This is how a bear market begins

Market is addicted

Much like a "drug addict," any removal of the stimulus leads to an immediate and severe reaction. Given the high correlation between the Fed's balance sheet and the stock market, there is no reason to believe this will change soon.

Technicals Remain Weak

As noted in "Bulls Buy The Dip" the bullish trend remains exceptionally strong. Importantly, each "dip" gets bought at shallower levels despite deteriorating internal measures.

Liquidity Risk

For investors, the biggest risk remains the "liquidity" risk.

Every transaction in the market requires both a buyer and a seller, with the only differentiating factor being at what PRICE the transaction occurs. Since this is necessary for there to be equilibrium in the markets, there can be no "cash on the sidelines." 

In the current bull market advance, few people are willing to sell, so buyers must keep bidding up prices to attract a seller to make a transaction. As long as this remains the case, and exuberance exceeds logic, buyers will continue to pay higher prices to get into the positions they want to own.

Such is the very definition of the "greater fool" theory.

However, at some point, for whatever reason, this dynamic will change. Buyers will become more scarce as they refuse to pay a higher price. When sellers realize the change, there will be a rush to sell to a diminishing pool of buyers. Eventually, sellers begin to "panic sell" as buyers evaporate and prices plunge.

Sellers live higher. Buyers live lower.

What causes that change? No one knows.

But that is how bear markets begin.

Slowly at first. Then all of a sudden.

by Lance Roberts

A million dollar Bitcoin

In its short life for just about 11 years since birth, Bitcoin has been announced dead more than 300 times. But it has survived each death penalty and come back stronger and stronger! With its recent high over $64K, its next highs over $100K is more than ever reachable. How about the ultimate high at $1 million? It may still sound illusionary but when Bitcoin was just $0.001 10 years ago, wasn't a $60K price also like an illusion? With the current price around $50K, we just need 20 times appreciation to reach that magic number, much less than the magnitude of increase from $0.001 to $64K, right?

So when we may see a million dollar Bitcoin? Another 10 years? Before I answer your question, let's first get rid of the fear of Bitcoin being wiped out by governments. The biggest threat has always been the US government. But below I have seen three good reasons why  the U.S. government will not ban bitcoin (shared by my friend):

Banning bitcoin is impractical. It's impossible for the U.S. government, the Chinese government, or any government to stop bitcoin. It would have to shut down the entire internet everywhere in the world and then keep it off. And even that wouldn't be enough, as there is a network of satellites constantly beaming the bitcoin network down to Earth. Further, the bitcoin network can be communicated over radio signals, and small portable solar panels can power the computers running the network. All aspects of bitcoin are genuinely decentralized and robust.

The best that governments can do is play an endless – and ultimately futile – game of global whack-a-mole.

The cat is out of the bag. Bitcoin is bigger than any government. It's entirely impractical to ban it.

It's too late to ban bitcoin. Supporting a ban on bitcoin means going against tens of millions of Americans – no small number of whom are wealthy, powerful, and well-connected. Outlawing bitcoin is not going to help anyone win an election. It's already too politically popular to outlaw, and every day it gets stronger as adoption grows.

Banning bitcoin will only benefit U.S. rivals. Is the U.S. going to ban bitcoin and give China and other U.S. rivals a golden opportunity to become even richer and even more powerful by dominating the future of money? I don't think so. I'm not the only one either. A flurry of high-level U.S. government officials expressed similar sentiment recently.

In short, the U.S. government doesn't like bitcoin. It would probably ban it if it could do so effectively and without giving China or other U.S. rivals an edge. But it can't, so it won't. The U.S. government will have to adapt to that reality, and there are signs that it's already doing so.

With this fear out of our way, let's talk about the projection when Bitcoin may reach one million dollars.

The chart below gives the answer. Someone (unknown so far who is this guy) has shared a formula that is based on the past 11 years of Bitcoin prices and estimated the Bitcoin floor price curve (the blue line), which has perfectly supported the price fluctuations of Bitcoin since its birth as its base. Each time when the price came towards the floor line, it bounced. Given it has been tested for 11 years without failure, we have reasonable confidence that this floor curve may be a good one to project the future Bitcoin price trend. Let's just assume this is indeed Bitcoin's floor price movement tipping to the upside of course. With this trend continuing, we will see a $1 million dollar Bitcoin floor price in Apr 2029, i.e. just less than 8 years from now. If this is correct, then it is highly likely we will see a Bitcoin reaching $1 million much earlier than that as its highs can jump around widely above the floor. 🤗

Folks, keep the faith in Bitcoin and you will be greatly rewarded!!💪

This is what will happen when a fake president in in power....

With a fake president in power by stealing ballots and worse, a guy with mental disability without knowing what is going on in the world, what can we expect from him and those around him? Good luck for those who stupidly believe him.....😜  

Why Is the U.S. Taking Orders From the Taliban?
By Trish Regan

Just when you thought you'd heard it all...

