Editor’s Note: As Chief Investment Strategist of Total Wealth, Shah believes in making his track record of recommendations easily accessible to all readers within seconds – and that’s why he’s compiled an Archives page.
Sep 28, 2020
This week’s going to be a battle between buy-the-dip retail traders and double-dip recession fearing investors. Each side has plenty of ammunition and both camps are looking for back-up in data out this week and possibly some direction from the debate on Tuesday.
Bulls are betting the dip in markets and correction in some mega-cap tech darlings are a buying opportunity. And they’re going to test the waters early this week. Bears are betting the dip’s not done and sloppy data on the heels of no-stimulus in sight will grease the path lower.
Last week’s fight gave both camps hope, but the round went to the bears.
My money’s with them because retail buy-the-dippers aren’t likely to get institutional follow-on momentum as money managers aren’t ready to commit the massive amount of sidelined cash they have at the ready until they see what the election brings.
Here’s what happened last week, what data points could move markets this week, and a final word on the near-term direction of equities.
I’m not a “gold bug,” never have been, never will be.
A “gold bug” is someone who expounds the many virtues of owning gold, including that it’s a “store of value,” a “safe-haven” investment, an inflation hedge, and because its been hoarded by investors, central banks and governments the world over, it’s price is always going to rise.
All of that’s true, to some degree, but only because so many people believe gold is all that and more.
The reason I don’t trade gold all the time is it’s not volatile enough, meaning it doesn’t move up and down enough for me to watch it and trade its ups and downs. The reason I don’t invest in gold for long periods is because I don’t think it’s going anywhere, and I’d rather place my capital in stocks or other instruments I think are moving a lot higher.
But, that doesn’t mean I don’t buy, sell, trade, and invest in gold, especially when I see a good set-up, meaning a set of reasons gold’s about to make a move, I’ll jump in.
Here’s Why the Fed Pulling Another “Saturday Night Massacre” Would be the Best Thing for the Markets
The Federal Reserve’s not the problem, or maybe it is.
Economic growth, job creation, narrowing the wealth gap, equal opportunity in America, are the problems, but not the Fed’s problems.
Those problems should fall on the administration in power and Congress, but instead, the Fed has made these problems their concern, and if that doesn’t change, our economy could be headed for trouble, big trouble. We’re talking a meltdown that will put the Great Recession to shame.
On October 10, 2020, the Saturday before Columbus Day, the Fed should announce a new role for itself, one that will shake up markets, politics, and the country, but ultimately result in the problems the Fed can’t fix being addressed and fixed by presidents and Congress.
It’s been done before. On the Saturday prior to Columbus Day in 1979, then Fed chairman Paul Volcker, the last strong, independent Federal Reserve chairman, changed America’s future.
Sep 21, 2020
Today shouldn’t be any kind of surprise to you.
In fact, I know you saw this selloff coming because you had a roadmap with every signpost and mile marker redlined and highlighted with flashing “bellwether” levels to guide you.
You have been paying attention to your Capital Wave Forecast, haven’t you?
We’ve been in for a wild ride in 2020, markets aside, we’ve seen a pandemic, a civil rights movement, and natural disaster after natural disaster – in an election year, no less.
Markets have done exactly what you’d expect in such unprecedented times, which is to say, they’ve gone absolutely buck-wild.
While Q3 is coming to a close, I wanted to make sure to address some crucial questions that have come out of this years’ insanity before we shift our sights to the election, what’s to come in 2021, and more.
Here are some of your best questions, and as always, if there’s something you want to ask that isn’t addressed here, comment below and I’ll get them on the next round…
The privately owned and controlled Federal Reserve System, America’s so-called central bank, is more powerful than the U.S. government. In fact, it controls our government by financing particularly Fed-friendly governments, as only it can. MEET DAVID He’s got a 95% …
Last week, we ended down across the board. The Nasdaq, Dow, and S&P closed a combined 8.3% lower, and it had the bears coming off the sidelines and getting ready to make their move.
But the bulls weren’t giving up that easily, not Friday, not today, maybe not ever.
We’ve got a way to go before we’re in bear market, although we’re tapdancing on the edge of a correction, at least when it comes to the Nasdaq Composite. But we still have lower to go, if we end up going lower, that is.
The bears are looking to get in as the hedging unwinds, chasing Big Tech lower, and election madness begins to ramp up.
