Investing in stocks is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Legendary investor Warren Buffett defines investing as “the process of laying out money now in the expectation of receiving more money in the future.” The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.

The key is that you don’t need to be an expert to invest like one. What you need is a good source that explains what is happening in the markets and then makes recommendations, telling you WHY you should invest in that stock or sector.

Since 2002 the Trend Letter has delivered average returns of over 40% per closed trade. We help people just like you understand what is happening in the markets and what sectors, and stocks make the most sense to invest in.

What Are the Risks of Investing?

Investing is a commitment of resources now toward a future financial goal. There are many levels of risk, with certain asset classes and investment products inherently much riskier than others. However, essentially all investing comes with at least some degree of risk: it is always possible that the value of your investment will not increase over time. For this reason, a key consideration for investors is how to manage their risk to achieve their financial goals, whether they are short- or long-term.

Key rule: Have an Exit Strategy

The first rule in being a successful investor is to not lose money. That might sound obvious, but the truth is most investors have no exit strategy for when they are wrong.  Basic human emotion is perhaps the greatest enemy of successful investing. But whether you’re a long-term investor or a day trader, a disciplined approach to trading is key to profits. You must have a trading plan with every trade. You must know exactly at what level you are a seller of your stock—on the upside and the down. Before we buy any stock or Exchange Traded Fund (ETF) we always set a SELL Stop in case the market moves against us.  When the stock starts rising, we raise our SELL Stop to ensure we lock in gains when we get a pull back.

The bottom line

Being a successful invest requires having the tools necessary that give you the best information to understand current and future market trends. At Trend News we offer three services for investors:

  1. Trend Letter is a weekly service that covers stocks, bonds, currencies, commodities, and precious metals. Trend letter has been publishing since 2002 and has an incredibly successful record over that 20+ year span.
  2. Trend Technical Trader (TTT) is an online service that was originally designed as a hedging service, allowing investors to protect their investment during down markets.  We have expanded TTT service to include trading long positions in precious metals, commodities, and other sectors as well.
  3. Trend Disruptors is our service for investors interested in investing in technical sectors. Disruptive technology propels us into the future at a rapid and increasing pace. Virtually no industry goes untouched, as the boundaries between the physical and virtual worlds are erased, transformed, or re-imagined. New technology can re-shape existing business around the world, and create entirely new business models never before thought of.

Whatever you  experience, we have a service that can help you become a very successful investor. It’s your money – take control.

No BUY Signal just yet

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As an investment newsletter, we strive to bring the best information to assist those who want to become better, more successful investors.

Bond yields:

Investing in bonds. The recent market turmoil is predominantly driven by concerns over long-term bonds and their elevated yields, as investors brace for the prospect of enduring high borrowing costs. The underlying issue for the long bond market stems from the ongoing accumulation of substantial deficits and debt by the US government, compounded by the fact that China and Japan, historically the largest purchasers of US bonds, are now sellers of them.

Currently, the US is making interest payments of $909 billion on its debt, as reported by the Federal Reserve. With the primary buyers of US debt transitioning into sellers, a pressing question emerges: who will step in to purchase this debt? As potential buyers remain on the sidelines, market dynamics are pushing yields higher in an attempt to attract new investors.

Remember, the Fed only controls the short-term rates, the market controls long-term rates.

Equities:

Investing in stocks. Although the recent selloff in equities showed some signs of slowing down on Wednesday, investors remain vigilant for any potential resurgence in volatility, particularly if the upcoming US non-farm payrolls data on Friday exceeds expectations. On Wednesday, the S&P 500 made a noteworthy rebound, surging by 34.30 points to reach 4,263.70, thanks to early buyers stepping in. However, as of this moment, it has started the day with a lower opening and has retraced much of those gains, currently down by 25.39 points.

Oil:

Investing in oil. In our previous Trend Letter last week, we anticipated a retracement in oil prices from their peak at 94.00, prompted by an elevated Relative Strength Index (RSI) reading of 78.00, with any reading above 70 indicating an extreme overbought condition. Subsequent to reaching that high, oil has experienced a decline of approximately 10.00, settling around our initial support marker at $86.00, concluding Wednesday’s session at 84.22. This morning, there has been a slight uptick, but at the time of this writing, the market remains relatively flat. Our next anticipated support level for oil stands at 79.70, and we expect it to test that level in the near future.

Gold:

Investing in gold. Gold continued its struggles Wednesday, down ~7.00 to 1834.80. Over the past few months our projected lower target for gold has been 1825. At the time of this writing gold is trading at 1828 and is exhibiting oversold conditions. We are on the verge of our models issuing a BUY Signal, but it hasn’t triggered it yet.