On Tuesday, word leaked that the head of the CIA, William Burns, traveled to Afghanistan to meet in secret with the de-facto head of the Taliban, Abdul Ghani Baradar.

Let that sink in... The CIA's director had a clandestine meeting with the head of the Taliban. And he came back empty-handed!

Within hours of the story being (deliberately) leaked to the mainstream media, President Joe Biden participated in a call with G7 leaders in which he said he couldn't budge from the August 31 deadline to get all troops out of Afghanistan – regardless of how many Americans are left behind.

Since when did we take orders from the Taliban?

And why isn't anyone telling the Taliban that they, in fact, didn't honor their side of the agreement? The Taliban was not to take over the cities and country until after August 31 – but as soon as the U.S. communicated that it was withdrawing from the country, it was game over.

The Taliban swiftly took the country, and U.S. officials – including the president – were left scratching their heads.

Perhaps it's another example of U.S. leaders losing their edge... They want so badly to believe in their own particular vision of the world that they fail to understand all sides and end up developing poor plans. They can't think through the permutations of all that might happen because they're too blinded by their own political viewpoints.

Can Uncle Joe Survive This?

I realize Biden wanted out ahead of the 9/11 anniversary... Heck, everyone wanted out. No one wants forever wars.

But it wasn't in this country's best interest to get out in the way that we did. With better planning, this could have been handled more appropriately.

Meanwhile, we're now in a situation in which our allies are all rightly furious at us... Despite pleas from Britain, France, and other NATO allies to keep troops in Kabul, Biden said on Tuesday that the U.S. intends to withdraw completely from Afghanistan by the end of the month, as planned.

Even members of President Biden's own party are trying to distance themselves from him amid the latest events, including Vice President Kamala Harris.

Couple this with the reality that the Dems may not even be able to get their $1 trillion spending plan for infrastructure through, since Nancy Pelosi won't approve it without the other $3.5 trillion for social programs included... and you have the makings of an inept Jimmy-Carter-style presidency.

Now people are asking, can President Joe Biden survive this?

Chances are, he will. I hate to break it to those that wish he'd resign or be removed from office... but that's not going to happen. Yes, I realize there are a growing number of people who want him impeached over this. And while he could see a political attempt for such a thing, the likelihood that impeaching him sees the light of day in the Senate is non-existent.

For the Senate to convict a president and force him out of office, especially in a divided Senate, is a tall order... as it should be.

So the impeachment chatter is just more politicking... The reality is, elections have consequences. And the fact that Biden is currently the president of the United States has consequences – economically (as we've seen in the constant inflationary pressures) and politically on the world stage.

Trish's Takeaway

Ultimately, we need to work harder and smarter to protect our country's reputation at home and abroad.

We need to be more thoughtful in our approach to foreign policy... knowing that we still have a responsibility to the globe as the world's reserve currency.

Former Congressman and three-time presidential candidate Dr. Ron Paul just joined me on my American Consequences podcast, and his response would probably be "Good riddance! We never should have been the world's reserve currency to begin with!" (You can listen to more of what we talked about by accessing the episode here.)

Dr. Paul's point aside, I would argue that we have benefited tremendously from having that status, and I'd like to keep it... Being the world's reserve currency, after all, is partly what's helped support our country in times of real stress.

Consider this: When the pandemic hit, where did everyone invest their money? The United States of America.

When things globally start looking dicey, the entire world comes back to the U.S. to keep their money safe.

However, after the latest overseas catastrophe, the question now is... is it sustainable? Can the U.S. remain the world's reserve currency? At what point might our allies say, "Hey guys, it's been nice, but..."

At this point, I wouldn't blame our allies for seeking new ways to stabilize the world... And I wouldn't blame them for abandoning the U.S. dollar in the process.

Granted, countries around the world have their own big issues to deal with... Stocks in China have finally started to recover this week amid the Chinese Communist Party's privacy rules on tech companies. But many may be nervous to invest there knowing that the Communist Party could wipe out your investment tomorrow.

As for Europe, well... things may be bad in the U.S., but they're a whole other level of bad in Europe. I would start with the reality that the E.U. was destined for failure if nothing for the simple reality that people don't even speak the same language.

You cannot have a centralized government responsible for the currency if it's not also responsible for everything else. This will ultimately prevent the Europeans from dominating the world. (Well, that and a bunch more things that we'll save for another day.)

So – for now – we get a pass here in the U.S.

But President Biden... the CIA... and the State Department should not squander the equity that we have built as the world's reserve currency. We're still in charge, which means we don't just "walk away" from our responsibilities. And this includes the thousands of Americans still on the ground seeking a way out of Afghanistan. We cannot leave them behind.

Tomorrow, we'll get a read of the Federal Reserve on its plans for the future as it meets for its Economic Policy Symposium. (I covered this go-to event in our recent August magazine. If you missed it, you can read it here.)

