Stock Market Correction and Waiting To Click The Buy Button

The stock market correction is likely going to push the S&P 500 to test its long-term rising trendline and support at 232.20. The bearish divergence on the Twiggs Money Flow likely signals that the pull back is not over yet.

Short-term stock market correction underway.

A few traders have asked me if now is the time to buy or if they should wait on the sidelines while the market pulls back. We all know that history does not predict future price direction nevertheless, it is useful to know what has and hasn’t happened in the past.

Looking at the last 110 years of stock market price action, the data reveals that waiting for a correction when the market was expensive would have reduced investor returns significantly. The reason is that the term “expensive” is a subjective term. Even if you use a more objective approach of looking at the P/E ratio, the data still shows that staying out of the market for months or even years waiting for a correction is a losing strategy.

Where long-term investors get themselves in trouble is that the correction they are waiting for may occur at a much higher market level than it is at today. Also, sitting on the sidelines for months or even years runs the risk of the investor losing patience and ultimately capitulating to the Bulls and buying back in to the market at a much higher level.

Few investors believe markets efficiently follow a random walk even though it’s a key component of market theory.

Short Term Stock Market Correction

Timing a stock market correction for profits is best done using a short-term swing trading strategy. The idea is that you don’t want to try and catch a falling knife.

Looking at QQQ, the Russell 2000, and the S&P 500, over the last week, you can see that the Russell 2000 and QQQ are leading the S&P 500 lower:

In stock market corrections, the Russell 2000 usually leads the other major indices lower.

The market is telling us that what happens in the FANG stocks and QQQ will likely dictate market direction on the S&P 500.

With the Twiggs Money Flow breaking below zero for the first time in 2017, I think a retest of the $136 support level is likely.

Right now being in cash is an excellent move. Continue to stalk your favorite stocks for a swing long entry. I wouldn’t be too quick to jump back into this market yet. Consider using stop limit orders as taught in the lesson here.

The main thing to watch out for is the Establishment ‘Defeat Trump’ propaganda in the WSJ, CNBC, CNN, and elsewhere. These media groups are so dishonest that some were even claiming that the stock market went up because Steve Bannon left the White House. That was the propaganda narrative with CNBC claiming that traders on the NYSE floor cheered as proof. First of all, those old left-leaning talking heads in stock exchange clothing walking around looking stupid on the NYSE floor are not representative of the stock market as a whole.

Just as the Establishment media was advancing the false narrative that markets were up because of Steve Bannon being out at the White House, markets turned back down and so they quickly killed that false narrative. Another example is CNN’s propaganda that the entire market is worried because of Trump.

For the first time in our life-times, we have a President who is exposing the Establishment propaganda media in this country. There is a major information war going on right now.

As a trader, you can’t get caught up in the propaganda and the power struggle going on for control of public perception. You have to check yourself every day and make sure you aren’t making trading decisions based on propaganda. If you think the mainstream media is getting into your head too much, cancel your subscriptions like I did with CNBC Pro last week, and the WSJ and Barron’s the month before. Just turn it off because these propaganda machines are not going to help you make more money at stock trading.

Remember folks, markets mostly do random walks, especially during intra-day trading. No left-leaning propaganda media outlet can peer into the minds of millions of traders around the world and claim to know what they are thinking. These propaganda publications believe that perception is reality so if they can control the public’s perception, they can control reality.

The U.S. stock market is overbought, and the weak seasonal period is upon us. May through October marks the weakest 6 months of the year.

I don’t want to beat up on the mainstream media too bad so I’m not going to mention where I read the following bogus analysis:

Overbought markets look for excuses to sell off. Will Trump’s lack of leadership become an excuse for a big selloff in stocks?

The mainstream media is actually talking about a stock market correction as if it is some type of external beast that thinks for itself and makes up excuses. Reality check: you and I are the markets. People that work at institutional trading firms and hedge funds are the markets. Are you looking for an excuse for the market to sell off? I’m not either. Nobody is. We’re just reading the charts, analyzing the fundamentals, weighing external news events, and making our decisions. Nobody is searching under desks and looking everywhere for excuses to sell out of their positions. Especially not some make-believe entity called Overbought Markets.

Did you notice the Establishment propaganda “Trump’s lack of leadership…”? You can criticize the President on a lot of things but one thing you can’t criticize him on is a “lack of leadership”. President Trump is a strong leader with strong ideas and a vision on which he is moving to execute those ideas. Get in his way and “you’re fired”. Trump demonstrated his very strong leadership skills for over a decade on the hit-show The Apprentice. President Obama isn’t even in the same ballpark as President Trump when it comes to having strong leadership skills.

