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US Drives Global Growth

The US is back in the driver seat again as a sustained and growing economic powerhouse – the Trump Economy.  Since the November 2016 elections, the US economic data and outlook have been driving investment in US equities as well as select foreign investment opportunities.  The reduction in regulations and business friendly Trump administration seems to have unleashed the hoard of cash and opportunity of the past 7+ years.  US and foreign business are, again, “wheeling and dealing” with the intent of generating greater profits and more opportunities.

 

This is the reason I believe the US, as well as certain foreign partners, will see nearly immediate and direct advancement of economic objectives.  The amount of capital that could be unleashed over the next 2 years could be well in excess of $2 Trillion as related to business investment, consumer-driven sales and expanded manufacturing capacity will likely drive the US economy into a new leadership role focused on renewed opportunity and activity.

 

US Manufacturing has recently been in a state of decline since late 2011.  I attribute this to uncertainty related to US policies and leadership.  The graph, below, does not show the opportunity I see in the future expansion, but it does show that throughout historical periods of economic expansion, relative growth ratios tend to hover near +2.6% to +5.7%.  This level of expansion, historically, would relate to the US economy feeling optimistic about future capabilities as well as increasing earning potential.

 

US Manufacturing Output Chart

Manufacturing will likely grow to near greater than +1% for Q1 2017

Manufacturing_RealOutput

Keep the two functions in mind, as opportunities increase and the US economic activity increases, typically hiring and earnings increase as well.  This is a sign of a healthy growth phase that may, as it seems it always does, spill over into other foreign markets.  Much like the last 1990s and 2003~2006 US economic expansion phases, the historical rates of expansion averaged +4~5%.  The contraction periods (recessions : 2001 & 2008) were deep and dangerous, yet the growth phases were lengthy and substantial.  Household income growth was a key factor for extended periods of economic expansion.

 

FRED_MedHHIncome Chart

US Household Income Rising Sharply

FRED_MedHHIncome

As business activity increases, Inventory To Sales Ratios decrease.  The rational behind this factor is that sales volumes increase and inventories decrease in relation to new sales activities.  Thus, products start flying out of the warehouses and off the shelves.  Every US economic expansion phase has been paired with decreasing Inventory To Sales Ratios historically.

 

TtlBusInventory2SalesRatio Chart

Sharp increase in sales (Decreasing Inventory) after November 2016 elections

TtlBusInventory2SalesRatio

In short, this looks like “lift-off” for the US economy – at least for the immediate term perspective.  The concerns for investors are still very evident in some of the following graphs.  My opinion that the US is still, and has been for decades, the sole driving force behind much of the global economic expansion phases is based on the concept that the US, along with key partners, are the strongest and most mature economies on the planet.  I consider most of the immediate partners to the US economy as Japan, Canada, Germany and Great Britain.  I’m certain that many of you could add in 2 or 3 others, but I continue to focus on the core elements of the global economic process.  Because none of the other global economies are, in my opinion, capable of functioning well without the economic impetus of the four mature growth economies, I continue to believe these four are, and have been, the drivers of global economic growth.

 

The following chart shows why I believe a dramatic change in US economic activity will drive some level of increased economic activity throughout the world.  The combined European and Asian GDP Output graph shows severe contraction in 2013~2015.  I can only assume the continued contraction of this measurement of economic activity continued in 2016.  An increase of 10~20% of this value would result in a nominal overall increase compared to recent highs.  It would take an increase of over 70% for this measurement of economic output to be restored to 2012~2013 levels – yikes!

 

GDP_EuropAsia Chart

Europe & Asia show sharp declines in economic activities

GDP_EuropAsia

I attribute much of the GDP decreases in Europe and Asia to two factors; lack of economic expansion in the US and difficult/uncertain global economic policies in Europe and Asia.  As the earlier US Manufacturing Output chart shows, the US economic has only recently started to expand.  This is related to fears and uncertainty as related to the US election cycle (at least in part).  The recent BREXIT news as well as other issues that continue to plague Europe are also key driving factors.

 

Additionally, more and more frequent news is relating economic concerns and excessive debt levels in China.  I can attest that China’s economic reach is far and wide in most of Asia.  Any crisis originating in China will result in mini-crisis events throughout most of Asia and parts of Europe.  This is, again, why I believe continued strength in the US markets will drive US equities and economies to new highs while any “spill-over” may begin to improve foreign markets as well.  But we’ll have to wait for that “spill-over” event to actually start to happen before we see any increased valuations or activity.

 

European Economic Policy Uncertainty Index Chart

Europe in the midst of uncertainty and constricting economic leadership

EuropePolicyIndex

How does this relate to me, an active trader?  First off, it means I should be focusing on core US equity opportunities and focusing on uncertainty related commodity markets (Gold, Silver, Oil, Gas and others).  The uncertainty throughout most of the developed world will drive certain commodities to increased valuations.  What has recently happened in India with regards to currencies is already driving global events in precious metals and demand for alternate paper currencies.  What happens in France, soon, may likely drive further impetus for increasing valuations in commodities, equities and other markets.  The supply data in regards to OIL and GAS is pushing a message that oil may drop to near $30 again.  Things are changing quickly and we need to be ready to act and profit from these moves.

 

US DOW Chart

 DOW_Driver_Daily_final

 

Gold Chart

GOLD_Driver_Daily_final

The opportunities in foreign markets and in foreign equities will arise again in the future.  I can’t predict when, but I can predict that any further increased US economic activity will have a “spill-over” effect on foreign markets and will drive increase valuations – unless something acts to destroy that alignment going forward.

 

I keep my members alerted to these opportunities and provide more detailed analysis and trading triggers through ATP .  If you would like to continue to receive my research and analysis, please take a moment to visit ActiveTradingPartners.com to see how I can help you to achieve greater success.  Some of my most recent calls have been outstanding like:

 

UGAZ 10.7% Profit (Feb 21-23)

ERX 7.7% Profit (Feb 8-9th)

NUGT 112%Profit (Dec 16 – Feb 8th)

 

All the trades are based on my Momentum Reversal Method (MRM) trading system.

 

In short, the US stock market is back in full blown bull market with Trump re-energizing things. While I feel a short-term correction is due any day, it is just that, a short-term pullback followed by higher prices into June/July.

 

Follow my lead and start making money every month with www.ActiveTradingPartners.com

 

John Winston

Co-Author: Chris Vermeulen

What Investors Need To Know About U.S. Money Market Funds?

Why Low Risk Does Not Equate To Risk Free!

Charles Schwab has informed its’ clients that “at least 80% of the fund’s net assets will be invested solely in U.S. government securities…”.   Schwab automatically assumes that all clients affected by this change will accept: “if you are in agreement with this change in your cash feature, no response is required from you. They consider a non-response from its’ clients to be notice. “Those who disagree have the “option” of either sweeping their cash into the corporate bank exposing them to greater risk.  They add “you also have the right to close your brokerage account(s) without penalty at any time.”

Who will be the most recent owners of the rest of the current and future new debt?  The answer is:  YOU.  U.S. Mutual funds, U.S. pension funds and American investors. Why?  Because our insolvent government needs Americans to finance it before the entire house of cards come crashing down!  One’s ability to take your savings out of banks and store it in cash is coming to an end. U.S. Institutions are holding up to 99.5% of assets in cash, U.S. government securities, and repurchase agreements that are collateralized solely by the U.S. Government’s good faith.

“Debt-As-Legal-Tender”

This will make it much more difficult for one to be able to access any/all of your personal cash which was always considered to be accessible liquid risk free funds. What will American citizens do when they realize they were conned into “toxic investments” and decide to just pull their cash out of the banks and store it themselves?  If you do take possession of your savings in cash, how secure do you feel when the government comes knocking on your door asking about your stockpile of cash?  Schwab and others are taking preemptive action now to move your money into U.S. debt.

The top complaints and reviews about Schwab refusing to honor its’ clients’ money:( https://www.consumeraffairs.com/finance/schwab.html).  Fidelity is also causing the same problems for its’ clients, as well: (https://www.consumeraffairs.com/finance/fidelity.html).

This is just a new vehicle in which the U.S. Federal Government is taking control of your cash and converting it into “toxic assets” to be spread out amongst us all.  Why? The answer is to cover our enslavement of $19.9 trillion debt which is growing with each passing second.  The Current outstanding public debt of the United States is: $19,926,581,166,878.36 as of Monday, February 20th, 2017. That equates to everyone, in the United States, currently owing $65,586 which represents their share of the U.S. public debt.

chart

Public Debt: $14,403,392,566,439.40
Intragovernmental Holdings: $5,523,188,600,438.96
Total U.S. National Debt: $19,926,581,166,878.36

 

Who owns the public debt?

