As Premium members know, I traded against the recommendation of the SOFI AI today by going long Amazon stock in an overbought market.
If you are new to the Premium service then the idea behind the SOFI AI is to not enter long positions when SOFI says that the market is overbought. The idea is to only enter long positions when SOFI says the market is oversold or fairly valued.
Here is where SOFI, and really any AI used for trading, breaks down.
SOFI is partly basing the overbought rating on recent market action. However, when a large shift in sentiment takes place to where a new trading pattern is in the process of emerging, past patterns and decisions break down.
Markets alternate back and forth between trading and trending markets. In other words, markets alternate between range contraction (a trading market), and range expansion (a trending market). When a large shift in sentiment takes place between a trading market and a trending market, it throws AI’s off.
The break down in the SOFI AI could mean that the correction that began in February is coming to an end as we go back into an uptrending market.
Now before you start accusing me of drinking the Kool-Aid, I can show you an indicator that is signaling that the correction could finally be coming to an end. That indicator is the VIX.
The VIX mid-term futures ETN VXZ has broken below the 50 day EMA line.
This is the first time that VIX mid-term futures have traded below the 50 day EMA line since February 5th and the unwinding of the short vol trade that resulted in the current market correction.
Today, we had the International Monetary Fund lift its estimate for U.S. economic growth for this year and next.
In its world economic outlook, the IMF lifted its U.S. growth estimate for 2018 by two-tenths of a percentage point to 2.9% and its 2019 estimate to 2.7%. What the IMF really focused on, and it’s what I said on the Saturday Show in January 2018 what I thought was a big deal, is the full expensing of investment within the same year. The IMF pointed out the Tax Cuts and Jobs Act gives a temporary allowance for companies to fully expense investment. This is a strong incentive for companies to push forward investment projects. The more the I variable of the GDP formula goes up, the more investment that’s taking place in the US economy which should lift employment, which in-turn should increase consumption, and also wages. This wage inflation will allow the Federal Reserve to lift interest rates more aggressively in the future.
Whether or not the economy works out this way is unclear but the fact that the IMF thinks it will, helped put a bid under the stock market today.
One of the biggest threats to the stock market that we need to watch out for is the trade war with China.
Don’t believe the mainstream media that trade tensions between the US and China are dying down. That’s a lie. Things are actually heating up. It was just reported by Reuters that China is trying to back-door us, and in doing so, exposed a major truth. China is who has pushed this globalist agenda from the start. All these countries and media groups inside the US that push for so called “free trade”, have been doing the bidding of the Chinese all along. Check this out.
China has been holding secret meetings with ambassadors from every major European nation last week to ask if they would side with China against the US and put on trade tariffs against the US to pressure the Trump Administration into backing away from its protectionist policies.
What happened? I thought China was going to beat us in a trade war? That’s what the mainstream media has been trying to sell us for the last year or so. In the Saturday show I explain why I thought that was a lie because common sense dictates that the country that has the larger trade deficit is the one that stands to be hurt a lot more in a trade war. The Chinese even penetrated Trump’s administration with Gary Cohn. You didn’t know that China was using Gary Cohn to push its globalist agenda?
Gary Cohn was a major shareholder of the Industrial and Commercial Bank of China which is the largest bank in the world with more than $3.5 trillion in assets. Gary Cohn’s stake was estimated to be worth a whopping $16 million before he had to sell his position when becoming Trump’s Economic Adviser.
Gary Cohn wasn’t delivering for China on so called “free trade”, and so he resigned.
China has controlled the US Chamber of Commerce for years, even funneling money through the US Chamber of Commerce to get pro-outsourcing candidates elected to office.
The US Chamber didn’t just funnel money to pro-outsourcing candidates, it also has been intimately involved with many Chinese companies in terms of helping hold seminars teaching American companies how to outsource jobs to China. China influence in the US Chamber of Commerce is so absolute, it should be called the Chinese Chamber of Commerce as what they have done is become a consulting firm to teach companies how to move jobs out of the U.S.
China has been holding secret meetings with European countries and using its influence to try and get as many countries aligned against the US as possible. The Red Dragon knows that the next phase of this trade war is countries aligning with their allies and so China is moving hard on this front now to get as many countries as possible on its side.
China is sparing no expense pushing the virtue of globalism and the multilateral trade system, and why not? They’ve gamed that system to become the world’s largest economy on a price parity basis, in only about 20 years. No other country has been able to grow as fast as China in history and instead of becoming our ally, as Clinton and both Republicans and Democrats promised in the 90s, China has become an adversary, snubbing its nose to international maritime law and building artificial islands so it can control highly trafficked trade routes between countries.
What do we know about these secret meetings China has been having with the largest economies across Europe? Not much. We know that China met with France, Germany, the United Kingdom, Spain, Italy, and the European Union. An un-named source that attended one of the meetings leaked to Reuters that China used threats about consequences for foreign companies unless they sided with China against the U.S.