Time To Sell Our TIPs Position

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Outlook for 2019

Click HERE for a LINK to all of my charts and positions.

Gold looks like it found its bottom at the end of 2016 and has since become a good physical, durable store of value. Holding a small portion of your net worth in physical gold coins and bullion is a great idea – especially in these weird as fuck times.
This GLD chart is NEUTRAL for the stock market in 2019.
GLD 2019 prediction: UP

This China chart tells me we probably have more downside to come, if this unwinding is similar to the past two. This is the scariest chart in my mind. The $1000 question: Will 2019 be more like 2015? or 2008? Or has China figured out how to smooth and shorten these swings? Honestly, if I history repeats itself, a repeat of 2008 looks 50% possible. This FXI chart is BEARISH for the market in 2019.
FXI 2019 prediction: DOWN

The dollar chart makes me feel better about the prospects for large cap Dow stocks, as a weakening dollar will translate into higher profits for the multinationals. BULLISH for large cap multinationals in 2019. Note that in 2008, the dollar was very weakened before the market crashed. In 2019, we have a strong  dollar and are in a better position to nip any bearish tides in the bud. This UUP chart is BULLISH for LARGE CAPS in 2019.
UUP 2019 prediction: DOWN

This TLT chart shows how interest rates have normalized. Reminds me of a ship that used to be keeled over on its zero interest side but has now been righted by the fed.  This TLT chart is more bullish than bearish for both STOCKS and BONDS in 2019. Note the neutral RSI, the neutral MACD, and the NEUTRAL stochastic.
TLT 2019 prediction: NEUTRAL

Notice how perfectly the highs and lows bounced off of their three standard deviation bands. It’s BULLISH right now. As long as we don’t break down below the lower band, this looks like an excellent time to WAIT AND SEE in January 2019, then accumulate stocks if the “bottom” retests and holds successfully.
SPX 2019 prediction: Volatile, bottom testing first quarter, spring rally, sell in May and go away, christmas rally. Full year: ultimately UP.

Click HERE for a LINK to all of my charts and positions.

We Battened Down Our Hatches

Every now and then I like to look at the BIG picture (above) to gain insight into the overall trend of the stock market. As we can see, the RSI is headed down but has not dropped below 70 yet. The MACD is heading south too but it has not generated a sell signal either. Finally, the STO is also headed south but has not not clearly triggering a sell signal either. They are ALL displaying WARNING signs that a top MAY be in and that the long term trend is now DOWN. But these are only WARNING signs – not sell signals.

Conclusion: This chart looks way too ‘toppy’. We have switched to a defensive portfolio and we have raised enough cash to comfortably ride out a lousy couple of years or a bear market, or a crash. Better safe than sorry. We (a) sold all equities having little or no long term capital gains, (b) sold all bonds, preferring cash instead. (c) lightened up on some equity holdings that seem WAY overbought. We have a LARGE portfolio with a LOT of unrealized capital gains – so what this means in our particular instance is that we have gone from 100% long to 90% long – but if our portfolio was much smaller then we would be close to 100% cash as of February 1st.

Major Market Meltdown Time?

Overbought RSI heading lower, plus on-balance volume heading south = correction time? Or MAJOR CORRECTION TIME?

iShares China points out major market tops very well. We could go a LOT higher (see 2008 above) or THIS could be the TOP right here. Time to GET DEFENSIVE – for sure!

TLT performed VERY WELL during the last two major market meltdowns. Time to balance aggressive equity portfolios with GOVT BONDS.

Bubble Continues To Inflate

In my view, this market is ripe for a significant correction – at the very least. Either now – before Thanksgiving, or more probably next January or February. Daily, Weekly, and Monthly charts are ALL overbought. In terms of pregnancy, this market is in its 9th month. Time will tell. In the mean time, don’t fight the trend. The trend is your friend.

Stock Market Checkup

Looking at the long term chart below, it seems pretty obvious that the bull market has quite a way to go before we get a sell signal. And by that I mean possibly one or two more YEARS. The RSI is just breaking above 70 (not crossing below), the MACD looks nowhere near ready to cross over to a sell signal, and the STOchastics have not yet dipped below 80. Every indicator reads LONG right now. With this in mind, looking at the shorter term charts, which are VERY OVERBOUGHT, we are long overdue for a SIGNIFICANT CORRECTION. What will be the catalyst? Your guess is as good as mine.

 

Global Dominators Literally Rule

I am always looking for SIMPLE world class long term rate of return, dividends, diversification, safe, ‘no-brainer’ investment. In my mind, the “Diamonds” ETF (Symbol: DIA) epitomizes all of the above. It’s comprised of the Dow Jones 30 Industrial Average Stocks, period. What better investment could there be than a basket of 30 of the biggest, baddest, global dominating multinational corporations in the world? Who’s going to better be able to withstand anything and everything that the world can throw at it? Who’s going to better capitalize on bear markets by gobbling up small and medium sized companies? Who’s got the politicians in their pockets and the people on their payrolls? The easiest and safest way to ‘get into’ the stock market when it is so ‘high’ is to simply divide your total investment by twelve and then invest 1/12 into DIA every month for one year. If there is a downturn, you’ll buy some on the cheap, and if there isn’t you’ll be happy not to have allowed your pessimism leave your investing on hold. Note: Whatever cash you must spend within three years should NOT be in a long term asset like stocks.

Other worthy ETFs include SPY and VT. Do your homework. My fave is DIA.

Happy New Year!