Why You Must Adapt or Die in Today’s Market

Have you noticed we’re getting a lot of brutally sharp reversals in the markets lately? It’s so frustrating because most traders get caught on the wrong side over and over again. So called safe trend trades get destroyed while betting on bold reversals is working like clockwork.

What’s going on?

For years, it was possible to just buy any dip in stocks and crank out winner after winner. But those days are long gone. If you try that now, you’ll burn through your account in the blink of an eye. These days’ trends reverse on a dime, but at the same time, you can’t just blindly pick tops and bottoms either.

Anyone who was short stocks recently learned that lesson the hard way when the market rocketed to new all time highs. The bottom line is that those outdated strategies no longer work. If you want to generate consistent profits in these volatile conditions, you’ve got to adapt. And that’s why this short video by renowned trader John F. Carter is so exciting

You’ve just got to see the breakthrough strategy that allows him to catch massive price swings without breaking a sweat.

See for yourself >>> Click HERE to Watch <<<

If you haven’t heard of John before, he’s a best selling author and trader with over 25 years’ experience. He’s developed a world wide reputation for catching explosive trends in stocks, options, and even futures, too.

So I hope you attend on September 6th, 2016 at 7:00 PM Central for a special webinar called, “Hunting for Tops and Bottoms - Low Risk Setups for Trading Precise Turning Points in Any Market”.

Here’s just some of what you’ll learn....

  *  A simple 3 step process to identify major market turning points in any market

  *  How to find low risk, high probability trades in today's volatile market conditions

  *  Why it’s finally possible to catch tops and bottoms in real time on almost any chart

  *  Why these ‘Bold and Beautiful’ reversal trades can be safer than ‘comfortable’ trades

  *  How to avoid getting suckered into the costly traps that most traders fall into

  *  How to adapt your trades automatically for choppy conditions and big trends

  *  How to know when a support or resistance level is likely to hold or not

And that’s just the tip of the iceberg.

I’m looking forward to this special event and I expect I’ll be taking a lot of notes, too. There may not be a replay and this event will almost certainly fill to capacity – so register now and be sure to show up a few minutes early. Unless you’ve already mastered trading these volatile swings, this could be the most important training you attend this year.

To claim your spot just Click HERE

See you next Tuesday,
The Gold ETF Trader


P.S.   If you have not downloaded John's free eBook do it asap....Just Click Here

Will The Bubble Pop Regardless if the Fed Never Raises Rates?

The current overall SPX pattern is a broadening top, which is usually a very reliable pattern. The market continues to look as though it wants to go even lower. The momentum shift, which I have been expecting, has been slow to start, however one should be prepared for this occurrence ahead of time. Nevertheless, the large divergences which I have been viewing, in my proprietary oscillators, are most real, and, once the selling starts, 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 no other place to store their money, they appear to be content with leaving their money with risk on assets within a market that is pushing to all time highs. This type of mentality usually leads to large losses rather than big gains. There isn’t any real opportunity for growth in the SPX that I can see right now.

Dow Theory: Market Indexes Must Confirm Each Other

The Dow Theory was formulated from a series of Wall Street Journal editorials which were authored by Charles H. Dow from 1900 until the time of his death in 1902. These editorials reflected Dow’s beliefs regarding how the stock market behaved and how the market could be used to measure the health of the business environment.

Dow first used his theory to create the Dow Jones Industrial Index and the Dow Jones Rail Index (now Transportation Index), which were originally compiled by Dow for TheWall Street Journal. Dow created these indexes because he felt they were an accurate reflection of the business conditions within the economy, seeing as they covered two major economic segments: industrial and rail (transportation). While these indexes have changed, over the last 100 years, the theory still applies to current market indexes.

Market indexes must confirm one another. In other words, a major reversal from a bull or bear market cannot be signaled unless both indexes (generally the Dow Industrial and Transports Averages) are in agreement. Currently, They are DIVERGING, issuing MAJOR NON-CONFIRMATION HIGH the Dow Jones Industrial average. If one couples this with the volatility index, this is a warning sign and a recipe for disaster.

The FEDs’ monetary policy over the last eight years has led to unproductive and reckless corporate behavior. The chart below shows U.S. non financials’ year on year change in net debt versus operating cash flow as measured by earnings before interest, tax, depreciation, and amortization (EBITA).

The growth in operating cash flow peaked five years ago and has turned negative year over year. Net debt has continued to rise, which is not good for companies.

This has never before occurred in the post World War II period. In the cycle preceding the Great Recession, the peaks had been pretty much coincidental. Even during that cycle, they only diverged for two years, and by the time EBITA turned negative, year over year, as it has today, growth in net debt had been declining for over two years. Again, the current 5 year divergence is unprecedented in financial history. Today, most of that debt is used for financial engineering, as opposed to productive investments. In 2012, buybacks and M&A were $1.25 trillion, while all R&D and office equipment spending were $1.55 trillion. As valuations rose, since that time, R&D and office equipment grew by only $250 billion, but financial engineering grew by $750 billion, or three times this!