Foreign governments own the most U.S. debt.

chart1

 

This has been done under the auspices of the S.E.C. (Securities Exchange Commission): (http://www.investopedia.com/terms/s/sec.asp).  They implemented the New Money Fund Reform Rules”:

(https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542347679). The rules require fund providers to institute liquidity fees and suspension gates as a means of preventing a run on the fund. The requirements include asset level triggers for imposing a liquidity fee of 1% or 2%. If weekly liquid assets fall below 10% of total assets, it triggers a 1% fee. Below 30%, the fee is increased to 2%. Funds may also suspend redemptions for up to 10 business days in a 90-day period. These are the official rule changes; there are several factors investors should know about the reform and how it will affect them during its’ implementation.

The move for money market fund reform grew out of the 2007–2008 ‘financial crisis’. The Reserve Primary Fund recently settled its’ claims:( “ADDITIONAL INFORMATION REGARDING YIELD PLUS FUND-IN LIQUIDATION (Formerly known as Reserve Yield Plus Fund) DATE OF FINAL DISTRIBUTION WEDNESDAY, JUNE 15, 2016” ): (Reserve Primary Fund).  The fund had assets totaling $62 billion. The class action suit brought against them resulted in a mere $10 million settlement: http://www.usatoday.com/story/money/markets/2013/09/08/money-fund-broke-buck-deal-managers/2782931/). The 2008 financial crisis precipitated by The  Reserve Primary Fund (Reserve Primary Fund)  when it was forced to reduce its’ net asset value (NAV) of its’ money market fund below $1, due to huge losses, which were generated by failed short-term loans issued by Lehman Brothers. It was the first time a major money market fund had to break the $1 NAV which caused panic among institutional investors, who consequently began mass redemptions. The fund lost two-thirds of its’ assets within 24 hours and eventually had to suspend operations and commence liquidation.  This event prompted significant redemptions by institutional money market fund investors, putting the funds under severe financial stress.  The Reserve Primary Fund, which invested in Lehman Brothers debt, “broke the buck”: (http://www.investopedia.com/articles/mutualfund/08/money-market-break-buck.asp).

The S.E.C. Chairwoman. Mary Jo White, said “Today’s reforms fundamentally change the way that money market funds operate. They will reduce the risk of runs in money market funds and provide important new tools that will help further protect investors and the financial system. Together, this strong reform package will make our markets more resilient and enhance transparency and fairness of these products for America’s investors.”  This is what the SEC wants Americans to believe and buy into it!

The official final amendments to money market rules, which were made in 2014, for protecting shareholders from the impacts that a flood of redemptions could have on money market funds is how the S.E.C. is rationalizing this dilemma. The amendments are also intended to give fund managers enough time to respond to requests in a more thoughtful, prudent manner and in a much slower period.

  • Fidelity is converting its’ largest prime fund into a U.S. government fund. Federated is taking steps to shorten the maturities of its’ prime funds to make it easier to maintain a $1 NAV.  Vanguard is assuring its’ investors that its’ prime funds have more than enough liquidity to avoid triggering a liquidity fee or redemption suspension.

The Bank of America Corp. sold its’ money market business to BlackRock, Inc. to avoid these types of future problems.

  • Restricts who can invest in retail money market funds.
  • Continues to seek a stable $1 net asset value (NAV) for retail and government funds, but requires institutional funds to have floating NAVs like other mutual funds.
  • Allows certain funds to impose liquidity fees and temporarily suspend withdrawals (known as gates) in certain circumstances.

 

Gold Is Money!

Global negative interest rates have shifted the worlds’ appetite to buying gold and silver, once again. Gold and silver can sit outside the system and remain completely private. It cannot be tracked by the government or banks. Gold and silver have been the world’s greatest wealth protectors for over 5,000 years. It has shielded its’ citizens from government and banking collapses during the worst crises in history. Physical gold and silver cannot be instantly seized with the stroke of a keyboard. This is why I believe we should invest in gold and silver, before we have potentially nothing left to protect. Its two things to me: a store of untraced wealth, and an insurance policy in case something really bad happens. I like feeling financially protected and this is one way I do this.

 

Timing Is Everything!

The next BIG TRADE is setting up. You should take advantage of my hard work and expertise to make you short term profitable trades. Protect your financial future by getting my market and trade alert reports every week. Your portfolio should involve a proven strategy which I provide.

We have just entered a new commodity trade (UGAZ) Feb 21 as its forming a bottoming pattern. We have locked in 10% in 36 hours and hold the remaining for much larger gains. Do you want to be in the next trade of the Next Hot Stock setup?  My subscribers banked a 112% in a swing trade with NUGT (Dec 16 – Feb 8th). All the trades are based on my Momentum Reversal Method (MRM) trading system.

