I have been warning that this has been, perhaps, the most sold rally in history. Domestic buyers and net foreign investors are both approaching historical lows. This is the most shorted market ever. Yet, the chart pattern defies all their selling. This is setting itself up for the pop to the upside because the selling has reached all-time highs. The majority is clearly on the wrong side of the market, yet the market defies their selling.

It seems something is brewing for a major move. We urge clients to watch the reversals and the timing. Technically, we broke through the downtrend line and fell back to retest it. Holding that support level now is an indication of a coming pop to the upside. Pay attention to BREXIT. If Britain votes to leave and they cannot rig the election, we will start to see a contagion spread inside the EU for referendums to leave. The dollar can catch a bid on the initial capital crisis.

When we look at the S&P 500 in terms of the euro, the declines are far less due to the decline in the currency. The pattern is very flat and this is an indication also of a future breakout to much higher highs.

The net selling by foreign and domestic investors will lead to a complete reversal in their investment and that will fuel the rally.

A British protester tries to set fire to EU Flag, but because of EU regulations prohibiting flammable material, he cannot complete his protest.

The British Royal Mint is looking to sell more of its gold reserves in the form of gold bars for pension funds for the first time. They are charging 1% to store it and then they want VAT tax on top of it all. They are selling 100 g or 1 kg bars. The problem, of course, is government historically can just arbitrarily change the law and there is nothing you can do about it. They are advising people to place up to 5% of their pension in gold, but this should be tax exempt.

QUESTION: Marty, I looked back at your Gold Arrays and I can see how they work rather amazingly as well. The week of February 2 was a Panic and a Directional Change. That produced a dramatic rally into a high. The next week was what you call the back-to-back Directional Change you always warn will be choppy. The market pulled back and that was the lowest close. The next target was February 29. That was the highest close and the next target of March 28 was the low. I do not know how you doe this. But nobody can do time like you.

Good on ya

REPLY: Yes, but the key point is that these targets are all computer generated. They are not my personal opinion. The high degree of accuracy proves that there is hidden order and this is no random walk. In the field of forecasts, we are still living in a very primitive world by assuming government can manipulate everything. When the realization comes to the MAJORITY that they cannot control our destiny, then everything will breakout.

The arrays are not 100%, but they are very close. They can take place on a closing and/or intraday basis. Typically, you have back-to-back Directional Changes that are choppy, yin-yang types of trades.

One of the eye-opening shocks I experienced after I was thrown in contempt was that nothing was what it seemed. Numerous suicides occurred but the press did not report on them, and the few that received coverage were spun to the government’s favor to portray them as having some remorse. The truth is that those who committed suicide were typically the innocent, whereas the real violent criminals, I found, were cowards. They might kill someone else, but they themselves fear death and will appeal until the end. Even those who did something they believe was right, like Timothy James McVeigh (April 23, 1968 – June 11, 2001), opted for death and refused to appeal. The outright murdered was terrified of dying.

Then there is the nonsense portrayed as recidivism (the relapse to criminal behavior). The truth, even in this department, was far from what the press portrayed. I met people who had been imprisoned for 20+ years who were scared to be released. They all said they would commit another crime to get back inside where life was easy. Once a black individual cried in my cell. He asked me to read his paper because he could not read. He was sentenced to 40 years imprisonment when he was only 18-years-old. He said he had no family left. He had no idea what to do and was scared to death of the outside world. I came to learn that prison was not a punishment; it was a change of life. The justice system somehow operates under the delusional idea that increased prison sentences will deter people. That is just stupid. Prison is suited ONLY for those who pose a violent risk to society — no one else.

So now, we have the idea that they will pay people not to commit a crime after getting out. This will help some who are poor who committed some crime for money. However, the whole system is totally screwed up.

EVERY drug dealer I met said the same thing — the police stole half the cash they had. Their court-appointed lawyers told them to shut up because they would face longer sentences if they were found with more money. Just who is benefiting from this system is highly questionable. Then you have prison guards who take the job so they can beat-up people. They are some very sick individuals. Five New York City Rikers Island prison guards ere just found guilty in beating people. All this does is teach people that government is the enemy. When released, they have been exposed to a vast corruption that dominates the entire prison culture. Inmates have far too often been murdered by prison guards and buried in hole in prisons never to be heard from again. The Arkansas prison farm was just one notorious affair they try to hide from the public.

So unfortunately, the press rarely ever exposes the truth. They support government against the people and have abandoned their constitutional role of defending the people against government. Once the press was bought by big business, they then have agendas sold to the highest bidder.

D.C. may pay people not to commit crimes

Under this bill, up to 200 individuals a year could qualify.

Computer programming positions are open for our new offices in Florida.

We are opening up offices in the Tampa area in Florida. We have several positions open from PHP programming and site management, C# (Visual Studio) and database management (Mongo), server management, to machine learning positions. We are ready to begin the interview process. Please forward your resume to [email protected].

I happened to have a conversation with someone from Portugal who was neither a trader nor an investor, just an observant 23-year-old. When I asked for her take on the state of affairs in Europe, she candidly replied:

“Yes, there are groups of people who expect civil war. Actually, the situation in Europe at this moment is a big mess. Those in the Baltic countries are afraid of Russians, others are in a big panic because of ISIS, and the other third are upset about EU not to mention a mess with refuges and etc… In general, war industry brings amazing profit. So it is a question of time when history will repeat once again, as you say.”

