Are You Ready?: December 28, 2015

The title of an old Pacific Gas and Electric song seems fitting at this phase of the U.S. stock market. It stills looks to me that January is setting up to be a major turning point in not only the U.S. stock market but in the U.S. government’s self-appointed role as the CEO (Chief Executive Officer) of the world and all it thinks it entails. The problem with that role is that most other countries of the world did not willingly sign up to be pawns for the U.S. government to use and abuse as it sees fit. Many of these countries have co-aligned to cooperate in a new financial network that will bypass the use of the U.S. dollar in the not too distant future. This new financial network will not turn on to full volume until the U.S. dollar shows obvious signs of self-destructing, along with a little help from some of its creditors. This financial self-destruction is due to its exponentially rising debt (courtesy of the world’s largest paper money printing press (Federal Reserve) due to having the world’s primary reserve currency) which is directly tied to its unbridled spending habits that first and foremost support the U.S. military-industrial complex’s (this includes the CIA and the intelligence agencies) addiction to ruling the world which includes in no small measure the spreading of war and chaos around the world. This effort also includes suppression and control of the domestic population through efforts such as the creation of Department of Homeland Security, Transportation Security Administration, militarization of the local police departments, the Patriot Act/authorized spying on the domestic population, climate engineering, and last but certainly not least financial engineering (which includes making people debt slaves). This is all for the benefit of the relative few at the top of the ruling hierarchy which includes the Military-Industrial Complex, big banks, big corporations and the rest of the Deep State (the unelected portion of big government that has the power and knowledge of how to rig the game in their and their cronies favor) at the expense of the general population. The politicians are a side show to make the people think they have real representation in the government but mostly they tacitly promise the before-mentioned true powers to not get in their way and then they are free to game the system any way they please.

On to the markets. The leadership of the U.S. stock market is exceedingly thin now and a past market darling such as Apple is not close to making new highs. Apple has the largest market capitalization of any U.S. stock by far. Its average volume per month has not touched its 50 month average volume since April, 2013 and the trend of its average monthly volume is steadily decreasing demonstrating a lack of liquidity and demand. It has already fallen hard this month on increasing volume as compared to last month’s volume and the month is not over yet. Apple also showed significant relative weakness last week as compared to the broader indices that it is a constituent of, such as the Dow Jones Industrials, S&P 500, Nasdaq 100, and Nasdaq Composite. When the market’s largest stock by capitalization that has also been one of the market stalwarts during this almost seven year bull market shows obvious signs of weakness in an already thin market then it is time to seriously think about heading for the exits if not already out. Apple looks headed back to its late August low of 92 (it is now at $108.03) and due to the lack of volume/liquidity, it probably will not take long to get there.

I think it is starting to look likely that the major indices (S&P 500, NDX 100, NASDAQ Composite, and Dow Jones Industrials) will make a marginal new high in the first half of January. I do not think this new high will last long as economic fundamentals are steadily deteriorating both domestically and globally and the U.S. stock market is extremely overvalued at this point. I then think you will start to see a change in leadership towards selected emerging markets (Russia, Brazil, China), energy, and agriculture related stocks and away from past winners that are supporting the major indices. The solar energy sector looks like it has already bottomed and started up. First Solar (FSLR) made a 52 week high on Thursday and Sunpower (SPWR) continued up last week after an explosive move the week before. The solar sector ETF, TAN looks good here as well.  Also, the Dow Jones Transports are trading at 19 month lows and are nowhere close to revisiting their November 2014 highs leading to a Dow Theory non-confirmation of any new highs by other major indices, which means sell the indices making the recent high.

Precious metals look like they are getting ready to continue their downtrend after trading in a range for the last 6-7 weeks that has digested its previous move down. 1000 and then 957 or so appear to be the next downside targets for gold. Then I think it is likely for gold to break support at these levels and then continue further down to 800 or less. When gold gets down to these last levels, then it is practically game over for U.S. government hegemony. I expect gold and silver to make explosives moves off their bottoms that will signal the end of the almighty U.S. dollar which is the only thing underpinning the power of the U.S. government. This phase will end the ability of the U.S. government and their central bank to print seemingly endless amounts of paper money without any repercussions. At that point the U.S. government will be on the precipice if not over the cliff of actually being broke with little ability or recourse to fix things. As a guidepost, you might look to this happening around May 2016 since the move down to these levels will probably take some time. Final moves down in a market (such as precious metals) often happen quickly so do not expect this U.S. rigged game to last much longer.

