This January, We're Finally Going to Get Our "Super Crash"

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You, like me, may be a bear at heart.

You probably joined Sure Money a long time before I got here. The guy whose place I took was a brilliant market strategist who was just a little early in my view.

There is not a scintilla of doubt in my mind that his view will ultimately be proven resoundingly correct. Those of us of a bearish persuasion will make a lot of money over the next few years.

And it looks like we're going to be able to start in January 2018 (and we should be prepared and at least partly positioned before that).

You're Paying for This "Fake Funds" Welfare Program Right Now

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On Monday, I promised I'd tell you a little bit more about the fed funds rate. Well, the more I started writing about it, the angrier I got.

The Fed's policy of raising interest rates is a sham. We may as well call the fed funds rate the fake funds rate.

The policy is the opposite of monetary tightening and actually is an easing. And the fed funds rate and all other published interest rates are based on a sham… costing you money every year if you are a U.S. taxpayer.

The 4-Week T-Bill Is Actually a Secret "Liquidity Hack"

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I see intermarket analysis (the idea that other markets can be predictors of the stock market) mostly as a big waste of time. Often, what correlates today won't correlate a year from now, or the correlation may even reverse. The best way to analyze and forecast stock price trends is to analyze stock prices themselves. That's the basis of technical analysis (TA).

But there is an exception to the rule that intermarket analysis is useless… and it's the U.S. Treasury market.

If you know what to look for, Treasuries – in particular, the 4-week T-Bill – can tell you something very important about liquidity and which direction the money is flowing. That, in turn, will ultimately tell you where the stock market is headed.

This Handy Crystal Ball Lets You Read the Fed's Mind... Every Morning

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As you know, the Fed dictates the direction of the markets… but there's actually a way to predict the Fed's actions ahead of time. And this indicator is available to us every day in real time.

There's an economic indicator (actually, indicators) that gives a much clearer picture of the U.S. economy than the official and unofficial economic statistics that are reported in the mainstream media. It's hard cold data of what actually is. It's not collected by survey, not constructed from tiny samples and then extrapolated a million-fold, and not manipulated by statisticians and economists. It isn't misreported by the media because they never report it.

The U.S. Treasury publishes this data every day, one day after those taxes are collected. When it comes to the U.S. economy, it doesn't get any more real time than that.

It is U.S. government tax collections, and right now it's telling an important story that we all need to pay attention to.

But economists and Wall Street talking heads and PR merchants seemingly ignore this data. If they do track it, they don't report it to us. I do. I have been tracking, accumulating, and reporting this data for many years.

Economic activity does not drive stock prices. Liquidity does. But if we know what the U.S. economy is actually doing, we can get an idea of how policymakers will respond to economic data. And since we're up-to-date on the tax data, we know in advance what the lagging official economic statistics should tell them.

Sometimes the massaged and manipulated official statistics don't match up with reality. Then we know that the narrative about the economy that is being fed to investors is false.

All of that helps us to understand whether the current market trend is sustainable or not. It tells us whether the dominant narrative about the economy is mostly true or not. Most importantly, it tells us how central bankers, particularly the Fed chair and the FOMC, will formulate policy.

The Fed Isn't Evil, It's Just Nuts

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Many of my long-term bearish friends believe that the Fed's motives are nefarious. To them, QE (quantitative easing) and ZIRP were about cronyism – designed specifically and cravenly only to bail out failing banks during the financial crisis and nothing more. The Fed was just greasing the skids for the bankers to skim ever more profit from the economy.

Sure, there probably is an element of that. There's a lot of cronyism between the Fed and its member banks. The door between the Fed and Wall Street is a revolving door. Even those Fed members who were primarily academics have had their reward stints as high-level officers of Wall Street banks. Yes, it's a cesspool.

But I'm less certain that the Fed's aim was that perverse. Certainly the Fed was panicked, and that was one of its motives. But the Fed continued QE and ZIRP long after the panic had subsided. So why did it create such massive dislocations?