It’s essential to emphasize that we are trend traders, requiring more than just an oversold market condition. The market must exhibit a convincing rally potential. While we believe we are approaching that point, confirmation is still pending.

As soon as we receive that confirmation, we will promptly notify our subscribers. If you haven’t subscribed yet, our exclusive Special Offer, providing discounts ranging from 40% to 65% off regular prices, remains accessible until this Saturday. It’s your money, take control!

Stay tuned!

Market Notes – September 1/23

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Some investment news for those looking to invest in gold, invest in stocks, or currencies, and commodities.

Each week the Trend Letter, displays weekly heat map of the S&P 500. It is a great visual of the equity market that holds stocks many North Americans own. Each of the 500 stocks is shown in a box, & the size of the box represents its market valuation, and the colour of each box tells you how that stock did, GREENS being gains & REDS being losses.

As we can see, for the week, big tech stocks led the way higher. There was also a lot of green throughout most other  sectors, with utilities and healthcare being the main exceptions.

On the daily heatmap a bit of a different story, with some big tech in red.

Looking at the BIG picture, the S&P 500 is still solidly in a long-term uptrend channel, since 2009. If we were to test the initial support level  of that long-term uptrend channel, we would see a correction to the 4000 level, which would be a ~11% decline  from the current 4500 range

Based on seasonality, September is the weakest month for the S&P 500.

If we do get a decent correction in September, it could provide a good buying opportunity. Sectors that have looked good are oil, uranium, tech, gold, base materials and even cannibals cannabis, what with US health dept urging the DEA to relax restrictions. We will see if these will remain strong after Labour Day, or if the negative September seasonals take over.

What we do at Trend Letter is track those key support & resistance levels, looking for changes in trend, and then and alert subscribers when trends change.

In Martin’s interview with Jim Goddard on This Week in Money on Friday (interview start at 44:39), he promised to show the chart below. If we look at the last number of times the Fed CUT rates recently, so 2000, 2007 and 2020…each time was driven by the economy falling into a recession (grey shaded bars). And when they CUT rates (red arrows) the S&P 500 had sharp declines. In each of those CUTTING phases it was not until the Fed STOPPED cutting rates that the S&P 500 started to recover (green arrows).

For those investing in gold, the key numbers are::

  • Near-term resistance is 2000, 2040, then 2070, which was that double top in April-May
  • Next key support level is 1915, 1900, 1880, then & really strong support at 1825
  • If it does drop to 1825, that would likely trigger several new BUY alerts

In Martin’s interview with Jim Goddard, he explained why he still feels a recession is very possible. He outlined the two key leading indicators, the inverted yield curve and the Conference Board’s Leading Economic Index (LEI).  Both of these have an almost perfect record in forecasting recessions. Both are forecasting a recession coming soon.

A yield curve is inverted when short-term yields are higher than long-term yields. An inverted yield curve is a leading indicator of a recession and since 1955 (68 years), there has been only one time where the yield curve inverted without there being a recession.Recently, the yield curve is the most inverted it has been in over 40 years. Recessions don’t start when the yield curve inverts, but rather when it starts to ‘uninvert’ (red arrows).

This chart clearly shows that for each of the last 6 recessions, they all started after the yield started to rise. Today, the yield curve is starting to ’uninvert’ (circle).

The other indicator with a near perfect record of forecasting a recession is the Conference Board’s Leading Economic Index, which looks at 10 components across the US economy. That index, again in its latest report last week, is firmly saying a recession is coming.

 

Oil has had a great week after dropping down to the 80.00 level, it has rallied big time this week, and closed Friday at 85.55.  The big bump this week came after a massive 11.5 million barrel drawdown in US crude inventories. Also, we have the Saudi Arabia production falling and they, plus potentially Russia, are expected to extend the production cuts into the end of October.

Stay tuned!

We are offering discounted prices for our three services and with each new subscription this week, we will donate $100 to Special Olympics.  See Special Offers below.

 Trend Letter:
Since start-up in 2002 Trend Letter has provided investors with a great track record, giving exceptionally accurate information about where the markets are going, and it has explained in clear, concise language the reasons why. Using unique and comprehensive tools, Trend Letter gives investors a true edge in understanding current market conditions and shows investors how to generate and retain wealth in today’s climate of extreme market volatility.

A weekly publication covering global bonds, currencies, equities, commodities, & precious metals. Publishes every Sunday evening, covers equites, currencies, precious metals, commodities, and bonds. Each weekly issue is about 50 pages, mostly charts, with key bullet points to make easy to understand. A 10-15 min read

Timer Digest says: “Trend Letter has been a Timer Digest top performer in our Bond and Gold categories, along with competitive performance for the intermediate-term Stock category.”