So far, the Fed has chosen to completely ignore inflation in favor of focusing on unemployment. But with unemployment now at just 5.4%, there is reason to double down on inflation.

In light of all that has just transpired, and the frustrations our allies now feel, stabilizing the currency could help us bide our time.

Eventually, I predict the world will find a new system of tender, one that is digital and enables the world to depend less on the United States. But there's no reason for us to hasten this process.

There's no excuse for the ineptitude of U.S. leaders on the Afghanistan issue... But let's not compound it with more incompetence from the Federal Reserve.

The events of the last several weeks do not inspire additional confidence in the U.S. dollar.

Let's hope that's only temporary.

Joe Biden must resign before even more Americans die

Dear Friends, It's time.  Joe Biden must resign before even more Americans die. Please immediately email your congressman and senators and demand that they PUBLICLY call on Joe Biden to give up the Presidency. It's clear Nancy Pelosi will never impeach Joe Biden, so the American people must take a stand. Just click here to quickly email your two senators and your U.S. Representative.

Send Emails Now

Biden is planning to abandon Americans in Afghanistan where they will likely be murdered. He's put our troops in a terrible position and they are now dying in terrorist attacks. He's bungled, mismanaged and made worse everything he's touched. He has to go. Please email you Congressman and Senators and then ask everyone you know to do the same. Just forward this email around. And PLEASE do so quickly. We the People can force this man out of power and block his entire anti-American agenda. I've worked in politics nearly my entire adult life, and I can tell you that both Republicans and many Democrats realize that America is in crisis. They understand that Biden must go and go now. They are simply waiting to see if the American people think so too before making a move. That's why it is so important that you send your emails today and then ask everyone you know to do the same. For America and freedom, Rick Manning President Americans for Limited Government

Powell is climbing out from a hole tomorrow!

After 90 points mini crash late last week, the S&P 500 has just been slowly drifting higher. There's negative divergence on many technical indicators. And VIX call options are between 5 and 8 times the price of the equivalent VIX puts. I suspect we are setting up for a quick flush lower. What is the trigger? Maybe an event tomorrow! Yes, all the eyes are watching and ears are listening right now: the Fed Chair, Powell, will be climbing out from a hole to speak around 10 AM tomorrow, at the Jackson Hole annual meeting. Does that mean anyone is expecting him to say something interesting? Not at all!   Actually no one is expecting him to say anything new but if he is perceived to be speaking something a little bit out of whack, then watch below. For some reason, Powell is notoriously easy to spook the market by saying something misunderstood by investors. There is a chance he will do so again tomorrow. You see, the market has priced in a perfect world with perfect Fed support by now. It is not important what Powell actually says tomorrow. All it matters is what the market thinks he is saying. Anything apart from the priced-in perfection may trigger a flash crash. 

Now forget about what will happen tomorrow. Let's do an honest self assessment where we are in terms of the market cycle. Below is the Market Fear Curve, which vividly describes the investors sentiment and psych at each stage of the market. Do you think we are on the right side at the moment? Anyone with a normal mind won't believe so. But people may differ where we will land ourselves on the right panel. Personally I think we are at the top of the bull market, or at least very close to the top. We see a lot of excitement and overconfidence these days. That's why there is virtually no any fear that may last for a few days, let alone a few weeks or longer. Each tiny bit of dip will be eagerly bought up, followed by new highs. How exciting it is! And those dip buyers have been right for months. Nothing to fear about, as we have witnessed right now. But as the diagram below has pointed out, this is actually the time with Greatest risk of loss! 

Bitcoin Supremacy

Share an interesting thought about how much Bitcoin can be worth in the long run....

Think of it this way. Bitcoin has gone from having no market value when it was launched in 2009… to being used in its first commercial exchange to buy two pizzas in 2010… through to today where it generates over $50 billion in daily transaction volume from every country in the world.

Over 100,000 merchants accept bitcoin as payment. That includes Overstock.com, Expedia, Microsoft, and Starbucks. Tesla began accepting it, before putting that on hold due to unfounded and hysterical "climate change" issues around bitcoin mining. But that won't last long. It was just a PR move.

The fact is that the number of businesses accepting bitcoin is rapidly growing. This is what the process of a new asset becoming money looks like, and it's just getting started.

People worldwide are spontaneously adopting bitcoin as money because of its superior monetary properties, primarily its hardness. [Ed note: Nick discussed this in part two of this interview series here.] I think it's clear we are still in the early days of bitcoin.

If bitcoin is going to compete with, and eventually overtake, government fiat currencies – which I believe it has an excellent chance of doing – its market cap must grow substantially.

If it were a government currency, bitcoin would be the 14th-largest currency by the market cap of its monetary base, ahead of the Russian ruble and just behind the Swiss franc. In other words, bitcoin is already bigger than most national currencies… and it's going to continue to grow.

Think of bitcoin's superior monetary qualities – namely its resistance to inflation by any third party – like a black hole sucking in capital from weaker currencies. Bitcoin is eating the demand for monetary goods from inferior forms of money, such as government fiat currencies.

