Bubble Stock Market CRASH NEXT WEEK? 2020 Fed & Jerome Powell Bailed Out The Stock Market?

by birtanpublished on August 29, 2020

Time for our weekly market review which we do every week obviously because it's weekly and you can tell by my terrible picture quality that we're doing this late night but not really it's just raining outside and now that i've wasted your time

Talking about the weather let's get into the market review but first a quote from henry howard harper from his book the psychology of speculation when once caught in the maelstrom of stock speculation the average man becomes more

Or less mesmerized and at critical moments in his conservatism his resolutions and his theories all take flight under the discomposing influence of a rapid succession of changing values and alternating impulses he loses his

Perspective is incapable of calm reasoning and is likely to do precisely the opposite of what he had intended to do i'm sure any of you who have traded in the stock market have

Experienced this everything changes once your money is actually on the line and things get going in the market and there's excitement see all the flashing lights it becomes like a casino and all your best plans

Are thrown out the biggest thing i did to help myself through that was convert over to systems trading which is exactly what we talk about in this free training we talk about the strategy that i use and most of our fallable members use as

Well which is actually a system if you want to check that out there's a link in this video and down below in the description comments free training you'll learn all about it but the nice thing about a system is when you have

Those back tested results and you know you have an edge that works day in and day out you can kind of turn off your brain and depend on the system that you already built beforehand so in those times when you actually have

To make the trade where it gets the most emotional you're able to check out because all the work was done beforehand but of course even with the system you still have to follow it and that's why all of our

Members who use that system also get our psychology training which is probably the most important content i've ever done absolutely key for the markets which i'm sure henry would agree with

Because markets it all comes down to psychology moving on to markets one of the things that we keep our eye on the most is narrative and positioning so sentiment and you remember how that

Works when people are really bullish it's actually bad for the market when people are very bearish it's good because if they're bearish that means they haven't invested all their money they haven't converted yet to becoming

Bullish when everyone's bullish is when everyone becomes over leveraged and then where's the rest of the money going to come from to push prices higher so that sentiment has been a strong tailwind

For risk assets these past few months but now it's turning around you can see right here this green line that tracks it this investor's intelligence bulls and bears survey ratio bull to bear

Where previously it was all the way down here because of that ccpv crash it's climbed right back up so now this sentiment and positioning are becoming substantial headwinds for the stock market meaning the trend

Has become more fragile this is a bearish sign speaking of ccpv it looks like there's been a turn in new case growth and hospitalizations you can see these charts right here it

Looks like the peaks have been hit plus there's growing evidence in support of the lower herd immunity threshold they're now thinking that that could be reached around 50 or less which would explain why the states that

Were hit hard in april are not seeing that second wave this summer that's also why sweden is doing well on a relative basis and that is great news because me personally i've been one of the people

Who has been quarantining the hardest during this and at this point most people just think i'm crazy they're like seriously aka are you gonna stay inside forever no vaccine is coming for a long time

You're gonna miss this this and this don't you wanna see people of course i wanna see people but maybe it's because i sit here and talk with you guys about risk all the time and we're watching markets

All the time but the risk reward of a lot of the things that everyone feels comfortable doing again like going to restaurants it just still doesn't make sense to me because the virus is kind of like russian

Roulette you don't know how it's going to affect you so in the best case you have mild symptoms in the worst case you die so in the stock market we talk about risk of ruin right we talk about always managing your

Downside so you don't get blown out because starting from zero is extremely hard so you're much better off cutting your losses even if it turns out you might have cut too early and the stock market takes off so in that same

Sense when i think about the virus the risk of ruin is death or serious illness and why would i take that risk i was watching uh the last dance i'm in the middle of it right now which is the

Michael jordan documentary which is on espn is finally on netflix now and one of the episodes they were talking about when mj broke his foot and mj wanted to play when the team made him sit out and the

Owner of the bulls explained it very well he said listen if you have a bottle of 10 pills nine of those pills will cure you completely but one of them will kill you are you going to take any of those pills

And that was a good way to look at the risk because if mj did go back and play it on the foot before it was fully healed it could be career ending but everyone still thinks i'm crazy for it the only

People i know that are being super careful are myself alex for macro ops because he has that same risk control idea and the other guys that i work with because we're all involved in markets so

Much we'll see what happens maybe we're being stupid but our lives are all about managing risk so it makes sense that we would do this but going back to markets what's interesting

Is that the current narrative is really bearish on the ccpv and on the economic recovery but it's also increasingly bullish on risk assets because of the fed just propping them up but what if the case growth actually

Slows much quicker than is currently projected and at the same time we get a new round of fiscal stimulus that we've been waiting for which unleashes a bunch of pent up demand that could be a recipe for a

Massive bull market this chart from ubs shows the projected deficit of the us you can see it's getting crazy here so this is going to continue to put pressure on rates and especially the us

