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• On the lighter side. Check it out!

Here is the update of how the S&P 500 has  performed compared to our Weekly TL Forecaster Model for the S&P 500 since April 26th.

Note that our model (gold line) tends to lead the markets.

It projected the current decline and forecast a bottom in late May at the low 2700 (2750-2725) range. Check out how the market has eerily tracked the TL Model projection.

We will be looking to send Trend Letter subscribers fresh new BUY Signals if that low 2700 support level holds. Note: If that 2700 level does not hold, then we could be in for a much bigger correction.

On Friday, the S&P 500 closed at 2752, within a hair of the TL projection low of 2750-2725.

Projection vs actual as of April 26/19:

Projection vs actual as of May 3/19:

Projection vs actual as of May 10/19:

Projection  vs actual as of May 17/19:

Projection vs actual as of May 24/19:

Projection vs actual as of May 31/19:

The S&P 500 has now touched the upper range of our model’s target low, exactly on the last day of May, and is now approaching our next target ‘Buying Opportunity’.  Investor sentiment as measured by the CNN Fear & Greed Index is now at an ‘Extreme Fear’ reading, which for contrarian investors is a positive sign. Is it time to buy?

Every Sunday Trend Letter subscribers get our model’s latest readings on stocks, bonds, currencies, commodities, and precious metals, with our model’s latest BUY & SELL triggers. If you want to join our list of global subscribers and receive these very timely and accurate projections, we are offering a $200 discount, meaning you would only pay $399.95. This offer is valid for the next 3-days only!  Click Button below to subscribe to this Special Offer.

Stay tuned!

Just when you thought you had just figured out millennials a new generation of influencers has come on the scene. They are Gen Z—loosely, people born from 1995 to 2010— and they are true digital natives.  From their beginning they have been exposed to the internet, to social networks, and to mobile systems.

Corporate America is shifting advertising focus to Gen Z, away from the millennials, as this group is massive and influential. In U.S. alone, there are 65 million of them. By 2020, Generation Z will account for 40% of all consumers in the U.S.

Gen Zers are very comfortable with collecting and cross-referencing many sources of information as they’ve grown up in a world where they have limitless options, but not limitless time.

McKinsey & Company did a survey on Gen Z and its implications for business.

Our study based on the survey reveals four core Gen Z behaviors, all anchored in one element: this generation’s search for truth. Gen Zers value individual expression and avoid labels. They mobilize themselves for a variety of causes. They believe profoundly in the efficacy of dialogue to solve conflicts and improve the world. Finally, they make decisions and relate to institutions in a highly analytical and pragmatic way. That is why, for us, Gen Z is “True Gen.” In contrast, the previous generation—the millennials, sometimes called the “me generation”—got its start in an era of economic prosperity and focuses on the self. Its members are more idealistic, more confrontational, and less willing to accept diverse points of view.

Such behaviors influence the way Gen Zers view consumption and their relationships with brands. Companies should be attuned to three implications for this generation: consumption as access rather than possession, consumption as an expression of individual identity, and consumption as a matter of ethical concern. Coupled with technological advances, this generational shift is transforming the consumer landscape in a way that cuts across all socioeconomic brackets and extends beyond Gen Z, permeating the whole demographic pyramid. The possibilities now emerging for companies are as transformational as they are challenging. Businesses must rethink how they deliver value to the consumer, rebalance scale and mass production against personalization, and—more than ever—practice what they preach when they address marketing issues and work ethics.

Generations are shaped by the context in which they emerged . Baby boomers, born from 1940 to 1959, were immersed in the post–World War II context and are best represented by consumption as an expression of ideology. Gen Xers (born 1960–79) consumed status, while millennials (born 1980–94) consumed experiences. For Generation Z, as we have seen, the main spur to consumption is the search for truth, in both a personal and a communal form. This generation feels comfortable not having only one way to be itself. Its search for authenticity generates greater freedom of expression and greater openness to understanding different kinds of people.

Gen Zers, with vast amounts of information at their disposal, are more pragmatic and analytical about their decisions than members of previous generations were. Sixty-five percent of the Gen Zers in our survey said that they particularly value knowing what is going on around them and being in control. This generation of self-learners is also more comfortable absorbing knowledge online than in traditional institutions of learning.