I think this process will not only continue but accelerate exponentially in the years ahead.

Some proponents believe the endgame for bitcoin is to eventually emerge as the world's dominant form of money – a process called "hyperbitcoinization," or what I like to call the "Bitcoin Supremacy."

It's a global, voluntary transition from inferior money to a superior one.

If the Bitcoin Supremacy even comes close to happening – the case for which gets stronger every day – it would be the biggest transfer of wealth in human history.

To give you a comparison, if bitcoin's market cap rises to that of gold's – 10x from the current price – the price of a single bitcoin would be worth well over $400,000.

If that seems outrageous, consider how outrageous today's price of around $44,000 would have seemed to someone just four years ago when the price was about $4,300. I think that is the kind of upside – 10x returns – that we can reasonably expect in the next four years.

Looking farther ahead – say to the end of this decade – if bitcoin absorbs all the capital held in all the world's fiat currencies, a single bitcoin would be worth almost $2 million in purchasing power of today's dollar.

Now, I'm not saying that will definitely happen. But the chance of it occurring is also not zero… and is in fact growing every day. That's why I believe everybody should own at least a little bitcoin.

Something is wrong in the market....

We got another rollercoasting week, with up and down in a wide range that has not been seen for months. The volatility was especially in a huge gyration. But as I predicted in my premarket note to my chat group this morning, I expected a Wonder Rally with crashing volatility. Here is what I said this morning:   "The overall tone of the market has turned bearish but in the very near term it is very oversold and I think we will see a quick rebound at any minute, probably a day or two of Wonder Rally. Looking for VIX to go down in the next few sessions!" It turns out to be a precise call. My bearish bet for VXX has yielded a great quick return for me. No complaints!

But I don't expect this rally will last long. More likely we will soon see another plunge more severe than what we saw early this week. Be ready!

For now, let me share a good analysis about the overall market conditions. While I don't believe the decade long bull market has already ended, I do feel we are very close to the ultimate top. My gut feeling tells me that the unbelievably resilient bullish movements of the market may be setting up a stage for a big black swan to fly out. I don't know when and of course what, but I think it is better to be prepared for something unthinkable right now. 

********************************************************************************************  

Let's look at the internals to see what's going on "beneath the hood" in the financial system.

High yield credit (junk bonds) has broken below its 50-DMA. This chart is looking uglier and uglier. The door is open to a potential drop to the 200-DMA here. And remember, high yield credit usually leads stocks, so if that starts to happen, it's likely stocks will follow. Again, this is very worrisome.

Breadth has also broken down in a big way, falling below its 50-DMA. Here again this is a VERY ugly chart. We need breadth to turn upwards again soon or it's going to the 200-DMA. This like high yields credit, is telling us "something bad is happening" within the financial system.

Put simply, market internals are flashing warnings to us. But the market is holding up for now. So, to summate, the market is beginning to "do something wrong." But it has yet to confirm this.

So now is the time to be more cautious than usual. We have yet to get confirmation that the market is in serious trouble. All we have at the moment are troubling internals and stocks breaking down modestly.

Put another way, it is NOT time to panic, nor is it time to get bearish. It is best to watch and wait and let the market show us what is going on.

In terms of the BIG PICTURE for this bull market, the "line in the sand" is the 50-month moving average (MMA). When stocks take out that line on a monthly basis and fail to reclaim it the following month, the bull market is over.

This Is The Biggest Cluster of Nasdaq Warnings in 6 Years (by SentimenTrader)

Despite new highs in many of the major U.S. equity indexes, the old school NYSE Advance/Decline Line hadn't made a fresh high for over two months.

It's worse on the Nasdaq.

On Monday, the Nasdaq Composite closed within 1% of a 52-week high, and yet two long-term measures of breadth on that exchange fell to very low levels. The McClellan Summation Index closed below -350, and the New High / New Low Ratio was below 30%. Those are the worst figures in history, dating back to 1986, for a day when the Composite was so near a high.

This internal tumult has been triggering some technical warning signs, such as the Hindenburg Omen and Titanic Syndrome for the Nasdaq exchange. 

Over the past 30 sessions, a combined 13 signals have been triggered, the most in six years.

When there has been such a cluster of signals with the Composite within spitting distance of a new high, trouble was brewing most of the time. The Nasdaq escaped any damage in 1996, 1999 (for a while), and 2016 but otherwise witnessed high volatility and negative returns.

After the speculative blow-off in late January - early February of this year, we've been on the lookout for major deterioration under the surface of the indexes. There have been periodic bouts of that since then, and the indexes have almost immediately recovered. We'll have to see if this is yet another episode.

It is really a joke but a major victory for Bitcoin!

By now you must have heard that the Senate has passed a one trillion dollar infrastructure bill. In it it mandates that "any broker (a person or company who regularly provides a service that executes transfers of digital assets on behalf of another person) to report those transactions to the IRS, just as securities brokers must do for stock and bond trading."

