Although the propaganda machine continues to spew out stories about the potential of a rate hike, it’s just not going to happen. The economy is in the crapper and it’s getting worse, no matter what they try to tell you in the main stream media. It’s not going to happen in December and it’s not going to happen in early 2016 either.
An interest rate hike would be the final nail in the coffin for this economy and the Fed knows it. In fact, rather than a rate hike over the coming months, you should expect to soon start hearing about another round of QE coming, although they might not call it that.
The Fed has lost control and has no more ammunition to throw at the economy except to continue printing money in the hopes that it spurs some consumer spending and props the stock market. But this approach hasn’t worked for the past 7 years, so why would it work now? It won’t. But this is the last option the Fed has to keep the entire economy from collapsing.
I think they’re running scared and just don’t know what to do. If you didn’t see Janet Yellen in her speech the other night, she almost passed out on stage and had to hold back her nausea. You can see it here: https://www.youtube.com/watch?v=xJ2UAYgIXG8
I think she knows how bad things are and they have no way of stopping the cards from falling. Considering the severity of the coming collapse, I’d be sick too.
It’s Coming, What to Do?
Yes, the economy is broken and the stock market has been stalled for the past 7 months and has now rolled over into a bear market. The markets tend to collapse every 7 years and this is the year for the next collapse which has already begun.
The breakout of the lower support line in the chart below confirms that the bear market has begun in the US stock market. But the US market is not the only one. All the major global indexes have broken through major support. See the charts below.
HANG SENG STOCK MARKET
I know that most of you aren’t traders and just want to know what’s going on in the financial world. You also want to know if your IRA or 401k is going to implode. How can you protect yourself from the pending collapse that’s already in process?
If I were you, I would allocate at least a portion of my assets into funds or stocks that tend to go up when the market goes down. Although most brokers and advisors don’t have a clue, ask your broker or fund manager if they can allocate at least 20% of your portfolio into areas that will protect you in the case of a stock market crash.
You should demand it, these brokers and managers do not always know best. They do what they are told to do by their superiors and that’s not always in your best interest. You may think they are working for you, but they are working for the company first, the customer comes second.
There are ETF’s (Exchange Traded Funds) and mutual funds known as inverse funds. These are designed to do the opposite of what the stock market does. There are also precious metal funds and stocks that will rise when gold and silver become the favorite flight to safety.
These precious metal stocks also pay a dividend. Stocks like the mining royalty companies ‘Royal Gold’ (RGLD) and “Silver Wheaton’ (SLW) and gold miner ETF’s like (GDX). These stocks will skyrocket when the dollar and stock market collapse.
I hope this helps and I hope your broker or fund manager doesn’t cop an attitude on you. Who’s in charge of your money, you or him? All you’re asking is to allocate a minimum of 20% of your net worth to these types of investments. Should be a no brainer!
We had a big jump in Gold today after the employment report came out this morning which came in way below expectations and just adds to the many indicators that show our economy is in the crapper along with the rest of the world economies.
Look at the daily chart above and you can see that we still need to break through the upper resistance level of the down trend line before we skyrocket higher.
My current PM positions are listed here:
GDX 3/18/16 $15 Calls
RGLD 1/15/16 $60 Calls
SLW 1/15/17 $15 Calls
Stock Market Indices: (SPY) (QQQ)
This is a bear market and it is just beginning. People who are buying the dip will be very disappointed. That strategy may have worked on the way up, but it’s going to be a disaster on the way down.
The chart above of the DOW shows a descending triangle pattern. The row of red candles on the left is the crash we had leading up to Black Monday and the consolidation that has followed, which will break down below the lower support line eventually and resume the downward trend.
Below is the hourly chart of the DOW today immediately following the disappointing employment report. You can see the crash that occurred right after the report went public and then the PPT (Plunge Protection Team) came in to save the day. We had a 380 point drop, only to be reversed shortly after the markets opened for no apparent reason.
I remain short on the stock market. I have positions in SPYJanuary 15, 2016 Puts $194
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Crude Oil is still in a consolidation pattern and if you’re making short term trades in the energy markets, you should wait until we have a break of either support or resistance out of the channel.
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.
Magnitude of Correction Will Eclipse Them All-Gregory Mannarino
…we are going to see a sell-off in this market that is going to spin people’s heads around. In my opinion, the party is over.