Most people who read my market commentary think I’m a doomsayer.
I get: ‘What you’re saying has never happened and it’s not going to happen now.’
Believe me, I get it! There’s a name for this and it’s called ‘Normalcy Bias’.
Normalcy Bias: A state of mind that causes people to underestimate the possibility of disaster and its potential effects. This results in situations where people fail to adequately prepare and the failure of governments to include the populace in its disaster preparations.
The assumption is made that since a disaster has never occurred, then it never will occur. It can result in the inability of people to cope with a disaster once it occurs.
People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.
But just for your information, what I write about is not my opinion, nor something that comes from my imagination. It’s based on mathematical certainty. I get this information from financial indexes, economic indicators and statistical and technical analysis.
The following excerpt is fiction, but it’s based on the financial reality that is already occurring in the markets.
Reality or Fantasy? You decide.
You wake up in the morning and turn on the news; the stock market is crashing again.
Another big Wall Street bank has failed. Your 401(k), IRA or stock portfolio has just lost another 25% in value. It's bleeding value every week.
Your dream of early retirement is quickly fading. You've lost so much money in stocks that retirement is not looking good anytime soon. There's no way you'll have enough money to be financially secure.
Foreign countries that used to fund our debt by purchasing our Treasuries have stopped buying. US Treasuries are being dumped like a hot potato and the US dollar is in free fall. The only safe investment now is gold and silver, but it’s gotten so expensive and supply is so short that most people can’t afford to purchase precious metals; especially since they lost their nest egg in the market crash.
The Fed just can’t keep up with the massive amount of money needed to service the trillions of dollars of National debt that we have accumulated and what’s worse, the US has no reserves.
The Social Security Trust Fund is empty and tax revenue is only a fraction of the revenue needed for our government to operate.
The government starts to shut down, it’s completely bankrupt. Over 2 million government workers are laid off and entitlement spending has been put on hold.
US citizens who are dependent on the government stop receiving their social security checks, Medicare payments, welfare checks and food stamps.
The Feds have no choice but to declare martial law to try and contain the masses of angry citizens who are now destitute and completely helpless. Curfews are imposed and travel is forbidden; you’re not allowed to leave your home or the country. Military officers go door to door searching and confiscating guns and ammo.
The government in its desperation to try and hold it together will seize retirement accounts, savings accounts and private property in the name of national security. Bank bail-ins are now in place. Any bank account over $50,000 is confiscated to bail out the failing banks.
Banks have closed indefinitely and cash from ATM’s is limited to $60 per week. Credit cards no longer work and store shelves are empty due to the mass of people stocking up to protect their families for the long haul.
Crime runs rampant, killings, assaults and burglaries ramp up due to the desperation of dependent mobs. The police are overburdened and are no help; they just can’t keep up with the massive extent of mayhem.
The president declares a national emergency and puts a halt to the next election after declaring martial law. He uses the US military to intern our own citizens. He declares to be completely in control with the US Constitution now considered null and void under this new military fascism.
Your only hope is to hunker down and try to protect your family and hope you have enough food, water and ammunition to survive the onslaught of angry mobs and thugs for the next several months. That is, if they don’t confiscate your guns. Who knows when things will return to normal?
Don’t believe this can happen here? Sounds extreme? It is extreme!
It happened in Greece, Rome, Venezuela, Zimbabwe and its currently happening in Brazil. The US is in big trouble and the elites know it.
That’s why they are moving to neutral countries like New Zealand, buying large chunks of land, installing bunkers, hoarding gold and silver bullion and moving their wealth out of the US.
Did you know the US government reopened its NORAD Cheyenne Mountain bunker in preparation for war?
Are you familiar with the Jade Helm 15 military exercise designed as a dry run for martial law?
What are you doing to protect your wealth and family?
I don’t mean to scare you; I mean to scare you into action!
Live long and prosper.
PS: Current orders for survival food, ammunition and gold and silver coins are off the charts. Dealers can’t keep up with demand. There is a huge back log in all categories, with delivery times exceeding 60-90 days. This should be a warning sign to those who are paying attention.
We had a breakout of the down trend line on Wednesday and then on Thursday, fueled by the Feds no rate hike, we have a serious move to the upside in gold and silver as investors move to safe haven assets in precious metals. Expect this to continue over the next few weeks as we are now in impulsive wave #3 to the upside.
Stock Market Indices: (SPY) (QQQ)
To show you how absurd the markets are, this week stocks rallied on bad news that came out on Tuesday. The Empire State Manufacturing Index and Industrial Output were both very weak. However, stocks rallied on the news because investors believed that this bad news would keep the Federal Reserve from raising rates.
So it appears that markets have become so distorted due to central bank policy, that bad economic news is good for the stock market.
Also, on Thursday the Fed decided not to raise rates and as a result the stock market initially rallied, as expected, but then reversed as it got closer to resistance near the downtrend line. (See chart below.)
It looks to me as if the market will consolidate within this triangle pattern until we have a breakout in either direction. My bet is a breakout to the down side by next Wednesday and a crash thereafter.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Last week I told you that a bull flag pattern was forming in crude oil and that we should have a break out to the upside with a profit target around $52-$54+. Look at the chart below and you can see that we had our break out yesterday and we should see a continued move up towards our target as predicted.
Financial Stocks: (XLF) (IYF)
It’s time to short financial stocks, the tide has turned and the devastation will be ugly.
Biotech: (BIB) (KITE) (IBB)
Biotech will be a good sector to get into once the stock market bottoms and begins to consolidate. For now I’m staying away.
Commodities: (FCX) (JJG) (DBA)
Commodities will move higher when we have inflation, however, I think we will start with deflation as the global economies crash and inflation will begin once the central banks begin printing more money to try to stem the crash in the markets. I will just watch these until I see a signal of a move up in price and a break of the downtrend line.
Financial Strategist: While we may not be able to predict specific dates or outcomes because of outright manipulation, a collapse of the system as we have come to know it remains a mathematical certainty.