Warning: Stock Rally Not Sustainable

We have been experiencing an exceptionally strong counter-trend rally in the stock market. This recent, bullish, upward move is not the beginning of a new bullish uptrend.  Last night, the Chinese stock market hit a two-month high. The Shanghai Composite Index rose by over 2% on the news that the government will offer cheap, short-term loans to stock brokerages.

I would like to point out, that corporate debt as a share of GDP is already too high at 160%. The global Central Banks have set off a global rally in equities, and the momentum oscillator levels are not sustainable, meaning stocks are running out of energy. The SPX traded to a major resistance zone last Friday, March 18th, 2016 which means sellers will be entering the market.

An active trader and market forecaster closed out his long positions last Friday and is now preparing for the next significant move in the stock market in a short video which can be viewed at https://youtu.be/UciMsGda0hA.

Who Can Achieve The Lowest Currency Value, Negative Interest Rates And Best QE Programs?

Last week, many global stock indices rallied on the good news that the ‘dovish’ FED to do nothing.   In typical fashion, the FED decided not to raise their short–term interest rates, after announcing three months ago, in December 2015, that they intended to raise their short-term interest rates four times in 2016.  This announcement gave the equity markets a relief rally higher, and caused the U.S. dollar to tank, which caused crude oil to continue its rally.

The ‘hawkish’ FED overestimated the strength of the global markets and will not be able to go ahead with its planned short-term interest rate hikes in 2016.

The no-rate-hike announcement came out last Wednesday, March 16^th, 2016, as the FED chose not to tighten.  This, by the way, followed last week’s decision by the European Central Bank (ECB) to lower their rates further into negative territory, while, at the same time, adopting new quantitative easing bond-buying programs. This generous banking stimulus did achieve the intended effect, equities and treasuries went up all over the world.  Central Banks are still chasing the fantasy of their desired outcome of 2% inflation.

Europe, Japan, and China intend to inflate their way out of world debt, by continuing the war on who can achieve the lowest currency value, negative interest rates, and best QE programs.  This is great news for investors in gold. There are companies that specialize in gold and silver investing, Like Gold Gate Capital, who can make sure you do it correctly if you want to own physical metals.

Today, the world has entered a wild period of time. International gold prices have rallied 18 percent this year, as investors seek the most sought after safe haven from the global financial market turmoil.  Worsening fears over negative rates and political risks, like Brexit, have some money managers getting prepared to return to gold. A fast-growing number of private investors have also begun buying gold as insurance.

Since the Fed raised interest rates in December 2015, investors have been waiting for another rate hike this year.  But considering the negative interest rate world we live in, with no end in sight, especially since the ECB lowered their negative rate even more just this past week, I believe it will be a very long time before the U.S. raises rates again.

The sluggish world economy, including a ‘chugging’ U.S. economy combined with negative or low-interest rates, will continue to keep investors buying gold for safety.  This alone is very bullish because gold has little competition.  Gold's allure to many investors is that it is better to turn their savings into gold as a safe asset rather than deposit money at banks that charge a ‘tax’ on savings or offer very low interest rates, and to avoid the possibility of a bail-in, which means your life savings will be taken from your account to bail out the country’s debt. This is a major concern and can be avoided with the content I found in this free book on gold investing.

Stock and Gold Trading Conclusion

There are several tremendous opportunities to make money in the next 36 months, not only from gold, but many other asset classes, which will either explode in value or crash. Either way, we stand to make a lot of money trading ETFs to profit from these moves. Based on my analysis, we are potentially only 1 week away from our first MAJOR long-term ETF position that could generate massive returns over the next 6-12 months.