Technical Trader:
Trend Technical Trader (TTT) is a premier hedging service, designed to profit in both up and down markets.

Our hedging strategy empowered  TTT subscribers to not only protect wealth from serious losses during markets crashes, it allowed them to be positioned to make significant gains as markets crashed.

TTT isn’t just a hedging service.  Its timing strategies have returned fantastic gains on the long side. See examples here

Included is our proprietary Gold Technical Indicator (GTI).

Trend Disruptors:
Disruptive technology trends will propel our future and the reality is that no industry will go untouched by this digital transformation. At the root of this transformation is the blurring of boundaries between the physical and virtual worlds. As digital business integrates these worlds through emerging and strategic technologies, entirely new business models are created.

Trend Disruptors is a service for investors seeking to invest in advanced, often unproven technology stocks on the cheap, with the objective to sell them when masses finally catch on. Covering Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), 5G, Quantum Computing & many more.

All subscriptions in $US

Special Offers

ServiceRegular PriceSpecial PriceSavingSubscribe
Trend Letter$599.95$349.95$250Trend Letter $349.95
Technical Trader$649.95$349.95$300 Trend Technical Trader $349.95
Trend Disruptors$599.95$349.95$250 Trend Disruptors $349.95
Better Deals
Trend Letter + Technical Trader$1,249.90$549.95$699.95 Trend Letter & Technical Trader $549.95
Trend Letter + Trend Disruptors$1,199.90$549.95$649.95 Trend Letter & Trend Disruptors $549.95
Technical Trader + Trend Disruptors$1,249.90$549.95$699.95 Technical Trader & Trend Disruptors $549.95
Best Deal
Trend Suite: Trend Letter + Technical Trader + Trend Disruptors$1,849.85$649.95$1,199.90 Trend Suite: TL + TTT + TD $649.95
Market Notes

Navigating the Currents of Rising Interest Rates and Market Uncertainties

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Rising yields

The significant surge in interest rates throughout 2022 has been extensively documented and has deeply impacted investors, leading to diminished performance in both the stock and bond (debt) markets over the past year. Coming into 2023, the common theory was that the pronounced and continuous escalation of rates would ease, as the primary focus would shift from combating high inflation to addressing slower growth. Although this scenario did play out during much of the current year, longer-term rates has seen a marked increase in recent weeks. Notably, the 10-year Treasury yield reached its highest point since 2007 this week.

As highlighted in recent Trend Letter updates, the notable increase in interest rates can be attributed primarily to a shift in perceptions surrounding the Federal Reserve’s policy. The previously optimistic view held by the market, anticipating swift changes in the Fed’s stance including potential rate cutbacks, has encountered a dose of reality. The persistent strength in economic growth is leading the markets to now acknowledge that the Fed intends to do as it has been saying it intended to do, keep its policy rate ‘higher for longer.’ This adjustment is now manifesting in higher longer-term yields.

As we look at the bottom of the chart, we can see that based on RSI, this rise in yields is getting technically overdone. Fed Chair Powell speaks from Jackson Hole on Friday, and should he be overly hawkish, these yields will move even higher. Conversely, a dovish tone in his communication could potentially prompt a moderation in rates.

Mortgage rates

Naturally, with the increase in the 10-year yield, there is a corresponding uptick in mortgage rates. Presently, 30-year mortgage rates in the US have surpassed 7%, marking their highest point since April 2002.

Massive government debts

In their efforts to rein in inflation, the Bank of Canada and the US Federal Reserve are confronted with a significant adversary: the substantial fiscal outlays by their respective federal governments. In the case of the US, within the initial 52 business days after the debt ceiling accord was reached in early June, government expenditure has reached an astounding $1.72 trillion. This equates to an average daily expenditure exceeding $33 billion.

As these governments intensify their spending and subsequently accumulate more debt, they must then secure additional funds to support these financial outlays. Consequently, they find themselves compelled to repeatedly access the bond market to issue more bonds. This sequence of events contributes to the elevation of interest rates, thus heightening inflationary pressures.

The following visual underscores the level of unsustainability of the US debt. While Canada’s situation may not be as dire as that of the US, the trend is similar.

Debt servicing costs

Rising interest rates impact consumers, leading to increased mortgage and loan payments. Governments also face growing financial responsibilities, especially regarding interest on their mounting debt. According to the St. Louis Federal Reserve, the US is currently spending around $970 billion solely on interest payments—a significant allocation for debt servicing, nearing the trillion-dollar mark.

