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The "Witch of Wall Street" Celebrated Market Downturns – and So Should We

By , Special Situation Strategist, Money Morning -

We are having one of the worst Octobers in the past decade.

Prices took some huge hits this month, and many folks under 35 have learned, for the first time in their lives, that stocks can actually go down.

It's a little scary if you have never seen this type of price action, but I've seen it so many times that, so far, I have not paid much attention.

The market has not offered a bunch of bargains yet, so there is not much to do at the moment. But personally, I am hoping that changes soon.

At my house, we don't celebrate new highs.

We expect new highs to happen, as we know that human nature itself means we are all going to want to strive to build a better life for ourselves and our families. That striving leads to innovation and growth that provides an upward drift in the equity markets over extended periods of time. It happens all over the world, but nowhere is it more evident than here in the United States.

Instead, we celebrate these occasional violent down moves.

These market downturns cover Wall Street in blood and vomit, while Main Street huddles under the kitchen table in fear, cuddling a bottle of cheap gin.

But that's when fortunes are made.

And that's exactly how one lone, miserly woman, known as the "Witch of Wall Street," made her fortune.

So today, I want to introduce you to that woman, and share with you exactly how you too can spot those opportunities...

The Autumn Correction Is in Full Swing – Here's How to Profit

By , Quantitative Specialist, Money Morning -

chris johnson

It only feels as though the media have said everything there is to say about the market over the last three weeks of this downturn.

The talking heads are still missing something - something they're just not keen enough to grasp about all of this. But, to be fair, the big news is hard to ignore.

After all, the late week phase of the pullback took all the major indexes back to, or just below, their break-even levels as far as year-to-date returns are concerned.

That's something that should scare the hell out of investors. However, I'm still seeing signs that there is a little too much bullish enthusiasm for stocks to call that "the bottom."

Even accounting for Thursday's bounce, sell-offs have shaved just about 10% from the S&P 500's October high. In doing this, the benchmark index crashed right through the plate glass window of its 50- and 200-day moving averages. It's still sitting below those lines as of Friday midday.

So it's "official" in my book, for what it's worth: The market is embroiled in an intermediate-term bearish pattern.

Now let me show you what to do about it...

Why Investors Are Walloped with a Constant "Bliss Blitz"

By , Macro Signal Strategist, Money Morning -

Investors are being targeted by an all-out media blitz. But it's a funny kind of blitz - none of the violence you'd normally associate with the word. There's a reason for that, as we'll see.

It's a decidedly opiate affair, this blitz. It's calm, soothing, numbing, and permeated with a "don't-worry, all-good" message on near-endless repeat.

Try this: Think of the last time you read, heard, or saw something about "exploding earnings," "synchronized global growth," or "record levels of consumer confidence."

I'll bet it wasn't long ago at all. In fact, I'll go so far as to say you probably read words to that effect today.

So why is the mainstream media going out of its way to spread... calm and tranquility?

I'll show you the answer in a minute, when we dive into what I can only call a "masterpiece of misinformation" from a trusted American news organization.

Here we go...

What Drove the Markets Higher Is Now Knocking Them Down

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

Good corporate fundamentals (meaning rising revenues), margins, and profits drove big-cap technology stocks higher. Those factors drove their respective indexes higher, which attracted millions of passive investors into indexed mutual funds and ETF products.

Now, the virtuous cycle that caused markets to spiral upwards could be morphing into a negative feedback loop. But markets in the U.S. aren't going down because fundamentals are deteriorating.

They're going down because market-moving tech darlings stalled out – then rolled over.

I have good news, and I have bad news. The bad news is the selling's probably not over and could get worse.

The good news is, if we fall far enough and fast enough, this sell-off could be a generational buying opportunity.

Here's what's really going on, why this sell-off (if it's big enough) will be the time to go all in, and what you can do to shield yourself from any market disaster...

This Standoff Could Paralyze the U.S. Economy

By , Behavioral Trading Specialist, Money Morning -

Mark your calendar: Economic recovery will likely stop in its tracks on Aug. 1, 2018.

And you can blame what we'll call a "gray swan event" (stick with me) that's looming right in front of us...

This could get ugly - the retail sector could be further damaged, while consumer goods and even some of the mighty FANGs might take a beating.

What's more, there'd be a pretty significant disruption in everyday Americans' lives.

On top of it all, no one is talking about this correctly. Not Barron's, not The Wall Street Journal, not Forbes, not CNBC, not FOX.

And so millions of Americans, millions of investors among them, are set to be caught completely off guard at a time when barely a month remains to prepare.