Hellbound Train: December 21, 2015

The title from an old Savoy Brown Blues Band album (some members ended up forming Foghat for those oldtime music aficionados) describes the path our wonderful U.S. government and their favored cronies are leading us down to.   All the major U.S. stock indices look weak. The NDX 100, NASDAQ Composite, S&P 500, Russell 2000, and Dow Jones Industrials have all had three down weeks out of the last six weeks with two of those down weeks being headslams from near their recent trading range highs down to their recent trading range lows, all within one week’s time. After the first headslam, the major indices bounced right back up the next week to their trading range highs again, but after the last headslam of one week ago, the best the indices could do this week was to continue trading below the low of the previous week and on heavy volume. So no sign of a bounce back this week, which is not a good sign. The Dow Jones Transports have been even worse, trading down five weeks out of the last six weeks and down on heavy volume over the last three weeks. The Transports are now at 19 month lows and have shown no signs of strength since they made their high back in November, 2014. We are now heavily into the Christmas season and you might have thought the transports would have bounced back up, at least somewhat during the last few months. The best they have done is trade in a narrow range from September through November with December being a heavy down month for the transports with the last two days being large moves to the downside with Friday’s action on extremely large volume.

I looked at the 20 largest capitalization U.S. stocks to see what they did on Friday and 16 out of 20 had large down moves on heavy volume. This is not a good sign either as these are the types of stocks owned by the big money (supposedly smart money) and they are bailing out of these stocks. It is also not a good sign that the market ended down hard on Friday, since during bull markets, indices usually finish the week strongly. One stock that held up well was Walmart, but it has still not recovered any ground from its big decline in mid-October due to a bad earnings report. Some of the higher volume and larger downdrafts on Friday were exhibited by such normal market stalwarts as Disney, Coke Cola, and Apple.

In the energy sectors, natural gas continued to go down hard for the 2nd week in a row while West Texas Intermediate (WTI) held steady last week after being down hard the previous week. Natural Gas is trading at 1.84 and looks like it could go down to around 1.42 before bottoming. WTI closed at 35.83 on Friday and looks like it could go down to about 33.2 before we could see a bottom. I am expecting these two energy sectors to bottom by the end of January. Junk bonds, especially in the energy sector have been getting hit hard recently and energy price hedges for many of these marginal performers in the shale industry are expiring. The solar energy sector had a strong week thanks to the U.S. government extending the solar subsidies that are federal tax credits of 30% through 2019 according to the Wall Street Journal. The tax credits apply to home installation as well as to big commercial projects. TAN (Solar ETF), Sunpower (SPWR), and First Solar (FSLR) all had strong weeks.   It looks like these solar stocks/ETF will probably rest here and consolidate their strong moves for a couple of weeks in this area. These recommendations look poised to continue much higher from here.

The agricultural fertilizer stocks look like it could be another couple of weeks before they finally bottom.   With the energy sectors and agricultural fertilizer stocks looking close to a bottom, the U.S. stock market indices looking very toppy, and the continually degrading world and U.S. economic pictures, I offer a possible developing scenario. January is lining up to be a very important month, a possible inflection and starting point for the transition from the unipolar, U.S. dominated world (economically and militarily; unfortunately the U.S. government combines these two separate, distinct, and diametrically opposed sectors together; one, an area of productive, creative, innovative, often collaborative, and value added actions, the other, an area of death, destruction, force, violence, and chaos) to a multi-polar world that is trying to focus more on the economic side of things and is only using its military to defend vital interests within the constructs of international law and historical boundaries. The multi-polar forces are oriented towards developing their economies and improving the lives of their citizens while the U.S. government wants to maintain and even expand their empire at any costs to others including their own citizens.  The U.S. government is expanding their already huge debt at exponential rates to keep funding their military adventurism and meddling, supporting a welfare system that has been poorly designed, maintained, and is severely underfunded, and maintaining a gigantic government infrastructure that is designed to control, attack, and manipulate its citizens as well as others.

