By Astrology Traders

The following is an excerpt from this weekend’s Astrology Traders update.

McDonald’s ‘McPick 2’ Deal Will Now Cost You $5 Instead of $2

Inflation is rearing it’s head at McDonald’s.  I warned about this in the January 10th Astrology Traders update.  January 6th was an important date, illustrated in the astrology, as critical for the dollar- suggesting a weak dollar and inflation.  On the same date a story popped up in the news, McDonald’s officially eliminated the popular $1 menu, replacing it with a McPick $2 menu.  Well, that didn’t last long.  Now the menu will cost $5-This is HYPERINFLATION!

Below is an excerpt from the January 10th Astrology Traders:

The Dollar

The media narrative for a strong dollar continues unabated, while oil, the commodity backing the dollar, is falling through the floor of price support. According to Jeff, oil is potentially headed to $20 dollars a barrel near its 2002 lows. It does seem a coincidence for oil prices to plunge through long time support levels at $35 dollars a barrel on January 6th , the date I have highlighted as critical for THE DOLLAR!
2016-03-13_2017

A symbolic coincidence?, McDonald’s chain restaurants officially eliminated their popular dollar menu on January 4th! So, they just eliminated the dollar and replaced it with the $2 bill- a “McPick 2” menu, which allows customers to pick items for $2: a McDouble, a McChicken, small fries and mozzarella sticks. This is pure comedy, McDonald’s is proving wrong the theory of Keynesian monetary policies.
Pumping money into the system is creating long term problems- it’s called INFLATION.

INFLATION

Milton Friedman

Inflation does not occur because of a “wage-price spiral”, an overheated economy, excessive economic growth, or through any other natural mechanism of the market.  A government debasing the currency would not have fooled anyone a century ago – Milton Friedman

In today’s economy, inflation is always the result of increases in the supply of credit money.  Corporations who have aligned themselves with the the Federal Reserve’s monetary policy, are now at risk for huge losses.  Corporate bonds are in the same risk category as the Treasury bonds – they are all hitting a brick wall!  A complete bond wreck is in the works.

DEFLATION

Deflation usually occurs from one of two causes.  Either the economy grows and the volume of transactions “T” increases, or the quantity of money “M” decreases.  After the Civil War, when the United States issued hundreds of millions of dollars in paper money “greenbacks” to spend on the war, greenbacks and gold dollars circulated side by side: but gold dollars were worth several greenback dollars.

Anything can be money: stones, gold, silver, paper, tobacco, shells, etc.  What makes these things money is not what they are but what they are used for.  They may have value in what they are, like gold and silver (commodities), or they may not, “credit” money, which means banknotes and paper money-deposits, markers etc.  What gives money value is the human element in the economy of supply and demand.  What people can earn, create, and demand for their talent and what people are willing to pay for it.  This is important to remember * the human element in supply and demand*.  PEOPLE ARE GOLD

Our economy has been stagnant with little to no wage growth for the last decade.  The Fed has increased the money supply “M” while money velocity “V” and transactions “T” have remained constant.  This is the equation for Inflation and how the aggregate level of prices “P” go up.  MV = PT

The Federal Reserve has manipulated the data to exclude food and energy in the CPI.  Their control mechanism has broken, the CPI numbers exceeded the Fed’s 2% target last month despite the manipulation.  Going forward, the government will attempt to blame inflation on anything but their own irresponsible actions.

March 23rd-25th: Marks an escalation in bond volatility and liquidations.

April 23rd-May 21st: Very important time frame for large corporations such as the Dow Jones stocks.  Investors are worried about corporate bonds and profits.  Safe haven investments are becoming fewer and fewer.

In my view, one of the best places to park your money is in your community.  Real estate, vacation rentals, duplexes and small businesses that cater to the middle class.  These are affordable investments that will hold their value and produce income above what the markets can deliver.  In terms of elections, the outcome of your local and state elections will have a much greater impact on your life than will the presidential elections.  Pay more attention to your local government and follow the proposed legislation.  Property rights are always front and center with the legislators.  They can sign a crazy bill that makes renting a home illegal.

 

 

By Chris Ebert

Note to readers: Only the charts and the Market Summary change from week to week. All other text remains the same, in order to allow regular readers to quickly absorb the entire Brief.

Each Thursday evening, we take some time to reconcile some of the varied options indicators available for the S&P 500. These indicators are unique to zentrader, and were developed in order to give readers an edge in the stock market.

These indicators were meant to be tangible – easily understood at a glance – thus providing an instant snapshot of the stock market to anyone regardless of trading experience, or the lack of experience.