The LAMPP Looks "Wrong" Today, but Don't Be Fooled

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The short-term LAMPP is slightly in red territory, but the market keeps rising. What's up with that?

The LAMPP was little changed last week, remaining red for the short term and still green on the long-term indicator. The red signal for the short term is not an exact timing indicator. It does tell us, however, that the market is ripe for a decline. For the time being, liquidity flowing from other sources, such as foreign capital inflows, continues to drive stock price inflation.

That is a common feature of the late stages of a bull run. I call it residual momentum. We have been indoctrinated to buy dips and chase rallies. There's never a price to be paid for that behavior. So we keep buying until the cash runs out.

That could happen soon. A huge amount of new Treasury debt will hit the market this month. In fact, $40 billion in net new supply was issued on Friday, and another $8 billion is being issued on Monday. That has caused some indigestion in the bond market. But stock buyers covered their eyes and sang "tra-la-la" at the top of their lungs. They don't want to hear any bad news.

Now That the LAMPP Is Finally Red, Here's How to Make Money

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As I reported earlier this week, the short-term LAMPP has turned red. It's only by a hair, but it did cross the line. This is no surprise to us. I have been reporting to you every week that we were getting closer and that a signal change was imminent.

I have been warning you that Treasury supply would soon increase radically. As expected, the federal government is now moving to raise the cash it needs to pay back the funds it raided internally under the debt ceiling and to rebuild cash. The Treasury will issue net new debt of $54 billion over the next few days.

At the same time, buyers of that new debt will no longer have the Fed's help in financing those purchases. In October, the Fed will start draining cash from the system, instead of adding $25-$30 billion per month to primary dealer accounts, as it has been doing lately.

The long-term LAMPP signal should turn red within the next month or so.

What that means is that the market should now begin its turn to the downside… the risk-reward equation has tipped to the sell side… and we will start seeing more and more opportunities to hop aboard the short side for solid profits.

Since you've hopefully been building a larger cash position over the past few weeks, you should be able to make one or more speculative trades to capitalize on the signal change. (Of course, timing these trades will require technical analysis, which I cover over at The Wall Street Examiner Pro Trader.)

Sitting on the "Sidelines" Is About to Hurt Your Bank Account

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This week, we saw an exciting signal change in the LAMPP, as our short-term indicator finally crossed over to red territory. I'll have details on that for you below.

But first, there's something we need to discuss…

I've been watching a big football-related problem on TV this weekend – but not the one you might think.

If you consume a lot of mainstream financial media, you've probably heard dozens of analysts talking about a magical place where trillions and trillions of dollars are stored just waiting to get into the stock market.

We Saw the Fed's "Major Announcement" Coming - Here's What to Do Now

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Despite the hype surrounding Wednesday's meeting of the Federal Open Market Committee (the monetary policy arm of the U.S. Federal Reserve), the announcement that followed doesn't change a thing.

That's right, nothing. Neither the FOMC statement itself nor Fed Chair Janet Yellen told us anything that the Fed and its proxies hadn't told us before.

But nevertheless, this is still groundbreaking stuff. It is the most important announcement since the Fed instituted outright QE in March 2009.

And as I have told you in past posts, it will have major implications for the markets and for your money.

There is a lot here that is essential for you to understand to protect your money and take advantage of this new policy.

And – fair warning – it's not bullish.

The Real Reason Markets Are Rallying - and Why It Doesn't Change a Thing

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Over the last week, the major market indices are all up.

If you've watched the mainstream financial media, you'd think this uptick was cause for celebration. You'd think the eight-year-old bull market is about to shift into another gear.

Thanks to my proprietary LAMPP indicator, we know that shift isn't likely.

Over the past few weeks, we're talked about how the Fed drives the long-term trend of liquidity.

But what influences the short-term indicator, the one that has been sitting on yellow and inching closer and closer to red?

Today, I want to take a deep dive into the short-term components of the LAMPP so that you can understand exactly what's going to push us from yellow to red.