To get back to the stock market side of things, I think you could see the NDX 100 and Nasdaq Composite make marginal new highs by early January and then start rolling over and continuing down to begin a sustained downtrend. This is the best that I see happening for the U.S. stock market. The U.S. market could trade in a range for the next couple of weeks and then roll over in early January. The energy and food sectors look like they are getting close to a bottom. Supply in the energy sector as well as most commodity sectors has been contracting due to the prolonged low price environment. I heard a report this week ( I believe it was the Charles Hugh Smith interview on the X22 Report) that countries are refusing many U.S. agricultural exports due to the GMO content, so that would certainly contract agricultural supply. Russia’s President Putin made a statement this week that Russia would be the world’s largest producer of non-GMO agricultural products and Russia has developed a very large agricultural capability over the last couple of decades. Putin also stated that the Russian economy was near a bottom and would do significantly better next year. From the Russian stock market related charts that I have been following that looks to be a true statement. So I think if the energy and agricultural sectors turn up, that would mean the Russian and Brazilian stock markets would do well in general.   Another catalyst that might facilitate this, is the possible impeachment of the Brazilian prime minister which is still very much in the works from several newspaper accounts. China may also participate in this selected emerging market rebirth as the Yuan was just added to the SDR basket of currencies by the IMF and it is still reporting economic growth although no one believes the numbers to be as high as the government reports. The U.S. economy is looking worse by practically all released data. The relatively low unemployment rate is a con job of the highest order. If you look at the labor participation rate, the type of jobs being entered, the number of part-time jobs being counted, and the felonious use of the birth-death rate model, you can see this is the work of a well-paid, non-thinking bureaucrat who is doing what he is told by those above. So as the big and smart money continues to realize the ongoing shrinking and failure of the U.S. economy, it is going to look for someplace else to put that money to work. Additionally, the obvious failure of U.S. leadership compared to Russia and China in domestic as well as international affairs contributes to the accelerating demise of the United States. And with relatively low market valuations for their respective stock markets and the extreme overvaluation of the U.S. Stock market, it becomes a much easier decision of what to do next with your assets under management. This transition to selected emerging markets will also contribute to the demise of the U.S. dollar as its extremely overpriced stock market and failing economy start to roll over for all to see.

Interest rates were finally raised by the Federal Reserve this week after jawboning over a multi-year period about doing it. My view on this is different than what you are going to hear in the mainstream press. I believe the market drives interest rates, both short term and long term. I think the Federal Reserve does not tell the public what is really happening behind the scenes in the Treasury markets or what the central banks real intentions are. The Federal Reserve is owned by the big banks and is not a government department despite its name. The Fed is certainly controlled by some degree by the government, probably the Treasury department. The Fed is there to supply the government and the big banks with their own, monopolized source of money that can be created out of thin air to allow the government to spend much more money than they actually have or if they were just dependent on taxes (and it makes them independent of the people as well). It gives the big banks its base money so that it can take that and create even more money out of thin air through fractional reserve banking, make bets based on inside information, and fund their favored large companies and benefactors. Anyway, I believe the Fed sees that interest rates are poised to move higher and they want to be appear to be leading the advance rather than appear to be following the advance higher.   There have been several reports over the last several months of how China, Russia, and now others due to low oil prices have been selling their Treasuries and lowering their dollar reserves. I am sure the Fed has been buying these dumped Treasuries either directly or through their proxies without telling the public.   Those dollars will come back into the U.S. at some point and I think you will see the U.S. dollar start to roll over before too long as well as interest rates starting to go up. I think you will begin to see a confluence of events that conspire to see money flow into selected emerging markets and their currencies, natural resources, and agricultural commodities at the expense of the U.S. stock market, U.S. dollar, and Treasuries. As I said, I think January is shaping up to be a very important month for the coming epochal change whose way has already been well prepared by both sides, one on a constructive basis and the other on a self-destructive basis. And when interest rates rise sufficiently then that will set off the derivative time bomb that has been held by the big banks since the 2008 crisis. Keeping interest rates low has been critical to keeping the fuse on this derivative time bomb (interest rate swaps) from igniting as well as allowing the U.S. government to fund its exponentially rising debt.