It may not sound like a big deal as brokers are already reporting stock transactions to the IRS. The problem with the bill is its definition of "broker." As written, it would include crypto miners, developers, and stakers. How in the world does the Senate expect miners and developers to track the gains of crypto users? They don't have customers. So they can't comply with the law. It's like asking the developers who write the trading software for Fidelity or Ameritrade to track the gains of everyone who uses their software.

It's pure insanity and it is just a joke!!

We all know that governments in general are hating Bitcoin and other cryptos! Here is a good writeup about why:

Central banking and fiat money only exist to steal time and money from the people and redirect it to the politically connected. Time and money represent life, so they are in fact stealing your life.

Any honest assessment of the situation would reveal that fiat money and central banking are tyrannies of historic proportions, like feudalism and slavery.

Bitcoin can give monetary sovereignty to the individual and render central banks and their colossal frauds obsolete. That's no small accomplishment. That's why they are so threatened by it. It's a historical development that profoundly alters the status quo between the rulers and the ruled. It's similar to the inventions of gunpowder, the printing press, and the internet.

That's why bitcoin is the most political of all assets.

Bitcoin shares many of gold's monetary characteristics – especially its resistance to inflation. That is what initially attracted me to it. Like gold, bitcoin does not have counterparty risk. Bitcoin and gold are the only primarily monetary assets that aren't simultaneously someone else's liabilities.

Here's the bottom line.

Bitcoin is a hard money monetary system that is accessible to anybody and controlled by nobody. It works in the real world, and it solves one of mankind's biggest problems: storing and exchanging value reliably. That's why I find bitcoin interesting and recommend everyone hold some.

While some governments have tried to kill cryptos in its entirety, its decentralized nature has made their attempt worthless. One good recent example is China. The East Kingdom has repeatedly tried to crack down on crypto trading. And in May, it announced a near-total ban on crypto mining. We saw bitcoin drop as much as 53% on the news. But all China did was force its miners to move to friendlier jurisdictions. These guys have now relocated and restarted their operations… And bitcoin has rallied as much as 59% of its recent lows.

Therefore, although the Senate bill may seem like bad news for the crypto sector... the market clearly didn't mind. Quite the opposite, in fact as the whole crypto market has moved up quite substantially since the bill was passed.  Actually in a way, the crypto world likes such kind of regulations, even though they are way overkilled. The most fearful risk for the crypto crowd was to see a total ban of Bitcoin etc in a major country like the US. Now with this bill passed, it actually means Uncle Sam wants to keep Bitcoin and its digital descendants around as they want to raise $28 billion in taxes from the crypto industry in the next 10 years.

As Jeff Bandman, a former senior official at the Commodity Futures Trading Commission, put it...

The government is going into partnership with the crypto industry. The government didn't abolish tobacco - it taxes it. The government taxes alcohol. The government taxes capital gains and income, and all kinds of other things.

Crypto now has an official, government-sanctioned role in the U.S. economy. And we all know that once the government gets used to this tax revenue, it won't give it up.

As such, I like the joke and I'm laughing all the way around to celebrate a major victory for Bitcoin and the crypto industry!!🤗💪✌ 

The most shameful moments in history

The New York Times" published an article on the 15th that "Afghanistan's ultimate failure is Biden's responsibility." The article reads, "In the history of modern presidents, there are few words that can bite the commander of the US military as quickly as President Biden said more than five weeks ago. The U.S. Embassy was hung from the roof. In Afghanistan, the possibility of a unified government controlling the entire country is very small." The article pointed out, "Mr. Biden will be recorded in the annals of history, whether it is fair or unfair, he is the presiding officer The president of the shameful final scene of the United States' experiment in Afghanistan, which has been brewing for a long time. In seven months, his government seemed to exude a much-needed ability; to vaccinate more than 70% of adults in the United States to promote Employment growth and progress on the bipartisan infrastructure bill. But everything in the last few days of the United States in Afghanistan broke people's imagination." The Wall Street Journal published an editorial on the 15th, stating that Biden issued the US abandonment of Afghanistan on the 14th. The statement should be listed as one of the most shameful moments in history when the U.S. commander-in-chief ordered a retreat. President Biden's statement to wash his hands in Afghanistan on Saturday should be listed as one of the most shameful moments in history for the commander-in-chief to retreat in the United States. The editorial pointed out that as the Taliban approached Kabul, Mr. Biden issued a confirmation letter of waiver from the United States, exempting himself from responsibility, shirking the responsibility to his predecessors, and more or less invited the Taliban to take over the country. Please note that Mr. Biden criticized his predecessor more than the Taliban. It took the president seven months to ostentatiously overthrow Trump's foreign and domestic policies one after another. However, he now claims that the Afghanistan policy is a policy he cannot do.

