May 29, 2017

This is just one headline, but as we make new highs in stocks, I still see PLENTY of opinion like this out there…

As I have written forever, when markets are making new highs, and there is anything close to noticeable “professional” opinion suggesting, “Don’t buy it”, that market (especially the stock market) probably WILL keep going…And I LOVE seeing headlines---and statistics---indicating that so many Wall Street geniuses are STILL trying to call the top…And continue to believe stocks could be at that stage where all the pros, with their money STILL on the sidelines, finally throw in the towel and start chasing all the companies they’ve long been out of…and ROARING EQUITIES becomes the next big headline…

“Traders see less upside?” I couldn’t disagree more and continue to believe stocks are ACCELERATING from here…And that this barometer of future economic activity is signaling MORE AND MORE STRENGTH IN THE USA AND WORLD ECONOMIES…

Here’s a bigger picture look…

More and more, I truly believe we are in the midst of a 1990’s style move in the economy, stocks AND housing prices…by which I mean they will all be advancing SHARPLY AND UNCEASINGLY HIGHER…and ONE VERY DIRECT RESULT OF ALL THIS ACROSS THE BOARD GROWTH WILL BE MUCH, MUCH HIGHER INTEREST RATES.

 Some instinct and some logic…

Specifically regarding interest rates, during the past few months I have noticed an overwhelming shift among the ever wrong talking heads back towards the idea of rates “staying low” or “the Fed moving VERY slowly”, to the extent that I AM NOW JUST DUMBFOUNDED THAT THE MARCH 2018 EURODOLLAR CONTRACT ONLY HAS A ONE QUARTER PERCENT INCREASE IN RATES BUILT IN OVER THE NEXT 10 MONTHS…that, in plain English, THE MARKET IS ONLY “EXPECTING” RATES TO GO UP 1/4% BETWEEN NOW AND NEXT MARCH…which I see as a classic instance of investor perceptions totally missing the boat on what the FUTURE will be.

You must always remember that the markets are never at equilibrium…that none of these paper values are ever fixed, or even “real” for that matter…and due to the mob psychology nature of human investing, they do FREQUENTLY totally lose touch with reality…They do ROUTINELY become severely over or under “valued”…with the eventual result being that, “out of nowhere”, prices suddenly shift in MAJOR percentages as the trading masses find themselves heavily on the wrong side of where a particular market actually ought to be…or just TOTALLY underestimating where markets might be, literally, within a matter of months…This IS why you do get moves such as I’ve shown below:  Crude dropping from $100 to $45 in 5 months, or Gold from $1800 to $1200 in 8 months, or Soybeans from $15 to $9 in 5 months…and so on, and so on, and so on…which is exactly what  I’ve seen 100’s upon 100’s of times during the 37 years I’ve been doing this…with virtually NONE of these “readjustments” ever being anticipated by anything more than probably 1% of the analysts, investors and traders that are players in the game…BIG UNEXPECTED MOVES IN EVERY MARKET WE TRADE ARE A CERTAINTY…AND THAT IS PRECISELY WHERE I BELIEVE WE ARE IN THE INTEREST RATE MARKETS…

Here are just a FEW recent examples of markets totally not even close to anticipating what was coming…

And to be clear…These are just a FEW examples of something that happens over and over in the markets…to show that just because today’s market is at a certain “quiet” level does NOT mean it can’t be TREMENDOUSLY lower or higher within a matter of months…

And as for the current perception of where Eurodollars will be next March?

TO POINT IT OUT ONE MORE TIME…HERE BELOW IS WHAT I BELIEVE IS THE MARKET’S CURRENT TOTALLY MISGUIDED PERCEPTION OF WHAT WILL HAPPEN IN SHORT TERM INTEREST RATES BETWEEN NOW AND NEXT MARCH…10 MONTHS AWAY.

So what do I think we will see…?

Ok…Eurodollars have been consolidating for 5 months…and thanks to a three day 500 point dip in the Dow in mid-May (now negated by new all time highs), we just had a concurrent 15 tick rally in Eurodollars…which I believe was a classic “last gasp, run all the stops” rally before the market truly goes in the tank…I keep saying it…and I believe it 150%...I look for this market to NOW begin what will be a virtually non-stop (no real consolidations) move to substantially lower levels…AND CONTINUE TO RECOMMEND BUYING PUTS…NOW EXTENDING OUT TO THIS MARCH CONTRACT.

Give me a call if you want to talk possibilities…

Thanks,

Bill

770-425-7241

866-578-1001

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The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars