Fearless Rick Called The Bear Market; Contributing To A Fund? You Are A Bag-Holder

There are very few people who ascribe to the discipline of Dow Theory.

I, Fearless Rick, am one of them. I am also the only person I know who has read Adam Smith's "The Wealth of Nations," and I am currently re-reading sections of that lengthy tome because it's important to understand.

I'm making these statements not to blow my own horn, but to point something out that readers of this blog and the millions of non-readers should acknowledge.

When I wrote this post on April 9, I had complete confidence in what I was delivering. There were no caveats, what-ifs, or other murky scenarios by which I could hedge my declaration that the bull market in stocks was over and that the next 18 months to three or four years would be losers for stock holders.

It's nearly a month later - and three months since the Dow Jones Industrial Average topped out at 26,616.71 (sorry, that number has been hard-wired into my brain) on January 26 - and nothing has changed. Stocks are still hovering between their 50 and 200-day moving averages. In fact, since the Dow Transports confirmed the bear market, the Dow Industrials are up - as of today's close - a whopping 184 points, a gain of less than one percent over the past 15 trading days.

Thus, I am here to say that it sure looks like I nailed it, called it, that I'm absolutely right. This is a bear market, and it will be a bear market until the Dow Industrials find some bottom and the Dow Transports confirm the primary trend change back to the bullish side.

And I will tell you when that happens and not a moment sooner.

I'm pointing this out because I've grown a little bit weary of toiling in obscurity while outright frauds like Dennis Gartman get to bloviate on CNBC in stultified language how "we" erred on the bullish side, or how he's "long gold in yen terms," or other such nonsense. He is getting paid to tout garbage. I get nothing, not even faint praise, when I'm absolutely right, 100%.

OK, so maybe I'm having a little hissy fit here, but I'm not going to lower my voice, nor am I going to stop speaking my mind, making my calls and writing this daily blog. My reward is out there somewhere, I just hope I get some of it before I get to heaven.

As for today's action in the markets, it was the same old saw that I've been commenting upon in previous blogs: up at the open, then a long, slow decline into the red, a typical and obvious chart pattern that the mainstream media will not ever acknowledge because they and their Wall Street banker masters want you to continue contributing to their ponzi schemes, at your own peril.

Fund holders will be the eventual bag-holders of this bear market. They'll lose anywhere from 30 to 60% of their portfolio if they don't reallocate their investments out of growth stocks and ETFs and into something more sustainable, whatever that may be. Bonds are probably a good spot as yields are rising. Commodities may not be bad, depending on the asset mix. Cash is more than likely to be king. You can send me some by clicking here.

We are entering a period in which it is more important to preserve capital than risk it and hope for gains. Hope is not an investment strategy. Watching your magic fund sink month after month is not pleasant, and being a bag-holder while the smart money runs for the exits is not what any rational person would do.

As anyone can clearly see, after taking losses in February and March, the Dow Jones Industrial Average finished with a gain of 50.81 points. That's not a gain, that is a rounding error, a pimple, a dot. It didn't even beat inflation. You lost money over time.

Get out, reallocate, or die.

Dow Jones Industrial Average April Scorecard:

Date	Close	Gain/Loss	Cum. G/L
4/2/18	23,644.19	-458.92	-458.92
4/3/18	24,033.36	+389.17	-69.75
4/4/18	24,264.30	+230.94	+161.19
4/5/18	24,505.22	+240.92	+402.11
4/6/18	23,932.76	-572.46	-170.35
4/9/18	23,979.10	+46.34	-134.01
4/10/18	24,407.86	+428.76	+294.66
4/11/18	24,189.45	-218.55	+76.11
4/12/18	24,483.05	+293.60	+369.71
4/13/18	24,360.14	-122.91	+247.80
4/16/18	24,573.04	+212.90	+460.70
4/17/18	24,786.63	+213.59	+674.29
4/18/18	24,748.07	-38.56	+635.73
4/19/18	24,664.89	-83.18	+552.55
4/20/18	24,462.94	-201.95	+350.60
4/23/18	24,448.69	-14.25	+336.35
4/24/18	24,024.13	-424.56	-88.21
4/25/18	24,083.83	+59.70	-28.51
4/26/18	24,322.34	+238.51	+210.00
4/27/18	24,311.19	-11.15	+198.85
4/30/18	24,163.15	-148.04	+50.81

At the Close, Monday, April 30, 2018:
Dow Jones Industrial Average: 24,163.15, -148.04 (-0.61%)
NASDAQ: 7,066.27, -53.53 (-0.75%)
S&P 500: 2,648.05, -21.86 (-0.82%)
NYSE Composite: 12,515.39, -78.64 (-0.62%)

Weekend Wrap: If This Isn't A Bear Market, Then What Is It?

