SCT Issue #246
No, the world isn’t coming to an end. And no, the U.S. stock market isn’t going back to 10,000, or lower, as many seem to believe.
In fact, as soon as this correction plays itself out, U.S. equity markets will be off to the races again, in one of the biggest bull markets you will ever see. More than doubling to well over 31,000 in the Dow, in an eerie parallel to what happened between 1932 and 1937.
This does not mean the U.S. economy will be in good shape. It won’t be. But neither will most of the rest of the world, which will be in worse shape. Again, just like the mid-1930s when all of Europe went bankrupt, trillions of dollars fled shores all over the globe and came rushing to the U.S. equity markets.
All of that is going to begin soon after this correction ends. So if anyone is telling you the market is headed into a long-term bear market, simply walk away from them – they have no clue what they are talking about.
The winds are already starting to pick up, as you can tell from this week’s record volatility. Mark my words: It’s merely the beginning of a period that I am calling “a roller coaster ride through hell” – one that will last for five full years until the major macro-economic and war cycles start to subside in 2020.
You’re in good shape. You’re a savvy investor with foresight, which is why you are a member of Supercycle Trader.
It’s already paying off. In the thick of yesterday’s early morning market selloff, you should have been able to bag a gross profit of at least 121% on your position in ProShares Ultra VIX Short-Term Futures, symbol UVXY.
If you acted promptly, you did even better, selling your shares at better than $72, for a gain of 171% or even more.
So that you know, we record the actual prices we use for track record purposes by waiting one hour from the average time that a recommendation is sent via email, to allow the majority of members to act on the recommendation.
That applies to both buy and sell recommendations. However, and IMPORTANTLY, you often do better, both buying and selling, since you act before we officially record anything.
We feel that’s the most conservative way to keep a track record, when we don’t know exactly what time members are actually pulling the trigger on a recommendation.
Now that you know that, it will help you understand any differences you sometimes see between your own results – assuming you act precisely on my recommendations – and what you see in the official posted track record.
The UVXY trade yesterday is a perfect example. We are booking a gross profit of 121%, while, again, many of you did much better. Some also – if they were very late entering the trade – may have earned a profit somewhat less than our official estimate, and that can happen too.
Nevertheless, it was a great trade. Perfectly timed. Not all trades will be as well timed as that, and of course, we will have our share of losers along the way.
But I am absolutely thrilled that the markets are now starting to open up to such luscious profit opportunities. They should be coming fast and furious now and for a very long time.
Major Markets, Review:
Basis the Dow Industrials, we should see one more new low, down just below 15,000, to the 14,900 level in the next couple of days. If that level gives way on a closing basis, we could see it drop even more, to 14,300, where long-term support resides.
Right now, that is about the worst case for the Dow. The extent and character of any decent bounce will determine the Dow’s next major move.
If, following a new low this week, the bounce is weak, then we may be looking at a normal five month bear market into October, where the Dow could get as low as 13,500 before bottoming.
Either way, I do NOT see any interim bear market in U.S. equities lasting past October.
My strategy will be to soon take profits on the two other inverse ETFs – DXD and SPXS. Per yesterday’s issue, you should have raised your protective stops, good till cancelled, to $22.39 and $20.39, respectively.
Gold is not faring well, as expected. Despite more than a 1,000-point early morning crash in the Dow, gold hardly rallied at all.
Per the previous cycle chart I showed you, gold should be pulling back now and then stage another rally into mid-September – before crashing into November.
I may opt for you to take a light long position in gold and silver if it looks like the rally is worth playing. But wait for any signal I send you.
The far bigger profit play will be to take on bearish positions near the top of the bear market bounce, and profit as gold and silver tumble into November.
The U.S. dollar got hit hard the last couple of days, with investors fleeing U.S. stocks and repatriating – temporarily – their money back to Europe. It is only temporary, as the dollar should soon bottom (along with stocks) and then catapult higher.
I will likely soon recommend a long position in a U.S. dollar ETF, but again, wait for my signals.
Crude oil has fallen fast and furiously, too fast to get on board with a low risk position.
No worries. Oil should soon stage a strong bounce before its next leg down. I plan on issuing a bearish recommendation near the top of that bounce to catch oil’s drop down to below $30. Wait for my signals.
Natural gas is holding its own. Hold your shares in UNG with your protective sell stop in place.
Best wishes and stay tuned …
Larry
Position Tracker
Click here, or on the image below, to view our position tracker in .pdf format.