Gen Z have a carefully tuned radar for being sold to and a limited amount of time and energy to spend assessing whether something’s worth their time. Getting past these filters, and winning Gen Z’s attention, will mean providing them with engaging and immediately beneficial experiences. One-way messaging alone will likely get drowned out in the noise.

Stay tuned!

In late 2017 we warned of much more volatile times ahead, from 2018 to 2020. Up until the start of 2018 the stock markets were in a solid  9+ year bull market. Investors were confident, to the point of being ‘complacent’ , with a ‘risk-on’ sentiment. But then things changed, inflation worries crept into the markets and investor sentiment did a quick about-turn, going from ‘complacent’ to ‘fearful’. As a result, the VIX Volatility index spiked and we saw the S&P 500 drop over 10% for the first time since January 2016.

After that initial ‘correction’, volatility worked its way back down as investors became more confident that the ‘correction’ was just that, and not the start of an all-out bear market.  The S&P 500 slowly worked its way back to break-even territory and actually made a new high in August ’18, before topping out in October’18 at a new all-time high.

From that October high we had the Fed talk about more rate cuts and quantitative tightening via reduction of its balance sheet. The investor reaction was quick, volatility spiked, and the S&P  dropped over 20% from the October high to the December 24th low.

The Fed started to panic and backpedal on its previously hawkish tone regarding future rate hikes and quantitative tightening.  The market’s reaction was again quick, with the S&P 500 now up over 24% and the VIX Volatility Index back down to levels where we saw previous market tops.

No market goes straight up or straight down and we are now getting signals that this market is due for a pullback, and that could be great news for investors. Pullbacks are healthy for equity markets and a pullback at this juncture would help the market digest its recent gains and work off stocks’ overbought condition, which will actually give it a better chance of rallying further in the future.

Make no mistake, we are in the late innings of this 10-year bull market for stocks, but that does not mean this bull market is over. In fact our models are calling for a pullback here and then another rally higher to new all-time highs in mid summer. Below is the most recent projection from our TL Forecaster Model.  As we can see it is projecting a pullback to the mid 2700 range by mid/late May, and if that level holds it could be a great buying opportunity.

Stay tuned!

Even though there are many signs pointing to a continued global economic slowdown, the Chinese stock market could be ripe for a surprise spike higher. The Shanghai Stock Exchange started the year with a bang, rising over 28%.

The SSEC is no stranger to volatility as we can see on the following chart. Back in 2006-2007 the SSEC had a massive bull market, spiking almost 450%. In 2015 it had another big jump gaining over 150% in a year-and-a-half.

Chinese stocks have been hated by global investors, but we believe that is a big mistake. China is the second largest economy in the world, with only the US being bigger, yet investors have ignored Chinese stocks.  But that is now starting to change and if you want to get in on the next big China rally you had best get prepared now. Even Goldman Sachs recently posted a story suggesting Chinese stocks could rally 50% due to investors’ Fear Of Missing Out (FOMO). When we hear an investment bank like Goldman Sachs trumpeting gains of 50% for the entire Chinese market, that is huge. Typically, these banks are quite conservative in their estimates, so a 50% forecast is worth noting.

But understand that it is not simply the FOMO factor that could propel Chinese stocks much higher. Back in 2017 we alerted our subscribers to an opportunity to take advantage of an anticipated massive inflow of capital into China A-share stocks. The driver was that global index provider MSCI announced that for the first time it was going to include China ‘A’ Shares in their Emerging Market Index.

China A-shares are the stock shares of mainland China-based companies that trade on the two Chinese stock exchanges, the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Historically, the shares were only available for purchase by mainland citizens due to China’s restrictions on foreign investment.

Think about that for a second. Here is the second largest economy in the world and MSCI Emerging Market Index did not include any China ‘A’ shares. But in June 2017, the MSCI Emerging Markets Index announced a two-phase plan in which it would gradually add 222 China A large-cap stocks.

From Investopedia: ‘In May 2018, the index began to partially include China large-cap A shares, which make up 5% of the index. Full inclusion would make up 40% of the index’.

The MSCI Emerging Markets Index has assets of approximately $1.7 trillion so as it keeps increasing the China ‘A’ shares portion of the fund, it means tens, then hundreds of billions, and potentially over $1 trillion will be flowing into Chinese markets in the near future.

We recently sent Trend Letter subscribers a couple of trades to play this potential windfall from capital flowing into Chinese shares. You do not want to be on the sidelines and miss what could be a massive bull market in Chinese stocks. 

Stay tuned!