MERRY CHRISTMAS or MERRY CRASHMAS

To those who celebrate, Merry Christmas.

We believe there has been a complete loss of confidence in the president, the secretary of the treasury and the head of the central bank when it comes to markets. We do not think it a big deal that the central bank raised rates to a measly 2.25%. We think it a problem when he, in fact, all three have stated everything is fine, the fundamentals are great and all that crap. It absolutely reminds us of Paulson and Bernanke who kept saying subprime lending was no problem, housing will not go down and the economy was sound…as banks were tanking and the market was trashed back in that lovely 07-08 period. We believe it was just fine for Mnuchin to contact the big banks. We think it a colossal blunder to advertise it as it got the opposite effect expected.We also believe it a mistake for the president to treat the head of the central bank as his personal pinata but frankly, we are not surprised by anything that comes from this man’s mouth or his tweets. We believe a good part of the recent drop was just this tweet. We continue to believe as we have since day 1 that tariffs suck and that Mr. Tariff must change that stance and policy. The fact is and we repeat…”THE MARKET IS YELLING AND SCREAMING WITH A BULL HORN THAT SOMETHING IS UP!”

The next move by the fed will not be raising rates…it will be lowering rates. MARK THAT DOWN. We are quite sure everything you are seeing in the markets is a telegraphing of “something is up” down the road…or maybe sooner.

Some of our quotes from some of our  past missives:

“If the lows are taken out, we worry that the big institutions will see it, know it and react to it. You know what happens next.”

“If all these major indices break the lows, you will be hearing “bear market” for the major indices.”

“If the lows that have held three times since late October get taken out, we worry about a”waterfall-type” drop as the big institutions will know market is giving it up for another leg down.”

Well, we got a “waterfall” but we must tell you, 2,400 Dow points in 6 days was not in our mind. This just tells you how much pent up selling there was. This just tells you how much leverage remains in the system.

We have spent countless hours studying bull and bear markets. We are able to pre-date our scans to the first day markets every traded. We must tell you that we believe there is only one other time the market became this bent out of shape on a near-term basis (oversold beyond belief) and that is 1987. We count in the mid-single digits the percentage of stocks above the 50 day moving average. We have the Dow an amazing 3,236 points BELOW the longer-term 200 day moving average or 12.9% below. To show you just how bad the 87 crash was, on crash day, price was 26.7% below the 200 day moving average. Eventually, this gap will get closed. We do not know when eventually is. By the way, major indices are down between 15-18% this month. This is not a typo.

We have again been out front and center on what could be a major top in the market. As always, we just do not know how long it lasts or how far it goes. Just like in 07-8, we will be putting out our “ANATOMY OF A TOP” report in the next week going over everything we saw and reported to you this year from the foreign markets topping out early in the year along with about 50% of our market leading to our “uh oh” moment the first week in October when we saw the “good half” of the market top out.

Lastly, “bear market rallies are sharp, quick, make you feel good, suck you in and screw you soon after!” We repeat one of our main bear market rules because based on our sentiment indicators continuing to be at beyond extremes combined with price at beyond extremes to the downside, we expect a good counter-trend move soon. What day? Don’t know. What week? Don’t know but gotta believe we are getting close just to relieve this condition. Often, it occurs on one of the big reversal days. We will be watching for one. Just realize that in no way would it change the big picture.

5 replies
  1. Avatar
    les says:

    Hi Gary,
    One rate increase under Obama and nine under Trump?
    This is the longest bull in history and will end regardless what people say and do.
    As you said the market was in trouble months ago. In a few days people will forget Trump’s tweets,and any comments Munchkin said. Onward we go. Loved shorting the last few months.
    Keep up the commentary and have a happy New year. MAGA

  2. Avatar
    kent says:

    I know what I am about to type is unpopular but this feels like 1998 14% down 4 or 5 weeks and it made one huge V. No retesting just a big V.

  3. Avatar
    kent hughes says:

    This feels like 1998. Big drop of 14% lasted about 4 or 5 weeks short scary shallow and we made a huge V. No retest just a big V. Like then, that is the last thing anybody expects.

  4. Avatar
    Victor Cardinali says:

    Thank you Gary, I believe as you to treat your money with care and as you say… don’t try to be a hero. I also think that the recent changes in government, specially the Congress has something to do with the markets tanking. Just like President Trump said, they change all the dynamics on reforms that give your money to others and to themselves. I believe in Pres. Trump and we must not forget that he as well as his whole family is at war in our country as well as around the world. The Chinese have been ruining other country’s economies fo decades. Ours is one of them. His tweets are part of the strategy to keep everyone off balance and the market will go up and down until the end of time. I’m not worried about it. I’m more worried about the national debt. The dems are going to try to undo everything that Trump has gained for us. Just think if you had the most influential family, the injustice department, fbi, cia, liars and leakers along with the media all against you your family and anyone associated with you. Tweet Mr. President! The forgotten ones are listening.

Comments are closed.