Mainstream media propaganda about stock market corrections.The main factors influencing a short-term stock market correction right now are: the speed of Fed rate hikes and balance sheet reduction, North Korea, the debt-ceiling, the economy, and the speed at which the Trump America First agenda is moving forward. Anything outside these main themes is likely Establishment propaganda by powerful groups battling to control public perception and thus reality.

Destroy Trump Establishment Media Continues Propaganda

The ‘Destroy Trump’ establishment media propaganda machine continues to attack President Trump while quietly not reporting on how the left is destroying America’s heritage and history.

In an unprecedented push to change the history of America, left-leaning groups and Democrat politicians are literally destroying statues of American history across this country. Reality check: the civil war was not JUST fought over slavery. I have studied under some of the most famous historians in this country such as Bill Coates and I can tell you that an in-depth study of history reveals that the Civil War was fought over many things and the knot that ties all these things together was a federal government in the North telling people in the South how to live.

Whether Lee, Jackson, and Davis were racists is not the point. They are, whether you like it or not, part of American history. Ripping down historic statues isn’t going to change that fact. George Washington had slaves. Let’s pull down all Washington statues. Where does it end?

This is clearly the destruction of American history and instead of reporting on the power movement behind destroying American history, here’s what CNBC is doing:

One story sort of defends trump (green), while 5 stories (red) are grotesque propaganda pieces that are part of the ‘Destroy Trump’ establishment media.

I quit subscribing to CNBC today. This is nothing more than political propaganda that has nothing to do with helping readers make money in the stock market.

Check out the stories that Google News is featuring prominent in their Google News section:

In a good and just news industry, there should be lots of stories about the movement to destroy and re-write American history by left leaning groups. We actually have a power movement underway to destroy America’s historic statues and effectively strip history away from the people and yet no one is reporting on the left leaning groups behind this push and what their ultimate agenda really is.

Sean Hannity is the only journalist that got it right IMO:

Deep State Leaker Caught Sabotaging Trump White House

The first arrest of deep state operatives just happened with the arrest of Reality Leigh Winner, a 25-year-old contractor with Pluribus International Corporation according to a report in Breitbart (link above). Reality Winner could just be the lower-level pawn given to appease the public.

The charges are that deep state operative Reality Winner printed a to-secret report for which she had no “need to know,” smuggled it out from an unnamed U.S. intelligence agency facility in Georgia, and later transmitted it to a left-leaning news site called The Intercept.

The Intercept is the same media group that employed writer Juan Thompson who created fake news about the tragedy at South Carolina’s Emanuel African Methodist Episcopal Church. Thompson wrote fake news stories about racist white southerners who were also Trump supporters. Thompson was later arrested for calling in threats to Jewish community centers. The mainstream media used these threats to create fake news stories that claimed Trump supporters were responsible for the threats against Jewish community centers.

What is the Deep State

A body of secretive people who Putin recently referred to as “the bureaucracy” who influence and blackmail influential members of government agencies or the military, with the goal of controlling government policy.

With the arrest of Winner it’s proven now that President Trump is being targeted by the deep state with the goal of getting him impeached IMO.

Putin Speaks Out about Fear of Russians In US Media

President Vladimir Putin is speaking out (link to video above) about the fear of Russians in the deep-state and consequently US mainstream media. The anti-Russia propaganda in the mainstream media is the poster-child for fake news.

If you were to believe the propaganda in the mainstream media, you would expect Putin to be talking about how much he hates the U.S. and how he’s ready to go to war if we try and use NGOs to overthrow another country like we did with Ukraine. Instead Putin came off as a very smart and rational leader who wants safety, security, and prosperity for the people of Russia.

Fear of Russians Made Up Says Putin

Putin said, “I think we all desire safety, security, prosperity and cooperation – so don’t invent the mythical Russian threat, some kind of hybrid wars and so on. First you invent it, then you scare yourselves and on this basis formulate policy. The main security threat in the world today is what? Terrorism. They blow up Europe; in Paris, in Russia, in Belgium. There is a war in the Middle East. This is what we should be thinking about, but here we are debating the threat that Russia poses.”

Putin nailed what the globalist controlled mainstream media is doing in the US. The media made up fake news about how Russia is such a big threat. Then when everyone gets really scared about this completely fabricated external threat, Congress then formulates policies against Russia.

It’s like Russia is the giant scapegoat for globalists. Rather than Democrats losing the battle of ideas and facing the backlash of the American people for bringing the economy to the edge of bankruptcy, redirect Hillary Clinton’s loss into the fear of Russians hacking into our elections. Instead of globalism being discredited by decades of multiculturalism that has left western civilizations exposed to barbaric Muslim attacks, blame Russia for supporting Syria.