We could be headed lower… but they key word here is could, and where the markets are headed next lay in the hands of one very specific group: the retail investors.The Battle of the Bulls and the Bears Rages On
Sep 11, 2020
I’m not the kind of guy to say I told you so, but if I was, I’d sure be saying it now.
That’s a joke, kind of. Because I did tell you that Tesla was the poster boy for irrational exuberance and “that one stock is a bellwether for the entire market.”
When Tesla rolled over, when it “corrected,” meaning fell 10%, that was the bell ringing out its warning, that was the time to make sure your stops were locked and loaded, that was the turning point for the market.
As a bellwether it worked perfectly. Tesla hit an all-time high on Monday August 31, two days after I said to watch it. It was up a remarkable 495% in eight months. The next day it fell 4.66%. The next day, Wednesday, as the S&P 500 and Nasdaq Composite were making all-time highs, Tesla fell another 5.82%. The warning couldn’t have been any clearer or louder, while markets were making new highs Tesla was down 10% in correction mode.
This is a true story.
It’s about U.S. mega-cap tech stocks and equity markets melting-up this summer and how one man drove the action, suckered in retail investors, and painted Wall Street’s biggest pros into a corner. It’s also a lesson for retail traders on how the big boys play and how to not get played by them.
Sep 09, 2020
Valuations have been stretched and it’s high time some of that air gets let out of the bubble. The rally could go higher… but it depends on one industry, and that industry could surprise you. Click here to watch.
Last week was entirely an illusion.
The week started out well, got better by Wednesday, but fell apart. And what looked like a nasty storm on Thursday seemed to calm itself down by the end of trading Friday.
But the storm hasn’t passed, and if it doesn’t dissipate quickly, meaning by this week or by the end of next week, it could completely obliterate what progress we’ve made.
And, if all hell breaks loose, we could easily be down 20% or more by the end of next week, or sooner.
Everyone Has a Plan Until They Get Punched in the Mouth: What You Need to Do When the Fed Realizes It’s in Trouble
Just because the master manipulators at the Federal Reserve say they’re going to backstop U.S. bond markets, as well as debt on corporate balance sheets, doesn’t mean they can.
It’s true they’re managing easily enough in the early rounds of the fight to save debt markets, corporations, and the economy, but they’re going to have to do more, including the impossible, when their real opponent comes out swinging.
As Mike Tyson famously said of Evander Holyfield’s fight tactics to beat him in their first bout, “Everyone has a plan until they get punched in the mouth.”
It’s never happened before. It’s totally unprecedented. A mere handful of stocks, six to be precise, are driving equity markets to higher all-time highs.
And it’s happening while COVID-19 still threatens the country and the economy, while the country’s struggling to climb out of the worst, deepest recession in history, and while 15 million of the 20 million Americans that lost their jobs since March remain unemployed.
However, none of that matters to the stocks powering markets higher, or the investors and analysts who say they’re going higher because they’ve benefited from lockdowns. They’ll continue to benefit from paradigm shifts in how we live, work, and play.
The narratives surrounding these companies and their stocks are all one-sided; they’re all positive.
The problem with that is, that positivity has turned to irrational exuberance – or, misled over-positivity. And that’s dangerous.
Sep 02, 2020
December 1996 is when the term “irrational exuberance” was coined, and the market’s are looking a lot like they did in 1996, especially in the tech sector. But it wasn’t until 2000 that the markets headed back down, so we have time to pull profits…
Don’t get me wrong – just because I’ve started to write about how crazy the market’s become, how it’s like déjà vu all over again, doesn’t mean I’m not bullish.
Because I am – bullish, that is.
Because, you know, it’s all good until it isn’t.
Because, “as long as the music is playing, you’ve got to get up and dance.” That’s what Chuck Prince, Citigroup’s chief executive in July 2007, told the Financial Times. The party would end at some point, but there was so much liquidity it wouldn’t be the U.S. subprime mortgage market stopping the music.
It took another 15 months for Prince’s preamble prediction which was, “When the music stops, in terms of liquidity, things will be complicated,” to come true, at least that part. The part about subprime mortgages not being the cause was just a little off. Just a little.
Does that mean we have another 15 months? Maybe.
The Dow was up 723 points last week, or 2.6%. It’s now 3.2% from its all-time highs of last February. The S&P 500 notched another all-time high last week, ending the week up 3.3%. And the Nasdaq Composite hit a record high, ending the week up 3.4%.
Since the March 23, 2020 lows, in only five months, the Dow is up 54.11%, the S&P 500 is up 56.78%, and the Nasdaq Composite, wait for it…is up 70.47%