Dollar in the coming years spend spend spend so going along with the thesis that things might not be as bad as we think there may be a mispricing in the long end of the u.s curve so we're talking

About bonds here 10-year yields are lower than they should be and there's an increasing chance that we see a move higher meaning there could be a bond sell-off ubs thinks that the fed is likely to

Embrace any long-end sell-off if it's accompanied by wider inflation breakevens and stable to easier financial conditions and if that sell-off happens and yields pop higher that's going to affect

Everything else because you remember that stocks and bonds they compete for cash flow right so money always goes where it's treated best so if there are higher yields and bonds you might see some of that money flow

Out of stocks back into bonds it's like a balancing scale looking at the dollar here commercials currently hold a rare net long position meaning that the specs are very short and this is kind of how you look at

Commodities and currencies speculators versus commercials so what this means is that the positioning is pretty crowded on the short side right now for the dollar plus the tape looks like a short term

Bottom may be in so we are bearish on the usd long term but it looks like you could get a bounce here because things don't go straight down so one of the important things you need to look at when you're analyzing currencies is

Those speculative flows because it's hard for the dollar to materially weaken when relative equity momentum is favorable so you'll see equity momentum fall along with the dollar but the fact that the dollar has fallen

So much despite the stock market continuing to go higher every single day that should tell you what's going to happen when the stock market finally does turn around then look out below for the dollar as

Well the energy space is another area to look at because for the first time ever energy has the highest dividend yield of any sector and that happened because these stocks have been beaten up so bad 2020 has been the worst year ever for

These energy equities you can look at this chart right here the big black line are these energy stocks they're just crushing everything else in terms of dividends first time ever it's the number one so this will be

A good area to pick up some left for dead companies once the dust settles you can't get in there too early and that's another thing we know about markets and sentiment a lot of times if there's a sector

That's really hated all the stocks get hit regardless of the fundamentals or anything like that when you look at a stock 50 percent of its movement comes from the overall market so

Say if the nasdaq or the s p is going up every day you'll probably see that stock go up as well 30 comes from its individual sector so oil stocks all getting hit because oil collapsed and then 20 from

The stock itself so that's where you go into the individual fundamentals and say oh they have a much better balance sheet than this other company that's what you kind of got to remember when you're in the stock market that at the end of the

Day most of the time you're playing the overall market you're not going to find a few winners shooting up when the entire market is collapsing same thing if the entire sector is collapsing it's going to be very

Difficult to find those winners so that could work against you when you're trying to fight a trend but it could also work for you because there can be a lot of undervalued companies because of it so again in this case with the oil

If every company is getting thrown out the window and no one's looking at the fundamentals of each individual company then there's going to be some gems in there that are way undervalued and we've talked about this strategy before like

The gravedigging strategy you find the few companies that hey the market did not evaluate properly at all these guys are going to take off and you get in them while the market sentiment is turning around now of

Course the problem there is timing so hardcore value investors they're never going to time it right but what we do in macrops is we use that value analysis but then we put that technical analysis on top of it because we don't want to be

Waiting around with that dead money and we don't want to be getting into something too early when it's still dropping which is exactly what we mentioned here you want to wait until the dust settles in the energy sector

But the technical analysis can tell you when the market is reevaluating those certain companies when you see them start to spike then you can put your money in and get that return it's a way safer way

To do things and it's one of the best ways to combine fundamental with technical analysis and sentiment analysis and that's the marcus trifecta michael marcus market wizard that's what he talked about which

Is why if you could do it and remember it's not super easy you can make a lot of good money from places like that and we've done that exact play over and over again in the oil space

Because there's been multiple times where they've been beaten down unrightfully moving on since bonds are basically yielding nothing or less than nothing after inflation institutions are now looking at large

Free cash flowing corporate equities like bonds so where are the companies that are huge and producing a lot of cash one of them of course is apple probably the most popular one

And that's why right now it's trading four standard deviations above its 200 week moving average this has only happened four times in its history the other few times were 91 2000 and 2004.

It's getting ridiculous in this stock right now we'll have to see if it turns around or if powell keeps it going and finally twitter is starting to look pretty good you can see it's starting to complete its monthly cup and handle

Pattern and the daily average users on the platform are actually accelerating so you got a fundamental and a technical push right here this might be one to watch on a breakout and remember if you're looking for a

Full systematic strategy check out our free training here there's a link to it in this video and down below in the description and comments bull market bear market it doesn't matter as long as you've got your wrist

Control in place and a solid edge you'll be able to profit which is exactly what we do here so definitely check that out if you haven't already so all in all the market is definitely getting overextended but it doesn't look

Like we're about to face a crash yet but we're going to keep monitoring that for you so if you want to see that make sure you subscribe so i could see you in the next video stay followed out there bye

you

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