Odds and ends. Junk bonds still look terrible and I expect them to continue falling hard although they may rest here for a week or two. Precious metals look weak here and The Powers That Be will keep the prices down as long as they can through the COMEX and London paper markets. The Japanese Nikkei Index looks very weak here. Europe’s primary stock markets are not near their highs so they look weak as well.

Cold, Cold, Cold … It’s Freezin’ Cold! : December 13, 2015

To borrow and paraphrase the lyrics from an old Little Feat song, these words very aptly describe the motives, agenda, and actions of this evil, despicable, and absolutely criminal regime generated and promoted by big government, big banks, and big business through purposely devious, deceptive, and violent methods that are kept secret from the American public. Their methods are kept secret from the public because their brutal, vicious, and corrupt actions would be inordinately less effective if the people knew what their overlords were really up to. I thought about using other metaphors for the title of this week’s article and analysis like “this volcano is going to blow”, or “the dam is ready to break”, or the “the Titanic has hit the iceberg and compartments are filling quickly” but the Little Feat lyrics get to the essence of how heartless and evil this totalitarian, fascist, and militaristic system really is, all for the sake of grossly excessive power and profit at the expense of the general population. Our freedom and liberty is a huge threat to their pre-designed and pre-destined results that fall out from them taking away our rights, freedom, and ultimately our lives from us and put our lives under their control to use for purposes that only serve the interests and aims of the self-appointed elite. The government and their cronies blame the problems they create on things like Capitalism, other groups of people, on us, or grossly exaggerate or even create or stage problems to create artificial environments of fear (and often real environments of fear by their warmongering and constant (and often violent) subterfuge) to push their agenda under the auspices of only your benevolent, protective government can protect and save you (at the expense of more and more of your rights until you are completely enslaved). This is the era of modern serfdom backed by sophisticated, deceptive, often covert, and violent means utilizing advanced technology, psychological warfare techniques,  biological weapons, chemical agents, drugs, GMOs, vaccines, and financial warfare designed and used to keep you in subjugation while you do not even realize it or understand the true source of your problems.

On to the economic front – “This sucker is goin’ to blow!” (in the terminology of George dubyah Bush, warmonger extraordinaire). This is no exaggeration, the arrival to hell in the proverbial handbasket is almost complete for the United States. This economic collapse looks like it is lining up differently than what has happened in the past though. In the past, emerging markets often collapsed and stayed down before the developed nations went through their economic busts. This time, while emerging markets have gone through an economic collapse due to the commodity price collapse, several major emerging countries are on the verge of bottoming and appear almost ready to make a very nice move up. These select emerging countries, in comparison to the U.S. and its vassal states, have various positive attributes, that will allow these emerging countries to make a nice move up. That is not to say these countries are without significant problems themselves. Russia, China, Brazil are the emerging countries that look on the precipice of reversing their current down trends. For Russia and Brazil, the common reasons boil down to benefitting from the likely near-term reversals in the energy and agriculture markets as their economies are heavily dependent on these two sectors.

Russia also has relatively decent leadership in their government that is steadily incorporating pro-capitalistic practices in the way they go about doing business. They are not only one of the major energy producers in the world but have developed a major capacity in the agriculture sector where they are now major exporters where once during the communist regime of the Soviet Union they were perennial importers of food products. Brazil on the other hand has serious leadership and political issues, still has a great capacity in the energy and agriculture sectors. Just like their prior economic rise due to the world commodity boom that occurred earlier in this century due to great demand from China had little to do with Brazil’s political leadership, this commodity sector rise will occur despite their current leadership and economic issues.