《纽约时报》15日刊文指出，"阿富汗的最终失败是拜登的责任"。文章写道，"在现代总统史上，很少有话能像五个多星期前拜登总统说的那样迅速地反咬美国三军统帅一口，拜登当时称'你不会看到人们被从阿富汗的美国大使馆屋顶上吊起来。在阿富汗有一个统一的政府控制整个国家的可能性非常小'。"文章指出，"拜登先生将被载入史册，不管是公平的还是不公平的，他是主持美国在阿富汗的实验中酝酿已久、令人羞愧的最后一幕的总统。在七个月的时间里，他的政府似乎散发着亟需的能力；让全美70%以上的成年人接种疫苗，推动就业增长，并在两党基础设施法案方面取得进展。但美国在阿富汗的最后几天的一切都打破了人们的想象。"《华尔街日报》15日发表社论，表示拜登14日发出美国放弃阿富汗的声明，应被列为史上最可耻的美军总司令下令撤退的时刻之一。拜登总统周六在阿富汗洗手的声明应该被列为历史上最可耻的总司令在美国撤退的时刻之一。社论指出，随着塔利班逼近喀布尔，拜登先生发出美国放弃的确认书，免除自己的责任，将责任推卸给自己的前任，并或多或少地邀请塔利班接管这个国家。请注意，拜登先生对他的前任的批评比对塔利班的批评要多。总统花了七个月的时间来炫耀地推翻川普的一项又一项外交和国内政策。然而，他现在声称阿富汗政策是他无能为力的政策。

Why am I reluctant to share the exact trading for VXX?

I generally don't share trading specifics in public and more so for VXX. Why?

Well today's VXX price action is a good example to explain why. As you know, I said last Friday that I was expecting a high volatility within days and more specifically a hike of VIX early this week. The primary reason for my call was due to the flashing of my crystal ball, the VIX call/put ratio in its extreme. As I said, I was accumulating VXX.  Following my blog posting, I got some requests asking if I could share my trade specifics. I of course couldn't. One major reason is that VXX is only good for short term trading, not for long term holding. Given the nature of the volatility involved in VXX, its prices will move very quickly and swing widely even during the day. For example, VIX jumped 15% at the intraday peak, meeting my crystal ball calling. As such my short term long VXX option positions shot up nicely today. Judging by the call/put ratio change for VIX, it appears to me that the VIX jump for this week is likely done, although I still expect a higher VIX in the next two weeks or so. Therefore I cashed out my short term profit nearly at its peak. Fortunately I did so as VIX quickly deflated after its intraday peak and gave back most of its gain for today. If I just held my VXX calls, it could be a loss in the next few days if VIX continues to decline, which is likely for the next few days. Actually I even placed a small trade to short VXX for this week today. 

If I shared my trading specifics with others, most likely it wouldn't be doing anything good for them unless they know very well how to follow the VIX dynamics and take quick actions accordingly. I doubt many people can do that.

Again, for VIX, I don't expect drastic moves for this week anymore but high volatility is still in play for the next two weeks or so. Don't be fooled to chase highs from here! 

What junk bonds are tell us....

I have mentioned before that junk bonds are usually leading the market  by a week or two. While the stock market has been quite bullish lately, making new highs almost every day, the junk bonds are breaking down, a divergency one should not ignore. I think the market is telegraming us with a warning! Let me share the current chart of the junk bond ETF (HYG) vs S&P in the past year. 

The right blue arrow shows how HYG closed decisively below the support of its 50 DMA. That has happened two other times this year marked by the two previous arrows. Following each of those times, HYG continued lower. And, the weak action in junk bonds spilled over into the stock market, and S&P fell 10% and 4% in the past two times when HYG spilled over. 

Will history repeat? I bet so. Actually my crystal ball is telling me again that a jump in volatility is imminent. Feel free to ignore this warning. For my money, I'm accumulating VXX these days and very likely we will see a moonshot of VIX next week. 

My crystal ball has never failed me and it won't this time, I believe!!😏😎

Are you ready?

A test of the 200-dma is coming (by Lance Roberts)

The 200-day moving average, as denoted in the chart above, is a technical indicator used to analyze long-term trends. The line represents the average closing price over the last 200 days. Each day, the average changes as the latest data point are added, and the first removed creating a new average price.

Given the 200-dma represents a longer-term holding period for stocks today, it is a more important indicator for "risk" management and capital preservation. As IBD notes:

"Making a decision on when to sell stocks to lock in a profit can be very tough, especially when you've amassed long or short-term capital gains. Watching the stock's behavior at the 200-day moving average can help you decide when it's time to take at least some partial profits."

One of the bigger mistakes that investors repeatedly make is not having a "sell discipline." They often hold a stock that is losing money hoping it will come back which weighs on portfolio performance due to "opportunity cost." Or, often worse, they turn a large gain into a loss trying to avoid paying "capital gains" tax.

These are easy mistakes to correct using the 200-dma and can improve portfolio performance over time.

Deviations Above The 200-DMA

In the short term, fundamentals don't matter. Such is because over a few days, weeks, or even months, what drives prices higher or lower is the psychology of investors. As such, we can look at technical deviations to determine how exuberant or not the market currently is.

For moving averages to exist, prices must trade both above and below that average. As such, moving averages act like gravity on prices. When prices deviate too far from the moving average, eventually, prices will revert to, or beyond, that average.

"Reversion to the mean is the iron rule of the financial markets" – John C. Bogle

We can visualize the reversion in the chart below of the S&P 500 index versus its 200-dma. With the index currently more than 11% above its 200-dma, such should be a short-term warning to investors. Looking back historically whenever deviations exceed 10% above the 200-dma, a correction generally ensues.

Deviations Of Averages

Since last November, the market has exhibited a period of extremely low volatility. During that period, the 50-dma has acted as an important support for the market as speculative buyers use minor "dips" to chase markets. Interestingly, these spurts of "dip buying" create a short-lived advance, price stagnation, and then a retest of the 50-dma.

Of course, the suppressed level of volatility is always a warning. As discussed just recently, "Stability Leads To Instability." To wit:

"Given the volatility index is a function of the options market, we can also view these alternating periods of 'stability/instability' by looking at the daily price changes of the index itself."

The following chart says much the same. Currently, the 50-day moving average is also significantly deviated above the 200-dma. Such suggests that not only will prices retest the 50-dma, but there is a rising probability that price will revert to the 200-dma.

Notably, technical deviations in the short term do NOT mean the market will "crash" tomorrow. Markets can remain deviated for quite some time. However, when the deviations begin to diverge from the price index negatively, such has previously preceded more important corrections and bear markets.

It is something worth paying attention to.

Important levels for Bitcoin

The crypto world has got some really bad news in the past week: the fake US government is trying to push through some very nasty regulations, which if passed, will be quite detrimental to the further development of this early stage burgeoning blockchain new technology! Since it is far from certain that this will pass without significant changes, I won't go into details but just so you know, it is huge negative news for cryptos. Having said that, Bitcoin as well as most of other cryptos, has been shaking off the huge negativity and making moonshot recently, a fantastic bullish sign for the sector!

As you may know, Bitcoin has got a haircut recently by over 50% since its high of over $63K just a few weeks ago. Now it has fought back to reclaim the $45K level. So the million dollar question is: have we been out of the woods by now? Well, after such a quick crash, it won't be an easy job to simply bounce back to new highs. There are many technical hurdles it must overcome before we see new highs. The most famous and mostly followed important levels are the so-called Fibonacci retracement: it typically has three levels from its peak:  -61.8% of the high, 50% of the high, and 38.2% of the high (see below). 

Right now, Bitcoin has just passed through the 38% level and is challenging the 50% level. We will see how Bitcoin will behavior in facing this resistance and but if overtaking it, it will be a big positive! However, the next level of resistance at the 62% level is more difficult to overcome. I don't think it will be a smooth journey for Bitcoin to challenge its new highs but you never know. Just be mindful of the potential huge volatility associated with Bitcoin at the current levels. We may still see sudden "crashes" along the way, although I have no doubt that we will see new highs for Bitcoin sooner or later. It is just a matter of when, not if!!💪🤗 

How did Bitcoin save WikiLeaks?

I'm sharing an interesting story about how WikiLeaks was saved by Bitcoin, thanks to its unique feature that is not controlled by anyone and no one can stop or manipulate it. Considering how much our life has been controlled by the very invasive government hands in various aspects, it is really comforting to know that at least they cannot easily reach out to your uncensorable money, Bitcoin or other cryptos. There is also a link to the historically valuable site: Bitcointalk Forum where the secret Bitcoin inventor, Satoshi, left his last note before he vanished from the earth.....

Hope you enjoy it!

Why We Need Uncensorable Money

When I talk about bitcoin, I usually focus on its importance as independent, scarce money. It's a hedge against inflation.

What I don't talk about enough is the importance of bitcoin's uncensorable nature -- the fact that no one can block a bitcoin transaction from going through.

This was famously demonstrated when WikiLeaks started accepting bitcoin donations back in June 2011. Visa, Mastercard and PayPal had all banned WikiLeaks from accepting donations through their payment networks after the organization leaked classified military documents.

WikiLeaks founder Julian Assange claimed that his organization made a 50,000% gain on that donated bitcoin. And that was back when bitcoin was around $5,814. Bitcoin basically saved WikiLeaks during the financial blockade.

Interestingly, in 2010 bitcoin creator Satoshi Nakamoto pleaded with WikiLeaks to not accept bitcoin. He was concerned about controversy and didn't think the network was mature enough for such large-scale adoption. Here's one of Satoshi's last posts on the Bitcointalk forum:

The project needs to grow gradually so the software can be strengthened along the way. I make this appeal to WikiLeaks not to try to use bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.