Food and energy inflation

Two other significant contributors to inflation are energy and food. Following its dismal performance in 2022, the oil sector has shown a notable recovery, breaking out of its downward trend. In recent weeks, oil has stood out as a positive performer. The subsequent chart illustrates that oil experienced an overbought condition last week and has since undergone a modest retracement. A potential buying opportunity might present itself if a pullback occurs to the 76.00 level.

Those who have been recently purchasing beef are well aware of the significant increase in cattle prices that has taken place since October.

Nvidia leads the markets

Later today, we have the eagerly anticipated Nvidia earnings report, and later this week, Jerome Powell is scheduled to speak at the Jackson Hole event, both of which represent significant uncertainties for the market. Nvidia is set to release its earnings after Wednesday’s market close, and the prevailing sentiment is that there will be another massive earnings beat and an optimistic projection concerning the demand for artificial intelligence. Analysts from various financial institutions are currently revising their price targets in anticipation of these earnings. It’s worth noting that the stock is currently trading at a valuation of 233 times its earnings, necessitating an extraordinary positive surprise to maintain the remarkable upward trajectory. While there’s always a possibility that Nvidia pulls off the massive earnings beat, we will be watching the 405.00  support level. If that level is breached, we could see much lower levels and it will likely drag the rest of the market down with it.

Fed speak

Federal Reserve Chair Jerome Powell is slated to deliver a speech at 10 AM during the Jackson Hole event on Friday. This presentation has captured the undivided attention of the global financial community. Powell has remained resolute in his mission to combat inflation, all the while suggesting that yields will continue to climb as part of this effort. Up to now, the markets did not believe the Fed, leading to a scenario often described as ‘fighting the Fed.’ The pivotal question now arises: Will the market accept Powell suggesting that stronger growth will require even higher rates?

We keep tabs on all sectors in the Trend Letter and issue a full report each Sunday evening. If you are not a subscriber but would like to get a deeper insight into the driving forces behind these markets, visit us at www.thetrendletter.com or email us at info@thetrendletter.com.

Stay tuned!

We are offering discounted prices for our three services & with each new subscription this week, we will donate $100 to Special Olympics.  See below.

 Trend Letter:
Since start-up in 2002 Trend Letter has provided investors with a great track record, giving exceptionally accurate information about where the markets are going, and it has explained in clear, concise language the reasons why. Using unique and comprehensive tools, Trend Letter gives investors a true edge in understanding current market conditions and shows investors how to generate and retain wealth in today’s climate of extreme market volatility.

A weekly publication covering global bonds, currencies, equities, commodities, & precious metals. Publishes every Sunday evening, covers equites, currencies, precious metals, commodities, and bonds. Each weekly issue is about 50 pages, mostly charts, with key bullet points to make easy to understand. A 10-15 min read

Timer Digest says: “Trend Letter has been a Timer Digest top performer in our Bond and Gold categories, along with competitive performance for the intermediate-term Stock category.”

Technical Trader:
Trend Technical Trader (TTT) is a premier hedging service, designed to profit in both up and down markets.

Our hedging strategy empowered  TTT subscribers to not only protect wealth from serious losses during markets crashes, it allowed them to be positioned to make significant gains as markets crashed.

TTT isn’t just a hedging service.  Its timing strategies have returned fantastic gains on the long side. See examples here

Included is our proprietary Gold Technical Indicator (GTI).

Trend Disruptors:
Disruptive technology trends will propel our future and the reality is that no industry will go untouched by this digital transformation. At the root of this transformation is the blurring of boundaries between the physical and virtual worlds. As digital business integrates these worlds through emerging and strategic technologies, entirely new business models are created.

Trend Disruptors is a service for investors seeking to invest in advanced, often unproven technology stocks on the cheap, with the objective to sell them when masses finally catch on. Covering Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), 5G, Quantum Computing & many more.

All subscriptions in $US

Special Offers

ServiceRegular PriceSpecial PriceSavingSubscribe
Trend Letter$599.95$349.95$250Trend Letter $349.95
Technical Trader$649.95$349.95$300 Trend Technical Trader $349.95
Trend Disruptors$599.95$349.95$250 Trend Disruptors $349.95
Better Deals
Trend Letter + Technical Trader$1,249.90$549.95$699.95 Trend Letter & Technical Trader $549.95
Trend Letter + Trend Disruptors$1,199.90$549.95$649.95 Trend Letter & Trend Disruptors $549.95
Technical Trader + Trend Disruptors$1,249.90$549.95$699.95 Technical Trader & Trend Disruptors $549.95
Best Deal
Trend Suite: Trend Letter + Technical Trader + Trend Disruptors$1,849.85$649.95$1,199.90 Trend Suite: TL + TTT + TD $649.95
Market Notes

Market Notes – May 19/23

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After receiving positive updates from retailers that reinforced the absence of an impending recession, the stock market surpassed the trading range that had confined it since February. This breakthrough triggered significant short covering and a surge of investment in the technology sector index, once again spearheaded by the mega-cap companies, as we have highlighted all year.