Is this a bear market?

Nobody wants to admit it, but the patterns are clear on the charts.

In the most recent week, all of the four major averages displayed the same kind of market action throughout, all ending in the red, from the Dow's 0.62% loss to the S&P's narrow, 0.01% decline.

All four are currently trading between their 50 and 200-day moving averages.

It's been three months since the averages made new highs, which just happened to be all-time highs, occurring more than nine years into the second-longest expansion in market history.

Even though the indices are not at correction levels (-10%), they are close, and the argument that a bear market is defined as a 20% drop is begging the question to a large degree. In the case that investors want to wait until stocks are another 10% lower, it will mean that the smartest investors got out early and those remaining will be eventual bag-holders, losing anywhere from 35-60% of their investments as the bear matriculates to lower and lower levels.

Since Dow Theory has confirmed bear market conditions, only the most hopeful or ignorant traders will cling to the belief that those all-time highs made three months ago will be surpassed somewhere down the road. The closing high on the Dow is 26,616.71, made on January 26. A rally of more than 2300 points would be needed to get back to that level.

Does anybody in their right mind see that happening?

Presidents of the various Federal Reserve System regional banks may try to make a case that the economy is strong and still growing, despite evidence to the contrary and their overwhelming desire to raise rates in the face of obviously weakening data.

Friday's first estimate of third quarter GDP might have been the straw that broke the back of the Fed's narrative, coming in below consensus guesses at a depressing 2.3%. When one backs out inflation and considers that almost all of the contributions to GDP - consumer, business, and government - are based on borrowed money, i.e., debt, the real GDP figure might be somewhere closer to -2.3%, consumer and business debt beginning to grow beyond sustainable levels, while government debt is already well past that point at $21 trillion.

There is little doubt that this is indeed a bear market and the flattening of the treasury interest rate curve is more evidence that a recession is just around the corner. Raising rates at this juncture - which the Fed plans on doing again in June - will only exacerbate an already stretched situation and actually contribute to causing the very recession the Fed wishes, publicly, to avoid. In truth, behind closed doors, the Fed presidents and governors of the FOMC know full well that a slowdown is coming, not just for stocks, but for the general economy. That's why they are in such a rush to raise rates: because they need the additional ammunition of being able to reduce rates when the recession comes.

Investors have had sufficient time to reallocate funds to safe havens. Sadly, the bulk of investments are held by pension and other funds, and the bag-holders are going to eventually be the millions of working people whose investments and livelihoods are inextricably tied to the market with little opportunity to allocate funds correctly nor the ability to leave the market completely.

Life has its ups and downs, and its fair share of joy and pain. The joy of the past nine years is about to be eclipsed by the pain of 2019-2022, a bear market and deep recession that will reveal - to some - the true state of the US and global economy, one that has been built on debt, low interest rates, non-stop issuance of fiat currency, stock buybacks, manipulation, and shady practices by the world's central banks.

Forewarned is forearmed.

Dow Jones Industrial Average April Scorecard:

Date	Close	Gain/Loss	Cum. G/L
4/2/18	23,644.19	-458.92	-458.92
4/3/18	24,033.36	+389.17	-69.75
4/4/18	24,264.30	+230.94	+161.19
4/5/18	24,505.22	+240.92	+402.11
4/6/18	23,932.76	-572.46	-170.35
4/9/18	23,979.10	+46.34	-134.01
4/10/18	24,407.86	+428.76	+294.66
4/11/18	24,189.45	-218.55	+76.11
4/12/18	24,483.05	+293.60	+369.71
4/13/18	24,360.14	-122.91	+247.80
4/16/18	24,573.04	+212.90	+460.70
4/17/18	24,786.63	+213.59	+674.29
4/18/18	24,748.07	-38.56	+635.73
4/19/18	24,664.89	-83.18	+552.55
4/20/18	24,462.94	-201.95	+350.60
4/23/18	24,448.69	-14.25	+336.35
4/24/18	24,024.13	-424.56	-88.21
4/25/18	24,083.83	+59.70	-28.51
4/26/18	24,322.34	+238.51	+210.00
4/27/18	24,311.19	-11.15	+198.85