Another trade this month was ERX, in which we took a nice profit of 7.7% in less than 24 hours after entry.  All risks are well contained.

Follow my lead and start making money every month with www.ActiveTradingPartners.com

John Winston
Co-Author: Chris Vermeulen

What has been Pushing S&P 500 Higher?

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Another Price Setup with Oil and Gas Stock

One of the key tenants of my Momentum Reversal trading is “waiting for the right trigger/event and getting in early”. I find this is one of the most difficult aspects for most clients to understand and master. Therefore, in an attempt to further illustrate some components of my thinking and strategy, I have put together these examples to try to help people understand these techniques.

Within this example, I’ve selected Chesapeake Energy Corp and a recent price move that resulted in strong gains. As you are well aware, within the Momentum Reversal Method (MRM) are a number of key factors that drive my investment methodology.

 

details1

 

Additionally, I use Fibonacci and Elliot Wave Theory in all of my analysis and decision making. The Momentum Reversal Method is not foolproof – it does take some losing trades. Generally, though, the winners far outpace the losers. My trading strategy helps to answer these important questions.

 

details2

 

 

Now, onto the setup I promised earlier – Chesapeake Energy Corp.

This chart illustrates three key components to my Momentum Reversal Method trading strategy:

– Established Price Momentum/Trend
– Defined Price Rotation
– Tightening/Coiling of price prior to a breakout

As you can see from the example chart, above, the upward price trend (highlighted in green) followed by the price rotation (highlighted in red) created a primary setup that allowed me to target this stock for potential trigger setups. In other words, this price momentum and rotation created an opportunity for trade signals.

The coiling of price with the flag/pennant formation created another component I often look for – price congestion. Price congestion following a wide range price rotation is usually indicative of a “pre-breakout move”. Therefore, the identification of this type of price action can sometimes be an early warning to watch it more closely for the trade trigger.

I’ve marked the initial breakout bar (not my ideal trade trigger) with a green up arrow. For the average trader, this would likely be your trading trigger. Within the Momentum Reversal Method, we look for early triggers that can allow us to get into these types of trades earlier – and often with much less risk and greater chance of success.

I hope this clear example of a MRM setup can assist you in understanding why this strategy is such a success.

 

chk1

 

The Outcome

This, the outcome of the Setup, shows exactly how quickly these setups can turn into profits. Generally, the Momentum Reversal Method holds trades for 3~7 days for short-term trades and for 14~35 days for longer term trades (in some cases even a bit longer).

You may be wondering why we only hold trades for 3-7 days? The answer is simple, we know that most of the biggest moves happen in a very short period of time. The explosive pops/drops in price only last 3-7 days in most cases. Catching these quick explosive moves provide us with the best risk reward. As you know time is money, and it only makes sense to make as much as possible in the shortest period of time, which has two key benefits:

First is that I provide lower risk. The less time our money is locked into a trade/the markets the better as cash is king!

Second, it means we can rotate some of some/or all of our money into the next stock/leveraged ETF ready for its explosive pop/drop.

You can see from this image the first upward move from the trigger bar resulted in a +27.8% gain in only 10 trading days. The second phase run-up in price resulted in an +83.75% gain in an additional 29 days. Clean, Clear and Consistent.

 

chk2

 

Again, I’m not giving away my successful strategy to anyone. The Momentum Reversal Method has worked for me for years and continues to generate fantastic results. Even if I tried to teach you every aspect of this trading methodology/strategy, you would still need my assistance in understanding the nuances of how to deploy it and how to better understand general market sector rotation, when to avoid false triggers and what you should and should not trade and when.

This article is to help illustrate why the Momentum Reversal Method is a success and to teach you some of the basic concepts of Momentum Reversal triggers. My followers receive detailed analysis, research and trading triggers from my member based trading room. I can provide a source of valuable and timely trading triggers and follow-up research regarding all activity I announce to my clients. A few of our recent trades have been VUZI 16%, UGAZ 74%, and last week NUGT 50% on a portion and we are up over 75% on the balance which could be 100% by the end of week. The NUGT trade was partially based of a Market Trend Forecast we published back in December.

Feel free to visit www.ActiveTradingPartners.com to see how easy it is to profit from my analysis and to see how well the Momentum Reversal Method works in real-time.

I sincerely hope you enjoyed this article and were able to see how you can improve your future trading successes by using some of these components.

John Winston & Chris Vermeulen
TheTechnicalTraders.com