You can only live on your seed corn for so long. Despite there being no increase in their interest costs while growing their net borrowing by $1.7 trillion, the profit shares of the corporate sector peaked in 2012. The corporate sector, today, is stuck in a vicious cycle of earnings manipulation management, questionable allocation of capital, low productivity, declining margins and growing debt levels.

Conclusion:

In short, I continue to pound on the table to help keep you and fellow investors aware that something bad, financially, is going to take place – huge events like the tech bubble, the housing collapse a few years back, and now national financial instability. Experts saw all these events coming months and, in some cases, years in advance. Big things typically don’t happen fast, but once the momentum changes direction you better be ready for some life changing events and a change in the financial market place.

Follow my analysis in real time, swing trades, and even my long term investment positions so you can survive from the financial storm The Gold & Oil Guy.com

Chris Vermeulen

The “Perfect Storm” That Could Shoot Gold Prices Through the Roof

By Justin Spittler

A “perfect storm” has hit the gold market.  Longtime readers know Casey Research founder Doug Casey has been warning of another major financial disaster for years. According to Doug, the financial hurricane that made landfall in 2008 never left. It’s been hovering above us, gaining strength.   Doug now thinks we’re exiting the eye of the storm. When the trailing edge hits, it will trigger a crisis “much more severe, different, and longer lasting than what we saw in 2008 and 2009.”

He’s encouraged anyone listening to buy gold, the ultimate safe haven asset. If you took Doug’s advice, you’re likely sitting on big gains. The price of gold has surged 27% this year. It's beat global stocks 6-to-1. Gold hasn’t done this well in years. Today, we’ll explain what’s driving gold prices. As you’ll see, folks are piling into gold at the fastest pace ever. And there’s no reason to think this buying mania will end anytime soon.

Gold is having a historic year..…
Over the first six months of this year, the price of gold surged 25%. According to the World Gold Council, gold had its best start to a new year since 1980. Record “investment demand” caused gold to take off.    If you’ve been reading the Dispatch, you might find the phrase “investment demand” odd. After all, we don’t consider gold an investment. We think of it as real money.

For centuries, gold has preserved wealth because it’s unlike any other asset. It’s durable, easy to transport, and easily divisible. Unlike paper currencies, it’s survived every financial crisis in history. It’s the most reliable store of value on the planet. When the World Gold Council says “investment demand,” it’s talking about gold coins, gold bars, and gold ETFs… basically anything but jewelry. Frankly, it doesn’t matter if you call gold an investment or real money. The point is that folks are buying gold at the fastest pace ever.

Investors bought 1,064 tons’ worth of gold during the first half of this year..…
That shatters the previous all-time record. Investors bought 16% more gold during the first six months of this year than they did in the first half of 2009, when we were still in the midst of a global financial crisis. Investors are buying any gold they can get their hands on.

MarketWatch reported last week:
Demand comes from a “broad spectrum of investors accessing gold via a range of products with gold-backed ETFs and bars and coins performing particularly strongly.” As you probably know, gold ETFs like the SPDR Gold Trust ETF (GLD) track the price of gold. They trade like stocks, making them a convenient way to “own” gold.

However, it's important to keep in mind that gold ETFs are “paper gold”—they’re no substitute for a gold coin you can hold in your hand. That said, gold ETFs are incredibly popular. They can say a lot about investor sentiment toward gold. Right now, investors can’t get enough of these funds. According to the World Gold Council, inflows into gold backed ETFs hit 579.2 metric tons during the first half of the year. That, too, is a new all-time high.

Mom and Pop investors aren’t the only ones buying gold..…
Legendary investors George Soros, Carl Icahn, Stan Druckenmiller, Bill Gross, and David Einhorn have all recently placed huge bets on gold. These are some of the best investors to ever walk the Earth. None of these men got to where they’re at by investing like everyone else.

They made billions of dollars by being contrarians. Yet, they’re all doing the same thing right now: buying gold. Just as important, they’re buying gold for the same reasons we own gold. It’s the ultimate safe haven asset.  This tells us something is very wrong with the global economy or financial system.

The World Gold Council says a “perfect storm” has pushed investors into gold..…
MarketWatch reported on Thursday:

“The global picture for gold is dominated by considerable and continued investment demand driven by the West as investors rebalance their investment in response to the ever-expanding pool of negative yielding government bonds and heightened political and economic uncertainty,” said Alistair Hewitt, head of market intelligence at the WGC, in a statement.

Regular readers won’t find this surprising. All year, we’ve been pointing out dangers in the economy and financial system. We said most stocks and bonds are incredibly risky. We’ve explained that global debt is spiraling out of control. And we’ve shown you countless examples of how the global economy is stalling.

