A Lot Going On But Let's Stick With This For Now

We're exiting the Bull Market that began in 2009. There, we said it. That means we're entering a Bear Market. Ditto.

A lot more is going on but let's stick with some notes we took from one of our most trusted sources. It's frequently right in explaining what's going on. It's also frequently spot on in identifying the bigger trends out there. 

You're welcome to read these. They're just notes. But maybe they'll spur some thinking that will cause you to look deeper into one or more of these items. Don't go crazy. But we are at a what looks like a significant turning point in a lot of areas. 

One area these notes don't have much to say about is Gold. (There is a comment about Silver.) This week saw a potential turning point there too, as in a possible resurrection of the Bull Market that's been stalled for more than a year. We'll soon see if Gold heads towards is all-time highs.

Oh, and the last item is a bit of a stomach-churner I think.

With that said, our notes...

* Market up move since March 2020 due to massive Fed created liquidity, not fundamentals.
* Bear markets don’t usually plunge in a straight line unless there is a shock. There will be rallies. Next one could be fueled by “reopening.”
* If/when Fed reduces bond holdings starting March, that will reduce liquidity. Theory of Liquidity and Credit says this change is most important and will bring a Bear Market. Potentially entire move up from March may be eliminated. Any rally will be a bear market rally.
* Doesn’t recall seeing as much volatility in many years as have seen in recent months.
* Most important to identify major trend, measured in months, not years.
* Start of a Bear Market is always going from very loose money to inflation fighting, which can only be done by reducing liquidity. Policy changes affecting liquidity now being made by all CBs throughout the world.
* S&P fall to January 24th worst start to a year in 90 years – since records have been kept.
* Value stocks don’t protect portfolios in Bear Markets – only slow the fall. Prefer cash equivalents, not necessarily money markets, but includes shorts.
* -    Bear Market rallies are usually sharp but short – designed to squeeze shorts – then decline begins again.
* New Highs/New Lows: If New Highs exceed New Lows, will reexamine bearish view.
* VALUG chart: Long sideways pattern says any stocks bought above that level will now become “supply” as those who bought there will look to sell “to get even.”
* Likes Energy Sector: Oil, Natural Gas, Coal, Uranium all look bullish longer term. But during serious selling in the market, these would be sold too.
* The coming Bear Market could be strongest in 100 years. At least 2 of Major Indices will decline to March 2020 level at first. Now think even that will be erased as Fed reduces liquidity gently at first, then more aggressively.
* Once inflation soars, Fed will have to get more aggressive. But they will already be behind the curve and will remain all the way because of political considerations.
* Re Cryptos: Holding view that these will be eliminated in favor of government digital currency. Recently predicted a big scandal would have to be uncovered to regulate cryptos out of existence. That just happened. Now seeing signs from Europe and Washington that the timetable for CBDC is becoming more urgent. Fed is not asking citizens to provide public comments until mid-May.
* Interesting note re big jump in jobs: Easily could be nothing more than a normal statistical error.
* Recent CPI of 7.5% annual gain confirms what D said two years ago, that we would eventually have double-digit inflation.
* Re potential stock price decline: the hangover is proportional to the party. The party, with worthless assets such as Cryptos, NFTs, etc. was biggest in 100 years.
* Central Banks around the world now raising rates, hinting at reducing liquidity. CBs tend to act in tandem. That’s bearish for stock markets.
* NB: “This will not end well. Over the next several years, we will be heading for very high inflation, to be followed by a global recession or worse.
* Notes that Junk Bond prices have fallen, will fall more, typically lead stock market down.
* Re Silver: Don’t see technical signs of big rally. Thinks maybe price being suppressed.
* Big investment flows going to inflation hedges, typically commodities.
* Coal: Likes sector – see ARCH chart. Note how modern plants don’t pollute the way we’re led to believe.
* See comments re possibly brewing Health Catastrophe: Cites life insurance companies experiencing avg 40% rise in deaths; also CDC national data showing 40% increase in deaths among 18-64 year olds compared to pre-pandemic numbers.