That is not to say that good leadership and economic practices have little effect on the output of any particular domestic economy. It does and that will be demonstrated by the outperformance of Russia and the past economic outperformance and improvement within China over the last few decades. While in the last few decades, the U.S. economy has become more dependent on financial engineering and the outperformance of a relatively few big businesses. But in relatively undiversified, commodity based economies, their markets will be dominated by the global sweep of any commodity boom or bust.

Russia and China have also acquired large amounts of gold so their paper currencies will ultimately have backing with something that has proven to be of real, historical value rather than just having the world’s biggest paper money printing press, a hollow shell of an economy, and the world’s most aggressively violent/meddlesome military as in the case of the United States. In addition, Russia has relatively little government debt compared to other major countries.

Sector ETFs include RSX (Russia), FXI (China), EWZ (Brazil). Russian stocks include VIP (telecom), MBT (telecom), YNDX (internet search and services), LUKOY (oil). Brazilian stock is PBR (oil). Chinese stock is BABA (Internet retail). RUSL (Russia), BRZU (Brazil), and YINN (China) are 3X leveraged ETFs for more aggressive investors. These markets look like they will bottom over the next 1-3 weeks although they will probably continue down in the early part of next week.

My previous stock recommendations related to the energy, agriculture, commodity/titanium oxide, and water sectors are still in force. I would add the Solar ETF, TAN to the list. But like I stated earlier here, the energy and agriculture sectors have not quite bottomed yet, but they look to be getting close.

Precious metals still look ready to start back down in the not too distant future. I expect their downtrend to continue for a few more months before a bottom is put in. The dollar has looked especially weak over the last 1.5 weeks with little sign of wanting to rise back up. The Thursday before last, the U.S. stock market, the U.S. dollar, and the Treasury markets all nosedived down in tandem with each other and was a rare event according to an article by the Wall Street Journal. Then on the following Tuesday, 12/9/2015, the U.S. stock market indices and the U.S. dollar nosedived down again in tandem. Then on Friday, the U.S. stock market indices dived down again while the Treasury markets jumped up and the U.S. dollar fell again on that day. This increased simultaneous volatility in all major U.S. markets is indicative of an unstable and abnormal market. The junk bond market is continuing to fall precipitously on heavy volume with junk bond funds starting to close their doors and go out of business.

I believe when the U.S. stock market rolls over, you stand a good chance to see the Treasury bond and U.S. currency markets roll over together with the stock market as well. All these U.S. markets are all artificially overextended and propped up through excessive paper money printing. The markets may start rolling over in tandem because there is not any fundamental or economic basis for the extreme overvaluation of any of these markets. The U.S. stock, currency, and Treasury markets have only demonstrated relative financial strength to other regional markets because the U.S. has the world’s primary reserve currency along with the biggest military to force the world, in general, to continue using its currency in its primary commercial transactions.  The coerced use of the U.S. dollar tries to force the world to ignore its obvious and growing flaws such as being backed by a country that has a humongous and constantly growing debt, a rapidly disappearing economy, and a total lack of fiscal and military restraint in minding its own business.

Much of the economic world has been making preparations over the last several years to bypass the flawed U.S. currency to conduct their economic life outside the undue influence, pressure, and control exerted by the criminal gang called the U.S. government. Make no mistake, the rest of these governments are criminal gangs as well looking out for the interests of their leadership circle of power and profit.   But some governments and their cronies have finally come to the realization that if they want to retain a significant part of their privileged positions of power and profit as well as escape from being under thumb of the U.S. dictatorship, they need a new financial foundation and framework that levels the playing field for all.

I think you are very likely to see the U.S. stock market, U.S. dollar, and U.S. Treasury markets roll over, more or less together, or closely following one another in a vicious, brutal, and long term downtrend.   The U.S. dollar can go down to below 71 (it is now at 97.7) before it falls below its historical low. The government could announce a devaluation before we reach that point. I think the run-up of the selected emerging markets will not only be because a large amount of the resource supply has eroded or disappeared due to the prolonged low price commodity/natural resource environment but also due to a fall in the US. Dollar as well. The precious metals, which typically move inversely to the U.S. dollar, could move together with the U.S. Dollar initially in the downward direction, as the U.S. government does everything it can to hang on before its inevitable fall from Mt. Olympus. I will keep you updated as we move through these unprecedented and dangerous times. Staying on the right side of the markets in these dangerous times are tantamount to keeping and even growing your savings and investments.

