Stock Market Is Crazy and Crazy Means Opportunity
The SPX has completed its’ “Broadening Topping Pattern”
…the next trend is DOWNWARDS!
The current pattern is suggesting that a significant top is at hand. I fully believe both in patterns and indicators and right now the current pattern is suggesting that a significant top is at hand.
My cycles are suggesting a potential “Black Swan” event, in multiple indexes, which are “imminent”. The SPX may have made its’ last challenge of the upper trend line of its’ ‘Broadening Top’. On Friday, August 19th, 2016, it closed beneath its’ ‘Cycle Top’ resistance at 2185.38. The SPX has fulfilled all of the fractal requirements necessary for a completed “corrective” uptrend. The uptrend from 1810 has been in a “corrective phase”. The next wave down will be an impulsive wave.
The large divergences which I have been viewing, in my proprietary oscillators, are most real and accurate and once the selling begins, the momentum should quickly move to the downside. The current market is being supported by a lack of sellers, more so than aggressive buying. With investors still thinking that there is nowhere else to place their money, they appear to be content with leaving their money at “risk on” assets, within a market that is pushing all-time highs. This type of “mentality” usually leads to large losses, rather than big gains. There is just no opportunity for growth in the SPX!
Investors have become complacent with the current rally. They listen to and believe what the FED has been saying regarding interest rates and they have come to believe that everything about this market depends upon the FED. I do not believe that to be the case. I believe that the FED is or should I say will be irrelevant in due time!
The Bank of America Merrill Lynch reports that its’ clients (institutions, hedge funds and private clients) who have sold stock for all but 2 to 3 weeks, during all of 2016, have once again sold $1.9 billion of US stocks while the SPX was hitting new highs. Institutional clients led the sales due to poor performance. It has been the retail investors that have been flooding into the market while anticipating a massive breakout and rally.
The big and smart money continues to build up massive short positions. George Soros has become more bearish on equity markets, nearly doubling his short bet against the SPX, following similar moves by Jeffrey Gundlach, Carl Icahn and David Tepper. According to his 13F filing, Soros now owns roughly 4 million ‘put options’ on shares of the SPY.
We are presently living on borrowed time and vast amounts of borrowed moneys. This is a period of time of “unprecedented economic upheaval” which was caused by ‘financial engineering’ by governments and their Central Banks. It’s a slow-motion catastrophe, where as we are living today at the expense of tomorrow. The FEDs’ balance sheet has more than quadrupled since the Crash of 2008. This is unprecedented:
Keep in mind, that most of these highly successful investors mentioned above also predicted other major market moves if you look back through the years. Their huge bets and called typically play out, but I do find most of them jump the gun a little early (many months in most cases). Reason being, they understand how and why the markets move, and because they do, they know when various markets are nearing a major turning point.
The catch, with trying to time these major multiyear market reversals is that all investors around the world (all market participants) buying/selling habits need to stall out and reverse direction for the new trend to take hold. This always seems to take longer than we expect, but these highly successful investors along with myself feel this bull market in stocks is about to come to an end.
Conclusion:
The next stage will become a vicious deflationary cycle in which prices and growth “crash and burn”. Prepare for another massive wave poor earnings, job layoffs, and falling stock prices.
Over the past 500 years, or more, whenever deflation emerged, price of gold gained and always gained big, in terms of purchasing power and I don’t feel this time will be any different.
There will be many ways to profit from all of this, precious metals is just one of many awesome opportunities unfolding for myself and subscribers to enjoy.
My ETF Trades: www.TheGoldAndOilGuy.com
Chris Vermeulen
