November 9, 2016
Wake up…It’s starting to happen…
I absolutely maintain that, try as they will to disguise or deny it, FOR YEARS, the overwhelming sentiment from the brokerage house industry, and all the talking heads, has been, “Don’t buy the stock market…here.” For sure, they do always have an underlying bias that leans towards a higher stock market (otherwise the brokerage industry wouldn’t exist), but what I have seen for virtually the entire 12,000 point run in the Dow since 2009 has DEFINITELY been, “Correction coming!” or “Bear market!” or “Overvalued here” or “Artificially high” or any number of supposedly “logical” reasons to NOT be a true buyer of equities…as I said before…”right here.”
OF COURSE, all of their negative advice is going to be accompanied by their usual CYA statement, “Long term, we like the market”, but over and over, all those well dressed, articulate slick talkers are, just about every other month, finding some “crisis” with which to infer that the next move in stocks will be to the downside. And along those same lines, as I have pointed out throughout 2016, they have been nothing but “cautious” or outright bearish since we came out of the gate in January with their “China is failing!”, “Crude oil is signaling worldwide slowdown!”, “Sell in May and go away!”, “Brexit will drag down everybody!”, etc…and the truth is, that is where they still are…STILL looking for reasons NOT to buy…right up until yesterday and their nearly unanimous calls for a disastrous stock market if Trump won the presidency…
Well…Trump DID win…and stock market futures DID sell off 900 points…FOR ALL OF THREE HOURS LAST NIGHT…as all of those brokerage house nitwits led investors straight to the slaughterhouse…BUT LOOK AT WHERE WE ARE NOW…WITH THE DOW CLOSING UP 257 POINTS DEAD ON ITS HIGHEST CLOSE EVER….For real…DO, one more time, understand that their advice WAS unanimously bearish if Trump won...and DO understand that, one more time, they have proven that they really don’t know diddly about the future value, I say, of ANYTHING…which IS what this stuff is about…And consequently, these analysts are perennially just about the best indicator of what NOT to do that I know of…
As I wrote several days ago:
I SEE NOTHING BUT A MONSTER ECONOMIC YEAR AHEAD OF US IN 2017. IF YOU WANT TO LIVE IN THE PAST, KEEP BELIEVING THE ANAYLYTIC NONSENSE THAT CHINA, EUROPE AND THE REST OF THE WORLD ARE ALL ON WEAK KNEES (THEY ARE NOT)…OR THAT GROWTH IN THE UNITED STATES IS “STILL TOO SLOW.” I THINK THE USA AND WORLD ECONOMIES WILL BE DOING NOTHING BUT EXPANDING DYNAMICALLY AS WE GO FORWARD…AND WITH ONE OF THE FUNCTIONS OF THE STOCK MARKET BEING TO ANTICIPATE AND REFLECT THE FUTURE (MEANING STOCKS GO UP BEFORE YOU SEE IT ACTUALLY HAPPEN IN THE REAL WORLD), I CANNOT ENVISION ANYTHING OTHER THAN EQUITIES BEING ON AN “ANY DAY NOW” SCHEDULE TO EXPLODE HIGHER…I EXPECT TO SEE THE 1ST AND 2ND QUARTERS OF 2017 AS RESULTING IN STATS THAT ARE “DECIDELY BETTER THAN ANALYSTS EXPECTED”, AND WOULD THEN SUGGEST THAT BY THE TIME WE DO GET THOSE “SURPRISINGLY STRONG” NUMBERS, THE DOW WILL BE SOME 1000’S OF POINTS ABOVE CURRENT LEVELS.
I do not see today (Monday) as a one day wonder. I think it is just the beginning of something much bigger. I continue to believe stocks are about to absolutely lift off from here…while at the same time Bonds and Eurodollars will be falling off a cliff as interest rates move up FASTER and BIGGER than all the talking head and Wall Street boobs would ever think possible. The public has been fooled into massively selling stocks and buying bonds for the past few years…and I expect the next six months will see them regretting it enormously.
So here on post election day number one, the next thing I will remind you is that those same people who have been forever bearish on stocks are STILL telling you that, “rates will be staying low”, or that “rates are not going up much anytime soon”, or just plain “rates aren’t going up much at all”…all of which I say is just more of their wrong way Wall Street hogwash…that they are just as wrong about interest rates as they have been about stocks….ALL YEAR.
I CONTINUE TO RECOMMEND POSITIONING FOR POTENTIALLY SHARPLY HIGHER INTEREST RATES. I CONTINUE TO TELL YOU THAT THE UNITED STATES ECONOMY IS IN THE BEGINNING STAGES OF AN ABSOLUTE BOOM…AND THAT THERE IS ZERO RATIONALE FOR RATES TO STILL BE AT THESE HISTORICALLY…ABNORMALLY…EXTREMELY LOW LEVELS.
I CONTINUE TO RECOMMEND BUYING EURODOLLAR PUTS…I THINK THE COLLAPSE IN THIS MARKET WILL BE BEGINNING “ANY DAY NOW”.
Here are some charts for perspective…
This first one is of the Dow since it made its Great Recession low back in March, 2009…You can pretty much be assured that ever since then, every time there was ANY dip at all, the yakheads and brokerage houses were howling, ”It’s over! Sell while you still can!”
Other than just presenting you with a longer term picture of this ONGOING BULL MARKET, what interests me here is the period from mid 2011 to late 2013, which very much resembles the market we’ve seen for the past year…really, almost right up until today.
Here is the same chart….with the type of scenario which I think easily may represent the future…
Here’s a closer look of the recent action in the Dow…
My next point is: If the charts above are even close to representing what is coming in the stock market, I think it would be next to impossible for interest rates…2-3 months from now…to still be anywhere even close to their current ABSURDLY LOW LEVELS….And I therefore continue to strongly recommend buying the June puts shown below…
Here is a closer look at last night’s action…
And the long term…I assure you, the average Wall Street BS analyst has totally forgotten (or never knew) how EASILY we could see a 2-3% rise in short term rates…
I can’t put it any plainer than this…If you don’t see my case, PLEASE let me know and I will take you off my mailing list…
All my energy is on this screen…If you want to look at possibilities, please pick up the phone and call me.
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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