The Times They Are A-Changin”: December 6, 2015

Yes folks, things are a-changin’ as the title of the old Bob Dylan song once noted and some of these changes are being reflected in the market while others are still covered up or patched over by the most powerful money printing machine in history, the Federal Reserve, in concert with their global money printing machine partners in crime. These money printing machines called central banks are controlled by a coalition of big bankers and government along with their other main beneficiary of this monopoly to create money out of thin air, big business. The Federal Reserve and its almost infinite ability to create money has allowed the U.S. government to expand in almost every nook and cranny of American life while attempting to do their best (or worst if you are a reasonably aware, sane human being who has not been bought off) to do the same internationally. The U.S. government says this rampant international interventionism is to spread freedom, democracy, and protect everybody from terrorism. If that is their true goal, then the facts say they have failed miserably and that we need a new government that can actually do what it says. Besides creating a lot of hate, chaos, and destruction in other countries, the American people sit idly by while “their” government dismantles their own country at an ever quickening pace. The vaunted American free enterprise system has devolved into a violent, aggressive, broke, oppressive, and over-regulated regime that hardly even still favors its own oligarchical elite who formulated this monstrosity.   The private sector middle class that is mostly independent of government spending has been wiped out intentionally and the middle class that remains and is mostly dependent on government spending in some shape or form waits to join the private sector middle class in its demise, once the almighty U.S. dollar is dethroned as reigning reserve currency of the world.

Once the U.S. dollar self-destructs, government spending and therefore its huge, bloated government will greatly diminish in size. The size and strength of the U.S. government now only remains because it still possesses the world’s primary reserve currency whose status as such is strongly swaying in the increasingly windy environment that will reach hurricane force in the not too distant future. The narrow, shallow, and weakening U.S. economy hardly even favors most of the business and government elite at this stage and they know the country is in trouble, but you will not hear them tell the public what is really happening. You will just get more BS about the economy is recovering and unemployment is at very low levels.   They do not fully explain how they arrive at their unemployment figures or the quality of jobs being created versus those that have been lost. If the economy is so strong why are so many 30 and under adults still living at home with their parents, why are almost 100 million people not even in the work force (labor participation rate), and why are almost 50 million on food stamps???

If this system is so good, fair, and just why do the 20 wealthiest people in the U.S. contain as much wealth as the bottom half of the U.S. population (Zerohedge article this week). Are these 20 people really that much more outstanding than all of these 152 million people in the bottom tier of wealth? Gimme a break. And as the question that is asked in that Zerohedge article, how much political power do you think these 20 extremely wealthy people and their businesses have compared to you or me? Are you starting to get an idea of who this system is set up to help, it ain’t us. This system is designed to keep the general population down and under control and they are doing a damn good job at it. Shut up and obey is their mantra. Don’t think too much either because that causes them more problems as well (threatens their position as the eternal status quo). This is not capitalism.

Capitalism does not have central banks, does not have favored access to the government including inside information according to how much money you can give to a politician or because your business favors a government operation or agenda, and does not have a government that severely restricts the playing field for everyone else through over-regulation. It is called fascism. This, so far, just touches on the surface level operations that should be pretty apparent to anyone living within this oppressive and narrow system, even if you are heavily vested into the system.  This does not even touch on the covert, hidden, and secretive activities of your government and their fascist business cronies. Examples include laws that are now being passed such as TTIP (and other secret, supposedly “free-trade” bills; free-trade my ass, it’s about further corporate control and takeover, both domestically and internationally), covert CIA and other intelligence agencies activities that purport to be doing God’s work for us, hidden Defense Department programs (this is supposed to be for national security reasons but it really is because they don’t want you to know all the evil crap that they are up to), and domestic enforcement agencies ( domestic police forces (state, county, and city), FBI, DHS, ATF, DEA, etc) (BTW, how many of these domestic armed forces do we really need to keep us safe, especially since Americans have the right to possess firearms for self-defense (for the time being anyway)). The Defense Department has never been audited, that is a problem when you have an important government arm that displays a serious lack of transparency and is above the application of basic level good practices. You could have a trusted, independent 3rd party conduct an audit of the Defense Department not only for accounting purposes but to compare their activities against international law. Anything that is obviously outside the bounds of international law stops as well as conducting investigations into the people that authorized and oversaw those programs. We need accountability in both government and big business, but this amalgamated, fascist, militaristic system of special interests fails that test by a long shot.