 

COMMENT: Dear Mr. Armstrong,

Is there a bug in my computer or has the latest the Nigel Farage video been removed from your blog? I also can’t find the recent more private video on migrant problems in Germany, which was rather shocking for us as the German press is not allowed to automatically report on migrant problems. It’s not a free and independent press anymore.

Thank you for your very interesting and excellent blog.

Kind regards,

ml

REPLY: The videos are still there on my end. It appears that perhaps someone in Germany is blocking those videos. Very curious.

Something BIG is brewing in the World Economy. We are definitely getting closer to the point when everyone starts to say OMG! What is going on? The US 2016 Elections are shaping up to be very interesting. They reflect the degree of how we are on such a tight-rope tottering before a fall. But which way? We have the BREXIT poll starting to be so overwhelming for exit, it is hard for the press to even cover it up. We have Merkel who is very lucky she is not being tarred & feathered. Her decision to allow refugees into Germany reflects everything that is wrong with the EU. She has torn Europe apart and it demonstrates that all other member states had no right to even object. This was her personal unilateral decision that now all of Europe must deal with. There was no unified vote. This was Merkel trying to make person of the year and capture the Nobel Peace Prize. Nobody bothered to tell her she has to want to invade a country to get the Peace Prize like Obama. This is a bullshit prize and handing it to Obama proved that point.

The refugee crisis demonstrates WHY the EU has failed. On the one hand they are trying to federalize Europe, yet here you have Merkel acting as the head of Germany making decisions that changed Europe as a whole. She failed to realize she surrendered her sovereignty to Brussels and cannot make unilateral decisions of such a profound nature. The federalized structure of the EU cannot possibly survive in such a manner. The EU should have simply remained as an economic trade union. Trying to make one government to prevent European war was just insane.

Meanwhile, the markets are showing the confusion that is dominating everything. Gold rallied but failed to close above the Weekly Bullish rising after testing 1206 all the back to 1280. The Dow again exceeded the Weekly Bullish only to fall back. The pound got crushed with the polls showing 55% of the British want to leave the EU, but it too held the Weekly Bearish. So may markets moved once again right to the threshold and backed off. You can taste it. We are almost there ready to make a move. It will be the tipping point when the general public begins to see this is all coming apart. From “super delegates” used by the Democrats to rig the game for Hillary to Republicans trying to for the NEVER TRUMP effort, and Cameron calling on everyone to scare the Brits into staying in the EU. Party Politics is being redefined in the USA and the smart Brits are starting to smell a rat. The under 45 crowd in the USA are neither Democrat nor Republican. Independence is rising everywhere because politicians has corrupted the entire game. This rise in independence is driving the elites insane because they are losing control. Everywhere we look, what was, is starting to be no more. This is what the markets are reflecting. Something is wrong – they just cannot put their finger on it and traditional forecasting is creating a sea of losses even for the professional hedge fund managers who lack global models that really work.

This is where our Reversal System keeps us out of harm’s way. It defines the critical points up and down and they do so like nothing else. They are not moving averages, stochastics, technical analysis, or anything subjective. There is no personal opinion involved and that eliminates human error because nobody can do this from a “I think” perspective. The Reversals simply define the critical points and markets gravitate to them rather amazingly like magnets. They will define the change and what we look at is a unified election across the broad scope of markets. The Reversals can catch the trend that is confirmed on a global perspective rather than a single isolated market.

It felt as though all regions were blaming the USD today for their market’s weakness today. Dealers around the world were claiming a balancing act against the currency, even the JPY! Lower markets in Japan and Hong Kong saw negative returns of 0.4% and 1.2% respectively but with the Shanghai market still closed. Ahead of the BOJ next week markets are searching for any kind of hint toward fiscal stimulus as the JPY trades away from recent highs. In late US trading, the Nikkei has lost an additional 1.5% from the earlier cash close.

European traders have watched this week: the oil price peak and then start to decline, the DXY hit lows then start to bounce, and have witnessed core bond prices climbing everywhere and gold rally, so taking a little money off the table on a Friday afternoon should not be that scary! However, that is exactly what we hear when talking to the street! Traders are reluctant to run large risk, margins are being increased it should not be a surprise that volatility is increasing. Sterling 1M VOL is around 25% (it hit 30% over the Lehman crisis) but cable did lose 1.4% today. To close the week we saw DAX and CAC around 2% lower. FTSE was off 1.9% and IBEX lost 3.2%. Early in the afternoon, the sell-off started to accelerate and with an uptick in volume. With the BOJ and the FED next week and BREXIT the week after expect more of the same.

US stocks were nervous from the start but did manage to recover the shaky opening. Economic data saw early reading for Consumer Sentiment 94.3 against an expected 94.7 but it would be a big call to point to that as the reason for the nerves. The VIX traded over 16 as we headed into the weekend. By the close, we had had one more attempt to break lower but had been rejected. Many are carrying a flat book into the weekend as any headline in the current client has the potential to move markets significantly.

We did not quite see the 0% Bund 10yr yield many were looking for today but it did reach 0.01% mid-afternoon. Everything in Germany yield curve out to 9.9 years trades with a negative yield. US Treasuries continues to tighten their spreads as the world looks to play the carry trade. US 10’s closed this evening at 1.64% whilst the Bund closed 0.02% this puts the spread at +162bp. Italy closed almost unchanged at 1.38%, Greece 7.34% (+7bp), Turkey 9.45% (+8bp), Portugal 3.07% (+3bp), UK 10yr 1.23%.