Once again, Big Tech, and mainly the 8 Big Tech stocks have accounted for almost all of the gains for the year in the broad markets. The Nasdaq 100 has jumped to a new all-time high this week, and Microsoft and Apple now make up 14% of the S&P 500 market cap. Combined, they have added over $1 trillion in value so far in 2023.

If not for the AI frenzy, stock indices would be down for the year, So, it’s been a very distorted bullish rally.

After three failed attempts (red arrows) since February, the S&P 500 broke above its key resistance level of 4175. If it can break and hold above 4200, then it could have a rally and test the August high at 4305. A break below 4050 would open the door for a more significant decline.

In speaking on This Week in Money, Martin was asked if the Fed starts cutting rates will it jump start the  markets. While the masses believe that to be true. Martin highlighted that history says quite the opposite happens. Typically, when the Fed PAUSES after a series of rate hikes, there is a brief uptick in the markets.  But what the red arrows on the chart below shows, it is when the Fed starts to CUT rates, that the big losses occur.

This makes sense, as the reason the Fed starts cutting rates is the economy is in trouble and likely headed for a recession, so investors dump stocks because stocks DO NOT do well in a recession. What the chart shows is the markets typically fall as rates are cut and not until the FED STOPS CUTTING (green arrows) do stocks start to rise again.

Currencies:

The $US was very strong from early 2021, when the Fed started aggressively raising rates till Sept 2022, and over that 22 month period the $US jumped over 27%.

Back in October, we called for a top in the $US and since then it has fallen almost 12%. But in the last 7 weeks, the $US has been forming a base formation and in the last 2 weeks has been rising, having now broken above that downtrend line from last fall (red diagonal line), and  also breaking above the tight trading range it has been in since mid March.

 

Why is this happening? One thought we have is that for most of the past decade the mantra on Wall Street has been ‘Don’t Fight The Fed.’  But ever since the Fed started to raise interest rates, the markets HAVE been fighting the Fed, not believing they would continue to raise rates. For most of the past year, the Fed, Bank of Canada and the ECB have all stated that they will keep rates high until inflation is near 2%. Today, inflation in the US is 4.9%, in Canada it is 4.4%, and in most of Europe it is over 7%. That suggest these central banks DO NOT want to cut rates, but at some point they will likely have to, due to some serious hit to the economy.

For now, the $US is looking like it is getting its legs.

For the $CAD, just like most every other currency, it trades inverse to the $US. The $CAD has been trading in a tight range between 72.5 and 75.50.  The $CAD is also forming a wedge pattern where it will soon break out either up or down.

Gold:

Gold  and silver have had a terrific couple of runs recently; from November to late January, then another from early March to early May (green diagonal arrows).

Gold has twice tested key resistance at 2060 (red arrows) and even spiked intra-day to 2083 about a couple of weeks ago. But since then, we have seen gold and silver decline, with gold down ~$140 from that intra-day high of 2083. On Thursday, gold hit our target low at 1950 and has bounced Friday with debt ceiling talks breaking down.

Silver was down over 10% in a little over 2 weeks before Friday’s bounce. In BULL markets silver outperforms gold and in BEAR markets silver underperforms gold.

One thing that we have been watching is that the mining stocks have been lagging the metals – something we are keeping an eye on

 

We are in a pullback here, which gold and  silver needed, so that’s healthy. We think gold and silver will continue to outperform the S&P 500 for the next few years. One of the big drivers for gold will be the loss of confidence investors have in government. Once that confidence is broken, we expect gold to rise along with the $US as safe-haven plays.

Based on seasonality, gold and silver typically have a great run starting from July till September.

We suggest buying the dips.

Stay tuned!

Special Offers

Trend Letter:
Since start-up in 2002 Trend Letter has provided investors with a great track record, giving exceptionally accurate information about where the markets are going, and it has explained in clear, concise language the reasons why. Using unique and comprehensive tools, Trend Letter gives investors a true edge in understanding current market conditions and shows investors how to generate and retain wealth in today’s climate of extreme market volatility.

