All's Not as Well as It Seems

Economy and Markets Chris Profile ImageAll’s well in America. GDP was revised 0.2% higher. Yellen assured us the economy can handle a rate increase this year and that inflation will proceed at 2% in the years ahead. The pope’s here. Things are great!

Except, things are actually still crazy. A CEO just stepped down. A major U.S. politician just resigned. Europe has a major refugee crisis. Civil war is heating up in the Middle East. Homelessness has sent Los Angeles into a state of emergency. Volatility is still swinging the markets around wildly.

I can’t help but find the symbolism in Yellen’s coughing fit during her speech at the University of Amherst Thursday night. It seems the world is breaking down. But the markets clung to her words and rallied higher Friday mornrning, only to fall later that day.

We remain diligent in our view of the market. Harry released an important market update yesterday explaining the two likely scenarios he sees the market taking in the next few weeks. In one scenario, the market drops. In the other, the market also drops – just a lot more.

He explained that three signs have likely confirmed we’ve seen a top. One was a series of major tops the market’s been forming since November. The next was the selloff in August. And the third was Adam’s broad sell signal, which he received and sent to our monthly Boom & Bust subscribers, ominously, on September 11.

On that note, we just put out the latest edition of the monthly newsletter yesterday. We actually inverted this one – normally we have Harry or Rodney go first, followed by Adam and Charles’ update. But we had Adam start it off so he could have a little more space to explain what his broad sell signal means. And it turnrns out there’s an important technical indicator illustrating very bearish behavior.

This means that now is not the time to buy-and-hold. It means sticking to short-term strategies that actually thrive in this environment.

To that end, Adam just released a new trade on Thursday to both of his trading services – Cycle 9 Alert and Max Profit Alert. Each received the same trade. Normally they get something different. But as he said, the stars aligned. Both algorithms pointed to the same trade.

As he put it, this new trade is a pure bet against the stock market.

That said, both he and Harry agree that until we see the overall U.S. stock market fall a bit more than 20% off its highs, we won’t know for sure that we’re in an extended bear market. But it’s looking more and more likely that we have seen a top, which is why I want you to read the note Harry sent yesterday if you haven’t already.

There was a lot of other great editorial this week…

Charles explained on Monday why he believes REITs will beat the overall stock market, and he makes his case…

Rodney discussed in Boom & Bust five critical changes today’s presidential candidates should get on-board with if they want to be taken seriously on economic policy…

John continued with his bearish message which he’s been hammering away at since we brought him into our fold earlier this year, and he detailed two shorting candidates for his Forensic Investor readers…

And Ben explained how Hillary Clinton single-handedly cost the biotech sector $40 billion in market cap in a single day ON TWITTER – making a case for the social media-based strategy he uses in his trading service…

I’ll wrap it up there. We’ll continue to bring you our unfiltered, original insight into the economy & markets every day. I know this market environment is challenging. It seems like there’s no break. I for one have two weeks of vacation saved up, but recall that when Adam last took a vacation, the market tanked (I blame him)!

That is to say, we never know what will happen from day to day… we’re all a little bit anxious… but we’re here to help guide you through this particularly troubling period in the markets. Stay vigilant.

Chris Cimorelli

Managing Editor, Economy & Markets