UPDATE July 13, 2019 – The Dow 30 hit 27,300 yesterday and thus entered the target range for a top to be put in place. At this point the detonator has been activated and the clock is click down….we just can’t see the clock to know exactly what day the top will occur. It appears that the stock market and gold will top out in the next month or so. Then they will decline significantly in sync. That should surprise the masses that believe the stock and gold markets move in opposite directions. My belief is yesterday was not the final top. As always, we shall see how this plays out…
The fun part for me is watching the Fake News Media come up with news stories that will be excused for the markets tanking. The reality is the markets declining will cause the news stories! I am sure the FNM will blame Trump’s trade wars (which obviously can’t be a reason as the market is at all-time highs after a few years of trade wars), something that Iran does (again we are at new highs after several Iran events recently), and other BS excuses.
UPDATE July 3, 2019 – The Dow 30 closed at an all-time high of 26,966. A month has gone by since my original post below. I can now update the range of the current top that is forming to be 27,200 to 28,300. It is occurring sooner than I expected. But, that is not an issue as long as the price range is met. It can be met in a single day or may play out over several more weeks or months. Once we get into the range, the downside target to look for to confirm that a 20%-25% bear market might be underway is 26,400 or such. I will be updating this as the waves unfold. So far, so good….
Most of the bad economic indicators for June have been reported. Of course, everyone is worried that the economy is headed into a recession. Based on the first six months being the biggest rally for some indices since 1938 or 1955, the economy should grow faster in the 3rd Quarter and even faster in the 4th Quarter. The 2nd Quarter GDP growth should be the lowest of the year.
June 9, 2019 – As I mention now and then, I use Socionomics (not to be confused with Socio Economics) to do many things in my life. All of my investments for the past almost 40 years have been based on this science – granted for the first 20 years it wasn’t an organized concept with that name).
Right now, the long-term picture has become clear. This is a rarity. But, when it happens, I take action. And, I would like to put in writing what it is forecasting thru Inauguration Day 2021 (I don’t recall if a re-elected President has that again or not).
The Dow Jones Industrial Average (Dow 30) is the best reflection of social mood. The current forecast is for it to move to new all-time highs this Summer or Fall. The expected range is 27,000-28,000. Depending on where we stand based on certain indicators in the theory, I will be liquidating all of my stock holdings and sitting on cash thru the forthcoming 20%-25% bear market.
What this upward move over the next 3-6 months is telling us is the public is expecting President Trump to be re-elected and the booming economy to continue. That should be the mood at the end of the year and into the 1st Quarter of 2020. Also, this suggests a very strong GDP in the 3rd and 4th Quarters of 2019 and 1st Quarter of 2020. The growth should be significantly above the very slow rate we will see for the 2nd Quarter of 2019 that ends in 3 weeks (this was forecast by Socionomics when the Dow crumbled into its December 24th low).
Following the top this Summer/Fall, a bear market much larger than the one last Fall should occur. As noted above, a 20%-25% decline to the 21,000 area on the Dow 30 is expected. This should occur around the 1st Quarter/Spring of next year. Obviously, the Presidential campaign will be officially underway at that time. The mood should have totally changed and the public will now expect Trump to lose in November. In fact, the Fake News Media, along with even some Republican strategists, will be talking constantly about how the Democrats will hold the House and even take over the Senate for complete control of the government. Such an event would destroy our economy and the business world will be as pessimistic as it has been in probably 10+ years.
When examining the ‘waves’ that explain social mood, there is always an alternate scenario that is watched. For the above, both the most likely and the alternate (i.e. less likely) wave patterns forecast the same events to occur. However, it is at this junction next Spring that the two patterns provide polar opposite forecasts.
Most Likely Scenario – As of today, the expectation is that following a panic low around next Spring, the stock market will begin a large bull move back to all-time highs. i.e. the Dow 30 should exceed the highs expected this Summer/Fall. 29,000 is an early target.
This bullish move means the public has determined who the likely Democratic Presidential Candidate is going to be and that person has no chance of defeating Trump. So, for the remainder of 2020 and into early 2021, the stock market goes straight up (not literally) and Trump is re-elected and businesses are bullish on the economy going forward.
Alternate Scenario – Assuming the public thinks the Democratic Presidential Candidate is going to defeat Trump and the Democrats are going to control both parts of Congress, the stock market will be accelerating its downward spiral in Spring 2020 and drop thru the 20,000 level like a hot knife thru butter. As this is the less likely scenario, I have not tried to determine how deep this bear market will be or how long it will last. That will be easy to determine next Spring when this critical time juncture is occurring.
So, that is what Socionomics is forecasting for the next 20 or so months. I am not giving my own opinion of the future. The public does this for us. It always has. As time goes by and the waves unfold, it is possible to get more precise with price and time targets.
Since both scenarios above have the stock market topping this Summer/Fall, it only makes sense to me to get totally out of all stocks. Whether or not I jump back in next Spring depends on how the waves unfold going into that timeframe. One scenario (the most likely one) projects about a 35%-40% bull market. The other scenario will be forecasting probably another 30%-40% bear market from the prices at that time. Money is to be made either way. In fact, the same amount of money can be made in either scenario. I hope to be back here in about 9 months to explain what Socionomics is then projecting. Do I go long….or do I go short.
I am sure almost no one makes a 2-year forecast of the future in some detail and puts it out in the public domain for all to see if it is accurate….or if they are wrong and a total fool for trying to predict the future.. But, I have spent my life doing this and not doing a bad job at it. I put my savings and retirement on the line with the forecasts. If I am wrong, I feel the pain. If I am right (like I have been since Election Night 2016 re stocks and early 2000’s re gold), then it is very rewarding.
As an aside, I remember moving my wife’s retirement and my retirement to a new brokerage in 2004 when I took a new job. We were 100% in gold investments. Talk about ‘all in.’ The new stock broker thought I was insane. Where’s the diversification? Gold was around $450. We had got in below $300 a few years earlier. By the time I left that job in 2008, gold had hit $1000. He told me I had done better than anyone he knew. You have to remember that by the Fall of 2008, Lehman Brothers went under and the stock market and real estate markets were crashing. But, not gold.
In 2011, gold peaked near $1900. I had gotten out a bit before the top admittedly. But, was back in near the $1075 low in 2016. Although, I think $1450 is the upside target, I just got back out last week as it hit new highs for the year. I am not in the mood to wait around for the next $100 to the upside, as there is a good chance of a $100-$200 decline before this final top occurs. I’ll sit and watch. Can’t go broke sitting on the sidelines:)
Lastly, let me mention the Fed and interest rates. Socionomics has shown that the Fed ALWAYS follows what the market tells it to do. The public thinks the Fed raises rates and then the market reacts to it. No! That is the kind of junk the Fake News Media feeds people over and over. Of course, the media is clueless about markets.
Factual data shows that when the Fed decides to raise or lower rates, the market has already made that move. Right now, the markets are telling the Fed to lower rates 75bp thru the remainder of the year! You don’t hear anyway talk about that, do you? Some are calling for the Fed to lower rates (Trump included….like him or not, he reads what the markets are saying and thus knows the Fed should already be lowering rates. He isn’t bullying them. He isn’t trying to make some agenda come true. He knows, like you now do, that the markets have already said the Fed needs to start lowering rates.), but most are just calling for 25bp. That is how they will likely start. But, if so, then it will take 3 of those reductions just to finally catch up with the market.
I’ll end it here. As Paul Harvey would say, now you know the rest of the story…..