The most enlightening part of the Putin interview was when he said, “You know, I’ve communicated with one US president, and with the second, and with the third – presidents come and go but the politics remains the same. Do you know why that is? Because the bureaucracy has a lot of power. So a person is elected, he comes with his ideas. Then people with briefcases come to visit him – well dressed, in dark suits, kind of like mine. Except instead of a red tie it’s black or navy. And then they explain what to do, and the whole rhetoric changes, you see? This happens from one administration to the next.”

What Putin just described is the “deep-state” which he calls “the bureaucracy”. These non-elected bureaucrats’ power spans far beyond Presidents 4-year terms. Our free democracy and Republic is not suppose to work like this. The Constitution was written so that everybody in government is held accountable to the people within a system of checks and balances and ultimately term-limits of the President. The deep-state or the bureaucracy works outside this framework and dictates policy direction no matter who is elected by the people.

I find the existence of a deep-state which operates outside the US Constitution far more scary than the fear of Russians being pushed in the mainstream media.

Effects of Climate Change, Who Cares? Trump Pulls US Out

effects of climate changePresident Trump has honored his campaign promise to pull the US out of these globalist run bureaucracies that tax Americans in the name of bad effects of climate change (see Washington Post link above). You go honeybadger Trump! Trump supporters finally have something to be happy about again.

Effects of Climate Change, Who Cares?

We all want a clean environment for ourselves and future generations but Democrats under the Obama Administration destroyed our economy and middle class in an attempt to control the effects of climate change. With $20 trillion in debt and most Americans struggling just to keep a roof over their heads and food on the table, it’s criminal that US citizens are taxed and those tax dollars are sent to a non-elected globalist run bureaucracy of socialists whose goal is to create a one-world order.

The message is not that we don’t care about the environment. The message is that America has been run into the ground by decades worth of rule under Republican and Democrat administrations that milked the US tax payer for hundreds of billions of dollars while crony environmental capitalists like Elon Musk made a fortune. The message is that free handouts from America are over because we are on the verge of bankruptcy after decades of high taxes and jobs shipped offshore to places like Mexico and China.

Wikileaks Vault 7 Shows President Trump In Danger Along With Stock Market

Help us spread the word about the growing America first movement conservative movement. We’re reaching thousands, help us reach millions by sharing this show with your family and friends.

A weekly Saturday financial show that attempts to predict market direction for the week ahead by looking at a variety of fundamental and technical charts. This week’s show features commentary on the plunge in oil markets, the largest CIA release in history called Vault 7, China’s increasing manipulation of our media in the US, Mexican George Ramos’ claim that the US is not “theirs” meaning “whites”, and the growing danger of a globalist soft coup against the Trump Administration.

China Trade: Measuring Perception or Manipulating Perception

Gallup released the results of a poll that shows 72% of Americans see foreign trade as an opportunity for economic growth.

The mainstream media (ABC, NBC, CBS, FOX, CNN, The New York Times) and those of the Democrat and Republican establishments have not educated the public about what China has done to our country. The US Chamber of Commerce and many establishment members of both parties took money from the Chinese and so they are always tip-toeing around the China issue.

Folks, this Gallup poll could be just another attempt at manipulating public perception rather than actually measuring public perception. I’ve lived for more than 46 years and I’ve never been contacted by Gallup in one of their so-called “public” polls. Nevertheless, I think it’s important that we get out the truth about China because the mainstream media isn’t going to do it.

Please make sure you share the video below with your friends and family. Let’s make sure that as many people as possible are informed about China.

Microeconomics of the Monopoly

Donald Trump said he would block the AT&T and Time Warner merger if he becomes president, arguing that such media combinations leave too much power concentrated among too few companies. What Trump is describing is monopolistic behavior. As Bloomberg writes

Trump also suggested he would favor a breakup of NBC and Comcast Corp., a merger completed in 2013. Such deals, he said, are “poison” to democracy and result in companies “telling the voters what to think and what to do.”

The problem of monopolies is growing beyond just the media industry.

Technology giants are continuing to gobble up the competition. As Bloomberg reports

30.3 percent of the market capitalization of the Nasdaq is now accounted for by just five companies — Apple Inc., Alphabet Inc. (Google’s parent), Microsoft Corp., Amazon.com Inc. and Facebook Inc.

Let’s examine what a monopoly is from a microeconomics perspective using a hypothetical Lemonade market.

Here’s the market for Lemonade in a perfectly competitive equilibrium at a price of Pe and the quantity of Qe. Now, because there are numerous buyers and sellers in this perfectly competitive industry, what do you suppose will happen if any one firm tries to raise its price above Pe?

