar.  

Below this summary I have the details.  Given above we are about 2% striking distance downward to first support, but if broken, another down of 20% from current levels on the index.  That level if ever broken is entering the realm of panic.  On the upside if sold today, you would 'miss out' on 10%  gain before the all clear to buy.  

Details

As I write this, S & P is at 390, the first major support line is at 383ish.   A break below will have a next support at 300-315 range (depending on time).  That is material support and should have a multi year recovery.  Breaking below that is dismally lower at 120 ish. ( depending on time).

On a positive note a break ABOVE 429 is very bullish, and on a closing basis a good risk to buy.  Obviously anything above the all time high is pure bull run at  481.  

Action

Take note of the levels above, they are critical for the health of your 401K.

NOTE: I Purchased RGLD today at 90, since the Dollar is strong, euro weak, gold is weak.  For risk v reward we need stronger dollar, weaker euro, weaker gold price.   All have moved to extremes already, I am trying to catch a falling knife. :)

Market top is in!

Friday was brutal, I expect a generational paradigm shift has arrived in our global economics.  The world Baby boomer generation is now more retired than not, and we are seeing shrinking populations for the rest of our lifetimes. (excluding India and a few other countries).

China has a material demographic issue both with aging population and retreating population totals.  China officially expects to hit 800 Million people in 2082 from current 1.4 billion.  Unofficial numbers advance this materially to as soon as 2050.

With the world population peaking sometime in the next 40 years after major population growth the past 100 years, our economic system isn't built for it.  This will result in global currency wars (already in progress) and a world searching for something to invest for growth.

Right now the market topped, and I am now selling all my long assets tomorrow, with a few exceptions.  Goldman Sachs agrees as it sells over 140 billion in the month ahead.  If/when the SPY closes weekly ABOVE 410 in the 'next few months', I'll reverse my opinion. I expect since everyone is invested in index funds, and automatic trading may kick in to conserve assets.
I'll also become a buyer if/when the market makes a substantial low, to play the long side for a time.  I expect an intermediate low around the elections.   
Over the year ahead I do expect a real low to be 50% lower than here, if not 80%.   But nothing runs in a straight line!

This is what I have been obsessing over since August 2006, the fourth turning that is upon us.  I don't have any easy investments answers except 'risk off' is the motto.

Good luck.

Economic repression since 2007

Since 2007 western countries have experienced economic suppression.  I can't say exactly what it is, but I think generally the global economy has been resting on the baby boomer generation for growth.  And in 2007 the first baby boomers hit 61.  This means the start of baby boomers retiring was well underway.  Remember many baby boomers got pensions from private and public sectors and can retire as early as 55.   In 2022 the oldest baby boomers are hitting 58, meaning, we are experiencing the last of the boomers retiring.   The majority of boomers are retired as of 2022.

These people are retiring at the peak of their earnings, lowering tax collections while simultaneously requiring more public services.

Below is a great video talking about analysis of England's productivity.  The personal financial growth from 1992 through 2007 if it continued through 2022, people working today would be  33% economically better off.  People who entered the workforce from 1945 through 1992 are materially better off.

If you are after generation X, you are at a material disadvantage than rest of society.  So when we look at the stock market, this is all a reflection of an economically sick society.

I recommend this video to get a sense of the economic disadvantage and how democracy is being undermined by the diminished economic opportunity.

Bull Market Alive

 Death of this bull market I think has been premature.  I covered my shorts, and went long early last week (a tad bit early).

This final bull hurrah is the precursor to the final multi-year decline.  What happened over the last few months is EVERYONE became bearish.  As a contrarian that invoked my interest to look at the youtubers I follow for feedback.  Two of them called for a reversal, and one of them is even calling for approaching and/or making new highs.  I am unsure if we will get to new highs, but what I do know is for a multi-year low, everyone must be sucked into the market before the decline can start in earnest.

I will post the investment strategy I am looking to execute on for the next 5-10 years in anticipation that the world will see great growth, it just may not be in the USA.

China is NOT going to get out of this anytime soon, India is what I am looking to invest in.

In any case , I went long ARKK and TQQQ.  I did take some off the table at the close today in anticipation nothing goes in a straight line.

Good luck!

Fed, US , Russia, China

Back in 2008 I posted about how the reserve currency of the world changes every ~100 years.  The USD has passed 100 years since the Federal Reserve was created, but we still have until 1932~1944 for USD to hit 100 years as the official reserve currency.   Looking ahead, The Fed, US Government and Russia/China know our 'kick the can' debt machine will run out of runway in the decade(s) ahead.

In advance of this event, Russia/China have been purchasing gold, and in the case of China banned Crypto currencies.   The US and FED knows this.

So if the world will eventually move off of the USD, what is the best options for the US to align as the new reserve currency?  Gold is terrible as it puts control to who can dig gold up quickest, and it isn't easily useable in international exchange.   China/Russia currency puts the world at the mercy of dictatorships.

In steps Crypto!   The FED asked for feedback on crypto USD, signaling the future of the USD.  Making USD into crypto alone doesn't change the world, as it could be viewed as similar as Tether. What will be a change is when ALL USD is only valid if on the USD blockchain.  When that occurs, the government could in seconds stop all USD change with any nation, like Russia.  Each movement of dollars could be tracked down to the penny of who sent money to who.  That is a game changer.

Some have speculated the USD may ban Bitcoin, I don' think so.  They can bury Bitcoin with regulation, taxation, or other measures.   Bitcoin must survive as a 'plan b' for the USD world reserve currency (store of value, not actually a currency) for international banks to exchange reserves.   This could become the alternative to USD for 'reserves' only, not for actual money per say.

Last night, 3/9, Biden issued an executive order on Cryptos.  While itself doesn't say much, the timing is huge.  Russia is trying to take over the Ukraine, the US is doing everything it can to financially punish Russia, and Biden just signaled to the world, the US is moving forward.  Russia and China will be offering a backward look, gold and central control.

The world will need to choose in the years ahead.  Go Crypto!

The jump the shark moment?

The Federal Reserve bank just froze bank reserves within Russia.  This step has been taken before from what I read in WW2.  We are dancing on the edge of something big in the USD financial system.  Dare I say that the cascading consequences of asset devaluation in Russia, and counter party risk, plus assets unable to pay debts, we are lighting a fuse.

I know the US must take such steps to discourage Russia from aggression.  Ukraine is paying the highest price right now, but the world may also suffer with economic consequences.  I still think the market rebounds to form a mega right shoulder, but it wouldn't surprise me if the market throws in the towel from here.

Changing World Order, by Ray Dalio

 Ray Dalio is a world leader in financial markets, as head fund manager of Bridgewater Associates, managing over 140 Billion dollars.  I am very pleased to share a well done summary of how our current global finance fits in the the history over the last 500 years.

History doesn't repeat itself exactly, but patterns do exist.  This is true simply because age old issues humanity faces are consistent across our entire history.  The shape and situation varies, but human social and economic problems are never resolved.

The last post was on effects of QE and the financial suppression (not expansion) it promotes.  This video puts into context the forces driving central banks to repeat the failures of the past.

Does the FED print Money?

 I have been watching Emil Kalinowski for about the last year, he does a fantastic job as a youtuber talking about Macro economics and the banking system.

This excellent video really digs in about the FED QE effects, they do NOT print money, they only generates bank reserves.  Most people believe FED QE promotes economic growth, in reality it is financial repression every time they do a QE.  It does promote existing wealth, not new growth.   
Grab a cup of coffee, grab a seat in a quiet area, it is a dense listen.