At the Close, Friday, April 27, 2018:
Dow Jones Industrial Average: 24,311.19, -11.15 (-0.05%)
NASDAQ: 7,119.80, +1.12 (+0.02%)
S&P 500: 2,669.91, +2.97 (+0.11%)
NYSE Composite: 12,594.02, +11.12 (+0.09%)

For the Week:
Dow: -151.75 (-0.62)
NASDAQ: -26.33 (-0.37%)
S&P 500: -0.23 (-0.01%)
NYSE Composite: -13.13 (-0.10%)

Facebook Helps Wall Street Rally; Amazon Posts Monster 1Q Surprise After Close

Facebook's (FB) blowout earnings were enough to propel markets forward for the day, but after the bell Amazon (AMZN) made serious noise when it absolutely crushed expectations, earning, in the first quarter, $3.27 per share on $51 billion in revenues for the quarter. Analysts had expected $1.27 per share on revenues of $49.96 billion. In the same quarter last year, earnings were $1.48 per share on $35.7 billion in revenue. Amazon was trading more than six percent higher in after-hours trading.

It's plain to see that Jeff Bezos of Amazon has taken internet technology and employed it to maximum capitalization. Traditional brick and mortar retailers have been failing and falling faster than the price of used shoes.

Amazon's monster quarter, combined with Friday's first estimate of first quarter GDP should be enough good news for a significant upside to close out the week. The timing could not have been better for the pushers of stock certificates, because February and March were down months for the Dow and other averages, and a third straight month of losses might have opened the selling floodgates wide.

With just two trading days remaining for the month, it's a safe bet that April will end in the black on the Dow, holding off, if only temporarily, the eventual sell-off everybody knows is coming. The Dow continues to wallow roughly 2000 points below the all-time high from January 26 (26,616.71). Expect the rally that started yesterday to continue into May, for a week or two. It should be good for 1000 Dow points at the minimum before it's exhausted. Look for pivot points upon which to place short bets, play puts or sell call options.

Dow Jones Industrial Average April Scorecard:

Date	Close	Gain/Loss	Cum. G/L
4/2/18	23,644.19	-458.92	-458.92
4/3/18	24,033.36	+389.17	-69.75
4/4/18	24,264.30	+230.94	+161.19
4/5/18	24,505.22	+240.92	+402.11
4/6/18	23,932.76	-572.46	-170.35
4/9/18	23,979.10	+46.34	-134.01
4/10/18	24,407.86	+428.76	+294.66
4/11/18	24,189.45	-218.55	+76.11
4/12/18	24,483.05	+293.60	+369.71
4/13/18	24,360.14	-122.91	+247.80
4/16/18	24,573.04	+212.90	+460.70
4/17/18	24,786.63	+213.59	+674.29
4/18/18	24,748.07	-38.56	+635.73
4/19/18	24,664.89	-83.18	+552.55
4/20/18	24,462.94	-201.95	+350.60
4/23/18	24,448.69	-14.25	+336.35
4/24/18	24,024.13	-424.56	-88.21
4/25/18	24,083.83	+59.70	-28.51
4/26/18	24,322.34	+238.51	+210.00

At the Close, Thursday, April 26, 2018:
Dow Jones Industrial Average: 24,322.34, +238.51 (+0.99%)
NASDAQ: 7,118.68, +114.94 (+1.64%)
S&P 500: 2,666.94, +27.54 (+1.04%)
NYSE Composite: 12,582.90, +65.04 (+0.52%)

Stocks' Bounce Not Very Convincing; Bears Taking Control Of Market Sentiment

The Industrials ended a five-session losing streak on Wednesday, but, as dead cat bounces go, it didn't even register on the Boo-Boo Kitty scale, leaving the Dow Jones Industrial Average in the red for the month of April and still within whistling distance of correction territory (23,954).

If it hasn't become obvious to just about everyone on Wall Street that stocks are in some serious trouble after nine years of relentless stock buybacks and jerking up by Fed policies of ZIRP and QE, it should be quite clear now. With earnings season winding down, there's going to be nothing with which to prop up stocks - other than the usual central bank manipulation and other wily shenanigans - from the first week off May until the next FOMC meeting in June.

Stocks and the Fed are playing a dangerous game of chicken. If the Federal Reserve insists upon its path of raising interest rates every three or four meetings, stocks are going to tank. From the Fed's point of view, it probably doesn't matter what they do in the interest rate scheme, since they consider the business cycle to be at an end. That kind of thinking gives them full reign to raise rates, crash the markets, send the economy into recession (late 2018 or early 2019), so that they have sufficient ammunition to battle the downturn they created. It's a sickening policy from the prior century that badly needs replacing in the 21st.