A weekly publication covering global bonds, currencies, equities, commodities, & precious metals. Publishes every Sunday evening, covers equites, currencies, precious metals, commodities, and bonds. Each weekly issue is about 50 pages, mostly charts, with key bullet points to make easy to understand. A 10-15 min read

Timer Digest says: “Trend Letter has been a Timer Digest top performer in our Bond and Gold categories, along with competitive performance for the intermediate-term Stock category.”

Technical Trader:
Trend Technical Trader (TTT) is a premier hedging service, designed to profit in both up and down markets.

Our hedging strategy empowered  TTT subscribers to not only protect wealth from serious losses during markets crashes, it allowed them to be positioned to make significant gains as markets crashed.

TTT isn’t just a hedging service.  Its timing strategies have returned fantastic gains on the long side. See examples here

Included is our proprietary Gold Technical Indicator (GTI).

Trend Disruptors:
Disruptive technology trends will propel our future and the reality is that no industry will go untouched by this digital transformation. At the root of this transformation is the blurring of boundaries between the physical and virtual worlds. As digital business integrates these worlds through emerging and strategic technologies, entirely new business models are created.

Trend Disruptors is a service for investors seeking to invest in advanced, often unproven technology stocks on the cheap, with the objective to sell them when masses finally catch on. Covering Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), 5G, Quantum Computing & many more.

All subscriptions in $US

Special Offers

ServiceRegular PriceSpecial PriceSavingSubscribe
Trend Letter$599.95$349.95$250Trend Letter $349.95
Technical Trader$649.95$349.95$300 Trend Technical Trader $349.95
Trend Disruptors$599.95$349.95$250 Trend Disruptors $349.95
Better Deals
Trend Letter + Technical Trader$1,249.90$549.95$699.95 Trend Letter & Technical Trader $549.95
Trend Letter + Trend Disruptors$1,199.90$549.95$649.95 Trend Letter & Trend Disruptors $549.95
Technical Trader + Trend Disruptors$1,249.90$549.95$699.95 Technical Trader & Trend Disruptors $549.95
Best Deal
Trend Suite: Trend Letter + Technical Trader + Trend Disruptors$1,849.85$649.95$1,199.90 Trend Suite: TL + TTT + TD $649.95

 

Market Notes

Market Notes – March 13/23

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US stocks finished Monday mixed as volatile trading gripped Wall Street after federal banking regulators took aggressive actions to stem the fallout of Silicon Valley Bank’s failure.

First Republic Bank led a decline in bank shares Monday that came even after regulators’ extraordinary actions Sunday evening to backstop all depositors in failed Silicon Valley Bank and Signature Bank and offer additional funding to other troubled institutions. First Republic is now down ~80% since February 2/23.

Many of the bank stocks were halted repeatedly for volatility throughout the day.

With fear of a banking crisis, bonds spiked as investors ran to safety.

With the collapse of these banks, the market is now changing its tune on Fed rate hikes.

The $US was down with expectations that the Fed will slow their rate hike efforts. We will see.

Gold spiked higher as a safe-haven play.

Oil continued its decline. Could be seeing a great buying opportunity soon.

US CPI data is out  tomorrow.

Stay tuned!

Market Notes

Market Charts – September 1/22

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As noted to subscribers in Sunday’s issue of the Trend Letter, the the 50-DMA (blue wavy line) would be initial support for the S&P 500.  We also noted that if that level did not hold it would open the door to retest the July lows (bottom green dashed horizontal line). After falling through the 50-DMA on Wednesday, the S&P 500 became oversold, so a brief rally was expected, which we saw today.

Looking ahead,  if the market does not get back above the 50-DMA quickly, we can expect lower prices in the near-term.  Initial support sits at the 3900 level,  with that June low at 3665 being a critical support.  We continue to suggest using any relief rallies rallies to take profits and reduce risk. Using hedging strategies is a great way to protect your long positions.

Below is a chart that we have repeatedly shown to our subscribers to warn them to be very careful with bear market rallies.  In a bear market there will be multiple relief rallies, but these typically fail to make new highs, and instead retest the lows, often making even lower lows.  Below we see the Nasdaq from the high in March’00 to the low in Oct ’02. In that over 2.5 year period there were 8 rallies of over 16%, with some over 40%, yet the Nasdaq remained in a long-term bear market and ultimately lost over 78%!

Our Trend Technical Trader (TTT) service highlights many hedging strategies for subscribers to consider to protect themselves in a bear market.  These are very simple strategies to use, as simple as trading any stock online. Click here for more information.

Gold continued its disappointing movement, continuing to trade in the downtrend channel it has been in since the March high.  Gold is now testing its previous low near the 1700 level and could fall to the 1675 key support level before we see a turnaround.   We have been alerting our subscribers that gold could be setting up for a strong run here very soon. Note at the bottom of the chart that based on RSI, gold is close to being oversold.  We will send out BUY Alerts to subscribers if/when our model triggers the potential bottom.