Taking the Stock Market’s Temperature

First, we take the stock market’s Temperature. We need to know if the stock market is hot right now, or if it has cooled off. In other words, is this a hot Bull market in which stock prices are going up, or a cold Bear market in which stock prices are tumbling?

To take the Temperature of the S&P 500, we look at the performance of a simple option trade known as a Covered Call. Covered Call trading is almost always profitable in a Bull market, and very often results in losses in a Bear market. Conversely, if Covered Calls* are profitable it is currently a Bull market, and if Covered Calls are returning losses it is a Bear market.

SNP Temperature -28

We consider the point at which Covered Call trading breaks even – returns zero profit and zero loss – to be an S&P 500 Temperature of zero. Then we determine whether the S&P 500 is above or below (more…)

By Poly

This is an excerpt from this weekends premium update from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly. Now offering monthly & quarterly subscriptions with 30 day refund. Promo code ZEN saves 10%.

Cycle Counts

 

Cycle Count Observation Probable Outlook Cycle Clarity Trend
Daily Day 33 Range 36-42 Days – 1st Daily Cycle. Bearish
Green Failed
Investor Week 7 Range 20-24 Weeks Caution
Green Failed
4Yr Month 79 Range 50-56 Months- 8th Investor Cycle. Bearish Green Up

 

In a classic example of the power of Short-covering, the S&P 500 has risen 190 points in just 16 sessions. Market valuations remain at historically extreme levels, so it’s not like the markets are cheap and investors are rushing in to buy value. The economic news remains uninspiring, and announcements continue to re-enforce a recessionary, low growth environment. So once the Short covering has run its course, the only catalyst for a continued rise in equities (back to 2,000 and above) would be the idea that the central bank will become more accommodative again.

In a case of bad-news-is-good-news for the markets, it’s clear that equity over-valuation exists because of FED policies. For several years, the FED has responded to bad economic news by increasing liquidity, and this has pushed asset prices higher. But the FED’s ability to safely provide liquidity is not unlimited, and it appears that the FED’s powerful accommodative policies have been exhausted for now, leaving asset prices vulnerable at current levels. Unless economic announcements become much more negative, forcing the FED steps back in with some sort of stimulus, the bear market in equities will almost certainly continue. (more…)

By Chris Ebert

Note to readers: Only the charts and the Market Summary change from week to week. All other text remains the same, in order to allow regular readers to quickly absorb the entire Brief.

Each Thursday evening, we take some time to reconcile some of the varied options indicators available for the S&P 500. These indicators are unique to zentrader, and were developed in order to give readers an edge in the stock market.

These indicators were meant to be tangible – easily understood at a glance – thus providing an instant snapshot of the stock market to anyone regardless of trading experience, or the lack of experience.

Taking the Stock Market’s Temperature

First, we take the stock market’s Temperature. We need to know if the stock market is hot right now, or if it has cooled off. In other words, is this a hot Bull market in which stock prices are going up, or a cold Bear market in which stock prices are tumbling?

To take the Temperature of the S&P 500, we look at the performance of a simple option trade known as a Covered Call. Covered Call trading is almost always profitable in a Bull market, and very often results in losses in a Bear market. Conversely, if Covered Calls* are profitable it is currently a Bull market, and if Covered Calls are returning losses it is a Bear market.

SNP Temperature -81

We consider the point at which Covered Call trading breaks even – returns zero profit and zero loss – to be an S&P 500 Temperature of zero. Then we determine whether the S&P 500 is above or below that all-important break-even point. By measuring the distance of the current level of the S&P 500 from the break-even point we determine the Temperature. Above zero indicates a Bull market; below zero indicates a Bear market is in progress.

The historical 10-year chart of the S&P 500 Temperature (above) shows its importance as an indicator. Not only are Bear markets highly-correlated with sub-zero Temperatures, the sub-zero readings often occur before stock prices have broadly declined 20%. Furthermore, the Temperature rarely falls below zero during a Bull market, so no matter how severe a pullback occurs in a Bull market, the uptrend almost always continues as long as the Temperature doesn’t dip much below the zero mark.

Temperature Determines Trading Climate

Next, we use the S&P 500 Temperature to determine the type of trading environment that is most likely to be prevalent in the stock market. Perhaps not surprisingly, hotter temperatures tend to coincide with a more positive outlook, thus more exuberance for those buying stocks. Lower Temperatures tend to correlate with fear and a propensity to sell stocks.

Points Above Bear Feb 25 2016

It should be noted that the Temperature ranges above represent (more…)