When power and the opportunity for profit is so heavily concentrated within the hands of a relative few, then this is not an accident, the system is designed to keep the general population down and under the control of those in charge. The system is designed by those who benefit from the system, and that is definitely not the people. A true capitalist system would have an everlasting changing of the guard, so to speak, of businesses in their ability to profit and in their kind as well as a very diversified and numerous array of businesses. Some businesses would be more sustainable than others, dependent on a number of factors, but no select group of businesses would be favored due to special connections with the government or special access to a government/bank controlled money printing press. But the status quo does not want this type of system because their position at the top would be time-limited, they would no longer be able to take advantage of the work and manipulation of others, and they would no longer be in charge as better replacements would supplant them – too bad. Enough show and tell about the U.S. and the world at large, on to the markets.

Thursday saw extreme volatility and sharp declines in the U.S. Treasuries, U.S. dollar, and U.S. stock markets due to the reaction of the actions by the ECB and its head, Mario Draghi. The move down in the U.S. dollar against the Euro was its biggest since March 2009 according to the Wall Street Journal (WSJ). Treasury interest rates spiked up with the 30 year Treasury rate rising over one point from 2.90 to 3.07 as per the 30 year Treasury ETF, TYX. The major U.S. stock indices: S&P 500, Nasdaq 100, and Nasdaq Composite fully recovered their decline on Friday to finish the week strong. The rise in volatility often occurs around market turning points. To have the U.S. bond, currency, and stock markets all suffer large declines on the same day is a rare event according to the WSJ. The decline in the U.S. dollar could have been partially technical in nature as the dollar has consistently risen over the last 7.5 weeks and was right at its previous recent high of 100.7 reached in early March when it started Thursday’s decline. So it was about due for a breather but that is not to say such a steep decline was to be expected. The volatility in all three U.S. markets simultaneously, and all in a negative direction, suggest a certain amount of fragility present in these markets, all trading at extreme levels. The U.S. stock market looks extremely fragile at these levels with very narrow leadership pushing it up at this point.

As I said last week in my Stock Recommendations Update, I expect the U.S. stock market to start rolling over in January with a rotation into selected emerging markets such as Russia, China, and Brazil. The OPEC meeting on Friday ended without any change in current production levels by Saudi Arabia, who is the main driver behind the current low oil prices. But as the oil price hedges of U.S. frackers expire going into the end of this year, I think you will see more oil fracking companies fall by the wayside and then oil prices will start back up to higher prices. Before we reach that point, it looks like oil will continue to decline further before bottoming. I also think agriculture commodities, in general, will bottom and start back up along with oil.   A rise in oil price will push up the cost of agricultural production that will be transferred on to the buyers. Also, at some point this year, I expect the U.S. dollar to start rolling over as it becomes evident its economy is in serious decline which should also push up commodity and natural resource prices. I believe this will be compounded by a rise in interest rates which would be due to similar reasoning as well as a hugely indebted U.S. government and recognition of the insanely leveraged banking system backed up by credit unworthy government bonds. Further, the U.S. government is not making any attempt to decrease their spending, at this point they have no legitimate buyers of their debt (except maybe by their proxy, puppet central banks and big banks), and once the U.S. stock market starts tanking after an almost 7 year run, the U.S. public and the world at large will quickly realize there is no economic recovery and the U.S. is no longer the safe haven. The unusual thing this time, I think, will be the emergence, at least temporarily, of selected emerging markets rising while the U.S. markets start to crater. Again, I think this is a reflection of the changing realities of the world as the U.S. will no longer represent the global economy in general but each region will be more a reflection of their own economic and government policies and execution as well as the greatly diminished importance of the U.S. and its markets (Thanks U.S. government, you done a helluva job representing the interests of your citizens).