Oil has continued to trade in a downtrend channel since the high in early June. Back then, we warned that oil prices, along with most commodities, could get hit as we head toward a global recession. When oil recently dropped to the 87.00 range we told subscribers that a rally to 95.00 was likely and even a run to 100 was possible. Oil did indeed rally to 95.00 but could not reach 100, stopping out at 97.00 last week. Ultimately, we are very bullish on oil and commodities in general for the long-term, but as we get closer to a recession, expect weakness in oil and most commodities as we head into the fall.

Stay tuned!

Market Notes

Market Notes – July 27/22

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This afternoon the Federal Reserve announced its latest policy, raising interest rates by 0.75% for the second consecutive month. Afterward, Fed Chair Jerome Powell answered a number of questions from the press gallery.

First, Powell was asked whether he agrees with the White House that ‘we won’t be in a recession.’ He then replied…

‘We think it’s necessary to have growth slow down. We need a period of growth below potential… We think it’s probably necessary if we’re going to get inflation down to a path to 2%… We’re going to be focused on getting inflation back down.’

At that point someone asked him ‘ ‘Why should we believe you when you said inflation was ‘transitory’?’

We thought that was a good question.

For some reason the markets  loved this rater announcement, with the S&P 500 closing the day up 102 points or 2.62%. There is serious resistance near the 4200 level.

The tech heavy Nasdaq did even better, rising 4.06% for the day.

With such a positive move in the markets, many are asking if the bottom is now in. Our answer is ‘no.’

In our weekly issues of Trend Letter, we highlight to subscribers a number of key indicators our models follow and the bottom line is, that even though sentiment has been very bearish until recently, it has further to go before we get the final bottom.  We are still seeing far too much bullish commentary from the mainstream media calling every one of these bear market rallies the start of the next bull market.

So many investors today have never experienced a true bear market; all they know is ‘buy the dip.’ Bear markets are different than simple corrections, they like to punish over enthusiastic investors.  We will know the bottom is in when no one wants to talk about the stock market. For those old enough, it will be like in 2000 and 2008, when the markets just kept going lower. Sure, there were bear market rallies, but every one of them was a bear trap, sucking in the ‘buy the dip’ players.

This bear market will end when investors are sick of hearing about the stock market.

Now, this does not mean that we will not continue to see bear market ‘relief rallies’, and some of these can be very strong. Typically, they get stronger the closer we get to a bottom. But in almost every case, these ‘relief rallies’ fail to make new highs and instead typically see lower highs and lower lows.

Here is what our models are telling us:

Stocks: rally into August, then head down into September

Currencies:  $US has had a huge run up and is now overbought. Look for a pullack over the next month and then move higher in September. This means most other currencies will trade sideways or higher over the next month, then head lower after August.

Commodities: Most commodities were red hot up until April on inflation, supply chain and war concerns. Then as they became overbought and recession fears have pushed prices down. We called for a rally in many commodities a few weeks ago and expect that could last through August, but after that, we will likely see another downturn in most commodities.

Gold: Gold and silver have been hit hard since the high in early March. We are getting a bit more optimistic that gold may be able to make a longer-term rally in the next few months.

Stay tuned!

Market Notes

Market Notes – June 17/22

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For those wanting to jump in and ‘buy the dip’ be mindful of our constant warnings that ‘bear market rallies typically fail to make new highs, and instead often make new lows.’

According to Bank of America ‘The average peak to trough bear decline = 37.3%, average duration 289 days; history is no guide to future performance but if it were, today’s bear market would end on Oct 19, 2022 (35-year anniversary of Black Monday) with S&P 500 at 3000.‘

The S&P 500 has dropped through the 38% fibonacci retracement level at 3838 and is approaching the 50% retracement at 3534.

A few months ago we targeted mid-year as a potential top for commodities. We are seeing food, lumber, even gasoline and oil coming down this week. Could the top be in?

Here is the Reuter CRB Commodity Index and it has started to roll over. Watch the 296 level (green horizontal line), which was the May low; a break below that level would be bearish. Understand that long-term we are very bullish commodities, but if we are heading for a recession then commodities will be hit as well. Once the bottom is in, we will be sending out BUY signals to subscribers.

Michael Hartnett of Bank of America notes that Fed tightening ‘always breaks something’ with the US recession likely the last leg lower in this bear market. Looking at the their Bull & Bear indicator we can see that it has dropped right down to zero, which is quite extreme. This is a contrarian indicator suggesting one of those bear markets rallies should kick off next week.