In a perfectly competitive market, any Lemonade vendor that attempts to raise his price above the equilibrium established by supply and demand would see his quantity demanded quickly fall to zero. Such a vendor would rapidly lose market share as his customers would go to the cheaper priced competition.

The consumer surplus is the triangle C, and the producer surplus is the triangle E. Consumer surplus measures the difference between what consumers would have been willing to pay and what they actually pay. The producer surplus is the difference between the price at which producers would have been willing to supply a good and the price they actually receive.

Now suppose a monopolist corners the Lemonade market and raises the price to Pm. In this case, quantity falls to Qm.

Consumers have to pay more for less quantity, and the rectangle B is transferred to the monopolist. That means consumers are poorer and the monopolist is richer.

What portions of consumer and producer surplus represent the loss of allocative efficiency from monopoly pricing?

The efficiency loss on the consumer side comes from the consumption of lemonade that is forgone under monopoly pricing. The loss of efficiency on the producer’s side comes about by a reduction in output and an undersupply. The loss of consumer surplus is measured by the triangle C while the loss of producer surplus is measured by the triangle E. Together, the triangles C and E measure the loss in allocative efficiency from the monopoly pricing. The loss in allocative efficiency from the monopoly pricing is called the deadweight loss.

Monopoly

A monopoly exists when there is only one seller in the market selling a product for which there are no close substitutes.

In such a case, the monopolist is not a price taker as was our perfectly competitive Lemonade firm. Instead, it is a price maker which means that it exerts considerable control over what the market price will be. The monopolist has this power because it controls quantity supplied in the market.

The market structures of most industries in the US fall somewhere in between a monopoly and pure competition as illustrated below.

From this example, you can see why relatively free, democratic governments do not like monopolies. Monopolies not only transfer income from the many to the few, monopolies also create an efficiency loss in the process.

Through microeconomics and supply and demand graphs, we have proven that a perfectly competitive market yields the most efficient use and allocation of resources, as embodied in productive and allocative efficiency. For further reading, I did another lesson on monopolies here.

Miley Cyrus Crying – Donald Trump Reaction

Miley Cyrus as a young girl actor made her popularity by appealing to young Christian girls in the Disney series Hannah Montana (2006). As soon as she came of age, she abandoned God for fame. Miley Cyrus rushed for the spotlight and lost her religion in the process.

Miley Cyrus caused thousands of Christian girls to cry as they saw her abandon her religion for fame.

Miley Cyrus did everything she could to get Hillary Clinton elected as President. Miley Cyrus, along with other Hollywood ego-maniac types, came out in full-throat support of Hillary Clinton. Hillary Clinton paraded these Hollywood types at her events and thought she could persuade Americans to vote for her because of the likes of Miley Cyrus.

Here is Miley Cyrus crying because Hillary Clinton lost the election:

The next day, Miley Cyrus posted this pick on Instagram saying she was done crying about Trump (look closely at her eyes):

Miley Cyrus talks about having love in her heart and for others, but can’t see the incredible love that was manifested by Americans in electing Trump as President. One could say that Trump’s campaign was all about love, that is love of country and love of Americans. Trump demonstrated that love by running for office. He’s a billionaire. He didn’t have to go through the public nightmare of running for President and having the mainstream media slander and spin his positions into hate filled rhetoric. Trump loves this country enough, loves Americans enough, to step out of his billionaire shell and run for public office. Most people run for office as a step up, to acquire power and wealth. Trump already had these things and so running for office was probably a step down for him in terms of acquiring wealth.

Miley Cyrus lacks the love of God in her life, and so she’s attempting to compensate that missing love. People love replaces God love in her life. That in part is why she is crying and so devastated about Hillary Clinton losing. Hillary Clinton has in some ways become her God.

Look closely at Miley Cyrus’ eyes in the Instagram image above. Notice how her pupils are dilated. Miley Cyrus is on some stimulant drug in this photo. Notice the rapid bipolar behavioral swing from crying one day, to being gleefully happy the next, often another side-effect of drug use.

The National Enquirer broke the story several years ago about Miley Cyrus’ drug use:

Miley Cyrus needs to get her own life under control before trying to control everyone else’s by stepping into politics. Politics is much too rough for someone in Cyrus’ condition.

Someone in the Cyrus family needs to do an intervention before this beautiful young lady spirals out of control.

I hope, no I pray, that one day, Miley Cyrus finds her way back to God before it’s too late.

Here Comes Supply-Side Economics and the Laffer Curve

Increases in government regulation, taxes, environmental regulations, and ObamaCare on businesses, shifted the aggregate supply (AS) curve inward and thus reduced aggregate demand (AD).
Continue reading “Here Comes Supply-Side Economics and the Laffer Curve”