Don't be one of them...

The Market Is Sending Us a Big, Red Warning Now

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

GDOW chart

It's obvious when you think about it, but lots of investors struggle to come to grips with this fact: The stock market is like a living creature whose personality mimics the psychology of the investors who give it life.

If investors are calm and optimistic, the market naturally reflects that positivity.

But when investors are unsure about the immediate future - like they are right now - and have to juggle competing and complementary apprehensions about... politics... interest rates... economic growth... and whether the mega-cap tech stocks they believed were the Holy Grail are about to be subject to all kinds of new regulations... their nervousness manifests itself as volatility, mirroring their fears.

That's where the market is now - where it's been since February, in fact.

Goodbye, Steady Eddie - hello, Nervous Nellie.

When that happens, the market does what it always does: It takes the path of least resistance.

Where's that path heading now?

I'll show you. Buckle up...

How Shorting the VIX Blew Up the Market, and Why It Could Again

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

Market Correction

If you didn't know what the Chicago Board of Options Exchange Volatility Index (VIX) is, you almost certainly do now after the correction.

Plenty of regular investors don't realize how the VIX works, though - what makes it move up, down, and sideways.

You can't trade the VIX directly - it's a mathematical calculation, after all. But a whole buffet of easy-to-trade, not-so-easy-to-understand exchange-traded products (ETPs) makes it possible for anyone - mom-and-pop retail investors, institutional traders, risk parity funds, and newly minted hedge funds - to bet on the VIX moving up, down, and sideways.

These folks saw the VIX doing a whole lot of nothing for more than a year and bet accordingly, to the tune of tens of billions of dollars.

And for a time... it was good (notice I didn't say "smart").

But earlier this month, when human and silicon investors and traders got spooked, the VIX spiked - spiked like never before, in fact - jamming an ugly, red-hot poker into that great big, happy, feel-good short volatility bubble.

All the investors and traders out there who spent a year or more picking up pennies in front of a double-decker bus got killed when their favorite ETPs blew up.

What happened after that... well, we're still dealing with it and could be for some time. The market's trying for a run higher from here. It's already pared about half its losses from the depths of the correction, but the road isn't as smooth as it was just four weeks ago.

Amazingly, the trade that started this whole mess is still out there. Sure, a few high-profile short volatility vehicles imploded, but it's still very possible for this to happen all over again.

Here's how...

I Don't Think the Bull Market Is Going Anywhere

By , Technical Trading Specialist, Money Morning • @DRBarton_Stocks -

Bull market

First things first: Don't panic. The raging, grinding bull markets are "officially" in correction territory.

It's a healthy thing.

Though I've been consistently bullish in my outlook over the past year or so, I've said that a 3% to 5% dip in the markets might be in order and that a correction like this would be welcome.

Why? It's not that I enjoy watching stocks fall... unless I'm planning to recommend that my readers play the "rubber band snap" (although I did, and they made a quick 50% gain). 

Rather, this downturn is good for the simple reason that we needed to see that capitulation.

Let me show you what I mean, and why this week's rough sledding has been a good thing, even in the very short term...

My Chart Shows Why We Can’t Trust These Market Highs

By , Technical Trading Specialist, Money Morning • @DRBarton_Stocks -

Good news is good news again - for now.

The Labor Department's announcement that July unemployment held steady at 4.9% while adding a better than expected 225,000 jobs was enough to snap the four-day pullback and get traders in the mood to buy.

Those numbers don't necessarily reflect the street reality of the economy, but of course they were enough to get the S&P 500 to yet another new all-time high, even if the Nasdaq Composite, Dow Jones Industrials, and the Russell 2000 didn't quite make it.

This is a near-term bullish development, especially when you consider that, before this recent upward trend, we've gone 14 months between all-time highs.

But... when you see the chart I'm about to show you, you'll agree it's not quite time to pop the champagne corks...

The Market Crash Will Start by June 20

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

super crash

Today I am issuing an official Super Crash Warning. That means we are on the verge of a serious market crash in the near future, which I now predict will hit by summer, June 20, 2016, and it's not going to be a good one.

It must seem like I never have any good news for you, but it's my job to see the world as it is, not as I'd like it to be. And what I see is things getting worse by the day...

$GS, MS, NYSE:BAC, NYSE:C, NYSE:JPM

Today's Markets
DJIA 64.96 (0.24%) 27,287.94
NASDAQ 16.42 (0.20%) 8,223.66
S&P 2.86 (0.10%) 2,997.98