Another sign a recession likely coming as manufacturing took a big hit last month.

And yet another negative piece of news. ‘Global profit expectations among money managers are tumbling, another sign that Wall Street is at a crisis point’, according to BofA Securities. In their June Fund Manager Survey of 800 panelists with $834B under management, a net 72% say corporate profits will worsen, the lowest reading since the collapse of Lehman Bros. in September 2008.

There is a term called the ‘wealth effect.’ It refers to how homeowners and investors feel when housing prices and the value of their stock portfolios go up in value; they feel wealthy and therefore are willing to spend more. Consumers account for ~70% of the GDP, so when they spend more, it is good for the economy. Of course the reverse is also true, when house prices and stocks fall in value, consumers spend less and the economy slows.

Various indicators continue to portray extreme bearishness, which in a bull market would be a solid BUY signal. But, this is not a bull market, so we need to show caution here. If you have not yet put on any hedge positions, use this next relief rally to do so. Trend Technical Trader (TTT) uses simple inverse ETFs for hedging and offers subscribers many options; there is something for every investor. Click here to subscribe to TTT at a 50% discount

Market Notes

Market Notes – June 16/22

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The S&P 500 dropped 123 points or 3.25% and is now close to testng the 50% Fibonacci retracement level from the rally from Mar’20 to Jan’22.  Remember our warning all through this year… bear market rallies tend to be sucker rallies, usually failing to reach new highs, and instead make new lows. We are neutral right now, with our insurance trade offsetting our long play.

We do have a great list of stocks on our watch list, but we are NOT buying the dip here. We will let our subscribers know when our models trigger a BUY Signal. If you want receive those BUY Signals when they are triggered, subscribe now to the Trend Letter and receive 50% off the regular rate. Click here to take advantage of this  special offer.

Yesterday Fed chair Jerome Powell stated ‘Overall, spending is very strong, the consumer’s in really good shape financially — they’re spending. There’s no sign of a broader slowdown that I can see in the economy.’ That is quite an astonishing statement and we have no idea what data he is looking at. Every consumer sentiment chart we see shows consumers are anything but confident.

Even the Atlanta Fed, Powell’s own institution, is now forecasting Q2 GDP to come in precisely at 0.0%. That’s down from a 2% forecast in May and then a 1% forecast earlier this month. Given that the consumer accounts for~70% of the economy, how can he possibly say the consumer is in ‘really good shape financially’

Inflation was caused by excess government spending, a very dovish Fed, and high energy prices caused by the Ukraine war and extremely nearsighted energy policies.. The way the Fed seems to be planning to stop inflation is to drive the economy into a recession. And then once the recession takes hold, those laid off workers will not be able to afford things like gasoline or healthy food, so the prices will finally start to fall.

Gold had been oversold and had a nice bounce today. Still trading in 1800-1975 range.

Mortgage rates for the US 30-year jumped by the most since 1987 and are now at the highest level since 2008, which coincided with the real estate crash and a recession. Sound familiar?

Stay tuned!

Market Notes

Market Notes – June 13/22

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The S&P 500 dropped back into a bear market within the first 30 minutes of trading today. The index is now down over 20% from its January high, marking the lowest level since March 2021. The Dow plummeted 2.79% while the Nasdaq fell 4.8%. Recession fears are growing amid crippling inflation and people are pulling out of their positions before the situation worsens.

For the last six months we have warned that in bear markets, relief rallies typical fail to make new highs and in fact tend to make new lows.  Our Trend Letter and especially our Trend Technical Trader (TTT) services have been using hedging strategies to protect our portfolios from these violent bear markets and even to profit from them.

Bear markets typically have three phases. The first stage is a sharp decline, followed by a rebound, and then a drawn-out fundamental downtrend. This is likely where we are now and we are likely to see some strong relief rallies, followed by deep corrections.

If you have yet to put any hedging strategies in place, we should be due for a rally very soon, which would be an opportunity to put in such a strategy.  If you need assistance on how to hedge, seriously think about subscribing to TTT at a 50% discount. Click here to subscribe.

The Nasdaq representing the tech stocks is now down over 32% since its high in November.

The S&P 500 is now officially in a bear market, having dropped over 21% since its high at the start of January.

The Canadian TSX has fared much better thanks to energy sector. The TSX is down ~10% and has not yet hit new lows.

Volatility spiked over 22% today.

The $US continues to be a safe-haven play in this bear market, testing recent high.

On Friday Gold jumped along with the $US as a safe-haven play. Today it fell off – very inconsistent and frustrating!

Stay tuned!