Governments are desperately trying to prevent another major financial crisis..…
Since 2008, central banks have cut interest rates more than 650 times. And they’ve “printed” more than $12 trillion. Central bankers thought flooding the global economy with easy money would make it grow. It hasn’t worked. The U.S., Europe, and Japan are all growing at their slowest rates in decades.

Governments are trying to “stimulate” the economy with even more extreme policies..…
Negative rates are the latest government “stimulus” measure. This radical policy basically flips your bank account upside down. Instead of earning interest on your money in the bank, you pay the bank money. The idea is that people will spend more money if they’re “taxed” to save money. It’s a completely idiotic idea. Yet, as the World Gold Council noted, negative rates are spreading like a plague. According to Business Insider, more than $13 trillion worth of government bonds now have negative rates. Keep in mind, negative rates were practically unheard of two years ago.

The average investor is starting to realize easy money doesn’t work..…
Just look at what’s happening in Europe. Two months ago, Great Britain voted to leave the European Union. The “Brexit” shook the global financial system. It knocked more than $3 trillion from the stock market in two days. Policymakers immediately sprang into action. Within hours, the Bank of England (BoE) pledged to pump £250 billion ($322 billion) into Europe’s financial system. And two weeks ago, the BoE announced its biggest stimulus package since the 2008-2009 financial crisis.

It dropped its key interest rate just above zero. And it launched a new £70 ($90) billion “money printing” scheme. It hopes its “sledgehammer stimulus” program will help England avoid a recession. We wouldn’t bet on it. As we often point out, easy money policies don’t actually help the economy. At best, they buy the government time, but this comes at a price.

Easy money policies destroy the value of paper currencies..…
The euro has lost 18% of its value since the European Central Bank (ECB) introduced negative rates in 2014. And the British pound plummeted after the BoE announced its new stimulus plan. It’s now down 13% since the start of the year. On Friday, it hit a 31 year low. People in Europe are taking shelter in gold. According to the World Gold Council, Europe was the biggest source of gold investment demand over the first six months of this year.

Doug Casey thinks paper currencies will fall one by one in the coming years..…
Doug explains:

A panic into gold. You’ve heard this story many times before here. But it’s truer than ever as we approach a genuine crisis. There are no stable paper currencies anywhere in the world. The dollar has been strong only because it’s liquid. Liquidity is good, but here, we’re talking about liquid like nitroglycerin.

While gold is already up big this year, Doug thinks it’s headed much higher in the coming years:

Hedge funds will start buying gold in size. As will central banks, who don’t want to hold each other’s paper. As will individual investors. Right now, few people even think about gold, much less understand it. How to profit? Buy gold. I expect we’ll see it well over $5,000 this cycle.

Right now, gold trades for around $1,340, meaning Doug thinks gold could easily triple in the coming years.

If you do one thing to protect yourself from the coming crisis, own physical gold..…
We also encourage you to watch this important presentation. As you’ll see, the crisis Doug’s been warning about has already begun. It could eventually take out every major paper currency, including the U.S. dollar. The good news is that you can still protect yourself. If you act soon, you could even turn this coming crisis into an opportunity to make BIG gains. Watch this free video to learn how.

Chart of the Day

The U.S. economy is growing at its slowest pace in decades. Today’s chart shows the average annualized growth rate of the past 11 U.S. economic recoveries. As you can see, the U.S. economy has grown just 2.1% per year since 2009. That makes the current “recovery” by far the slowest since World War II. Last quarter, the economy grew at an annualized rate of only 1.2%. That’s not even close to the average annualized growth rate (4.7%) of the last 10 recoveries.

We’ve been saying for months that the U.S. is in big trouble. We’re now starting to see this in the headline gross domestic product (GDP) number, which lags other indicators we follow. This tells us a major crisis could be around the corner. We encourage you to protect yourself before it’s too late. Step No. 1 is to own physical gold. We recommend most investors put 10% to 15% of their wealth in gold. For other ways to safeguard your wealth, watch this short video.

The article The “Perfect Storm” That Could Shoot Gold Prices Through the Roof was originally published at caseyresearch.com.

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It Can’t Wait Any Longer – It's Deja Vu in the Markets

The stock market tends to repeat itself on a regular basis. Why? Because it moves mainly based on the emotions of market participants, with the exception of extreme times when the masses are moving the market with extreme fear or greed, at which point they are flooding the market with buy or sell orders to create a final pop or drop in the market just before a major market reversal.

As with everything in the universe, everything moves in cycles, periods of expansion and contraction, and there are regular wave like patterns that happen on a regular basis no matter the time frame one is reviewing on a stock chart.

Here are three charts, each showing a similar price pattern of extreme washout lows, followed by roughly a 1 1/2 month rally taking investors on a roller coaster ride from fear and complete panic to greedy "know it alls". In short [no pun intended] U.S. large cap stocks look and feel toppy here. I feel a correction is likely to take place any day now, and the big question is “how much will the stock market pullback? Will it be another 4-5% correction similar to the chart examples above? Or will it be something larger 8-15% correction?

Chris Vermeulen


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