Stock Recommendation Update: December 2, 2015

This is to give an update on my previous recommendations over the last few months and current recommendation status.

VRSN has had a big run up and I think has a good chance to go to $100 from here ($90.90). Keep a two week trailing stop to protect your gains.

BABA had a big run up in October off its late September Earnings Report and has been consolidating those gains over the last few weeks. I think this stock has significant upside from here, probably to $100 and very possibly to its old high of $120. It is already moving up on heavy volume this week.

I still like SPWR and FSLR in the solar energy space. Both of these had nice moves up from mid-September till late October, have spent the last four weeks retracing part of that move, and digesting it. Both stocks displayed good strength yesterday.

A (Agilent) is in the life sciences/diagnostics sector and has had a nice move up since mid-September and ended last week near its high for this recent run up. It’s hitting prior resistance here and may settle down for a week or two here. It may be a buyout candidate, otherwise it has a lot of room to run from here. It is presently sitting very close to its 14 year high.

RHT has moved back above its pre-August highs and looks like it could go to $90-95 area. It is now sitting at $82.22.

MGM has gradually worked its way up a few points from its September re-test of its August bottom. It looks pretty good here going forward from a technical standpoint.

AKAM and FEYE took big hits on their earnings reports but appear to be looking for a bottom here. AKAM has a fast growing cyber security unit and its core business is a backbone of speedily and efficiently moving traffic over the internet. FEYE is a relatively new fast growing cybersecurity business and its product has a very good reputation as best in its class even though it has yet to show a profit. These two are on my watch list as I think these two would act very favorably if another cybersecurity issue hits the headlines in the near future.

FLEX had a pop up off its mid-October earnings report but has since been trading in a range since then. It has acquired a solar tracking solutions unit to expand its solar manufacturing capability, established a contract with Nike shoe company to improve its manufacturing process, and opened a medical device manufacturing facility in Mexico, all in the last few months. In addition, it has an electronics contract manufacturing business that has been its core business since its inception. Flex generated $143 million of free cash flow last quarter and its reported earnings was in the upper range of estimates.

LMNX (Life Sciences/Diagnostics) had a good earnings report and popped up a couple of points the day after the report. Since then it has been trading in a range digesting its move off earnings. It has held on to its gains and looks poised to move higher from here.

NEWP moved nicely higher from mid-September till late October and has been consolidating that move over the last few weeks. It looks poised for higher prices. The company operates in three groups: Photonics, Lasers, and Optics. It met its earnings expectations with good forward guidance and had $0.18/share earnings last quarter.

NANO, as per Yahoo, provides high-performance process control metrology and inspection systems used primarily in the fabrication of integrated circuits, high-brightness LEDs, discrete components, and data storage devices in the United States, South Korea, China, Taiwan, and internationally. The company had a good earnings report at the end of October with good forward guidance, had a good move up the day after the report, and has since been consolidating that move within a range. It looks poised for higher prices.

FB looks like it can go to about $125 from here ($107.12).

The few big cap NDX 100 stocks that have been largely moving this market up look like they can go up for another 2-3 weeks but I would expect them to start rolling over in January. Selected smallcaps look good here. Selected emerging markets still look like they are in a bottoming process but I would not be surprised to see a sector rotation into them (Russia, China, and Brazil) by the end of January 2016. POT, MOS, IPI, which are agricultural fertilizer companies, are getting very close to a bottom if not already there.

Some new stock recommendations are TROX (produces titanium bearing mineral sands and titanium dioxide-this could become a big item in the 3D printing process, 19.08% dividend), VIP (Russian Telecom), MBT (Russian Telecom, 11.29% dividend), LAYN (water management), TWI (agricultural/earthmoving tires, wheels, and undercarriages), CNX (produces coal and natural gas), and DHT (crude oil tankers, 9.27% dividend). I will try to provide more background on these in the near future.