Today, the bitcoin network is rock-solid. Its security and durability has been tested since 2009. It is successfully serving as an uncensorable form of money and is used by citizens all around the world as an alternative currency. Wherever inflation is high or access to the financial world is limited, bitcoin is there.

Bitcoin's uncensorable and scarce qualities are going to be increasingly important going forward.

PayPal Moves to Cut Financial Access to Extremists

Last week, news broke that PayPal has partnered with the Anti-Defamation League (ADL) to study the funding of "extremist groups." And possibly to cut off their access to PayPal.

This sounds good in theory, but who gets to define what "extremist" means? The move has worrying implications for financial freedom, and I don't think this trend is going away anytime soon.

The news brought a notable reply from David Sacks, an early PayPal executive. In a piece titled "Get Ready for the 'No-Buy List,'" he wrote:

Our democratized payment system caught fire and grew exponentially with millions of users who appreciated its ease and simplicity. Traditional banks were too slow and bureaucratic to adapt. Instead, the revolution we spawned two decades ago inspired new startups like Ally, Chime, Square, and Stripe, which have further expanded participation in the financial system.

But now PayPal is turning its back on its original mission. It is now leading the charge to restrict participation by those it deems unworthy.

First, in January, PayPal blocked a Christian crowdfunding site that raised money to bring demonstrators to Washington on January 6. Then, in February, PayPal announced that it was working with the Southern Poverty Law Center (SPLC) to ban users from the platform. This week the company announced it is partnering with the Anti-Defamation League (ADL) to investigate and shut down accounts that the ADL considers too extreme.

I strongly recommend reading the entire piece. Financial censorship is a trend that's only going to accelerate. And with the development of central bank digital currencies, governments will be able to track and block any transaction they don't like.

That makes alternative, decentralized and uncensorable payment systems such as bitcoin more important than ever.

Enjoy the weekend, everyone!

Good investing,

Adam Sharp

Red Flags and "Rip Your Face Off" Bounces

While I have been constantly talking about red flags and warning signs in the past few weeks, the market has been making new highs again and again. This fits into what is described below by Summers about the "rip your face off" bounces that follow each tiny dip. It seems nothing can stop the wildly bullish trend that is simply shooting up regardless. 

To be clear, while I'm generally bearish about the overall market for now, it doesn't mean I'm not doing bullish trades these days. Actually we closed a good profitable bullish trade for SPX today in our Family that we placed a few days ago when SPX was trending down. Another bullish trade I'm still holding is for AMZN. You know I was bearish about AMZN for a few weeks till recently when it crashed down towards its 200 DMA. I think there is a good chance that AMZN will bounce back strongly in the next few weeks. The easiest option trade is to sell its naked puts but you need a lot of money to do so, since one contract means over $300K worth of the stock value for 100 shares. Even with a margin, it easily means $50K to $100K cash required depending on the broker's margin requirement. I have a much better way to play with it as I have shared with my Family (for each contract):

It means we can potentially make a profit of about 70% in the next few weeks as long as AMZN is not trading below 3280ish by its expiry (AMZN is trading around $3350ish).  I think the odds are quite good in our favor, given how oversold AMZN is right now!

 

This is just an example about my swing trading in either direction, regardless of how I feel about the overall market state.  

Red Flags and "Rip Your Face Off" Bounces   Stocks are relatively sleepy due to low summer volume. The primary dynamic since the summer started is that rallies are lethargic and occur after days of chop (see red rectangles in the chart below). The problem is that whenever stocks start to roll over, "someone" steps in and manipulates them higher. We get at most a day or two of selling, followed by a "rip your face off" bounce. I've marked this in the above charts with blue ovals. In this environment, large institutions are not buying, but they're also afraid to sell for fear the Fed (or whoever is manipulating stocks higher) will instigate a major bounce. In this environment you get a slow grind higher. Underneath the surface, things are looking weak. High-yield credit, which usually leads stocks, is rolling over. Similarly, breadth, which also usually leads stocks, is breaking down. The ratio between stocks and long-term Treasuries has a rounded top. The long-term chart for this ratio shows that it has broken out of its long-term upwards channel. This suggests a "reversion to the mean" move is coming, which will see TLT dramatically outperform SPY. We see a similar over-extension in the ratio between stocks and the $USD. This, too, suggests a "reversion to the mean." Both of those charts tell us that stocks are severely overbought. Does this mean a collapse is just around the corner? Not necessarily, but it DOES suggest that the primary focus for investors in this environment should be risk management, NOT loading up on stocks. What could trigger a serious risk-off move? It's difficult to tell. Certainly if the U.S. started another round of lockdowns or even partial lockdowns, things could get messy. There's also pronounced economic weakness showing up in the hard data. Take a look at the below chart from Societe Generale and you'll see what I mean. The economy is surprising to the DOWNSIDE in a big way, I'm watching this situation closely and will issue updates as needed. But red flags are starting to crop up in the markets. Best Regards, Graham Summers