Dow Jones Industrial Average April Scorecard:

Date	Close	Gain/Loss	Cum. G/L
4/2/18	23,644.19	-458.92	-458.92
4/3/18	24,033.36	+389.17	-69.75
4/4/18	24,264.30	+230.94	+161.19
4/5/18	24,505.22	+240.92	+402.11
4/6/18	23,932.76	-572.46	-170.35
4/9/18	23,979.10	+46.34	-134.01
4/10/18	24,407.86	+428.76	+294.66
4/11/18	24,189.45	-218.55	+76.11
4/12/18	24,483.05	+293.60	+369.71
4/13/18	24,360.14	-122.91	+247.80
4/16/18	24,573.04	+212.90	+460.70
4/17/18	24,786.63	+213.59	+674.29
4/18/18	24,748.07	-38.56	+635.73
4/19/18	24,664.89	-83.18	+552.55
4/20/18	24,462.94	-201.95	+350.60
4/23/18	24,448.69	-14.25	+336.35
4/24/18	24,024.13	-424.56	-88.21
4/25/18	24,083.83	+59.70	-28.51

At the Close, Wednesday, April 25, 2018:
Dow Jones Industrial Average: 24,083.83, +59.70 (+0.25%)
NASDAQ: 7,003.74, -3.62 (-0.05%)
S&P 500: 2,639.40, +4.84 (+0.18%)
NYSE Composite: 12,517.86, +3.87 (+0.03%)

Stocks Tumble As Investors Flee Overvalued Stocks

Today was yet another example of the kind of days which are typical in a bear market, and make no mistake, this is the early phase of what could become a raging bear which will strip stocks of 40-60% of their valuations. Stocks were higher in the early trading and slumped in the afternoon, with the Dow Industrials closing at its lowest level in three weeks.

With today's losses, the Dow has plunged into negative territory for the month, following back-to-back declines for February and March. Even earning reports are not enough to keep stocks elevated, especially after Alphabet (parent of Google, GOOG) posted what appeared to be strong numbers only to reveal increasing expenses, crushing profit margins.

Dow component 3M (MMM) led the decline after posting earnings per share of $2.50, which missed analyst estimates of $2.52, and were 16% higher than the $2.16 posted in the year-ago period. The stock was blasted, losing 14.77 points (-6.84%) to end the day at 201.11.

Caterpillar was close behind in the loss column, down -9.80 points (-6.36%).

Alphabet dropped a stunning -47.47 (-4.45%) to close out the session at 1,019.98.

Only six of 30 Dow stocks managed gains on the day. The NASDAQ and other major indices were also badly damaged.

The prevailing trend this earnings season has been that whatever a company posts, it's probably not good enough for anybody seeking to get out of a position, as risk aversion has suddenly become popular once again, especially with yields on the ten-year-note approaching three percent and precious metals (gold, silver) at bargain basement prices.

Dow Jones Industrial Average April Scorecard:

Date	Close	Gain/Loss	Cum. G/L
4/2/18	23,644.19	-458.92	-458.92
4/3/18	24,033.36	+389.17	-69.75
4/4/18	24,264.30	+230.94	+161.19
4/5/18	24,505.22	+240.92	+402.11
4/6/18	23,932.76	-572.46	-170.35
4/9/18	23,979.10	+46.34	-134.01
4/10/18	24,407.86	+428.76	+294.66
4/11/18	24,189.45	-218.55	+76.11
4/12/18	24,483.05	+293.60	+369.71
4/13/18	24,360.14	-122.91	+247.80
4/16/18	24,573.04	+212.90	+460.70
4/17/18	24,786.63	+213.59	+674.29
4/18/18	24,748.07	-38.56	+635.73
4/19/18	24,664.89	-83.18	+552.55
4/20/18	24,462.94	-201.95	+350.60
4/23/18	24,448.69	-14.25	+336.35
4/24/18	24,024.13	-424.56	-88.21

At the Close, Tuesday, April 24, 2018:
Dow Jones Industrial Average: 24,024.13, -424.56 (-1.74%)
NASDAQ: 7,007.35, -121.25 (-1.70%)
S&P 500: 2,634.56, -35.73 (-1.34%)
NYSE Composite: 12,513.91, -96.87 (-0.77%)