Attention: This message is intended to be a market risk assessment, not a market prediction. We are a trend research investment company, not market timers.
FutureMoneyTrends.com believes a serious correction in asset prices could happen over the next 10 days. With the Federal Reserve so heavily involved in the markets we can’t say for sure, but looking at several key indicators we are VERY concerned about a move down in the beginning of November. If we’re wrong we may miss out on a few percentage points of profit, but if we’re right we believe we can not only protect ourselves, but find a perfect entry point for our next stock picks. Normally we do not allow short term market moves to determine when we announce a decade trend investment but we believe if the market corrects in the next few weeks it will be anything but normal. Since March of 2009 the Dow has rallied just over 70%. The inverse relationship between the dollar and the markets is what has us worried the most. We haven’t seen this type of bearish sentiment for the dollar since late 2008, just before the last major dollar rally. Bullishness for stocks is also a very crowded trade. So not only is the dollar over due for a correction, but so are stocks. Two important key dates that we all need to be following:
November 2nd is the 2010 election.
November 3rd is the next FOMC meeting.
A Republican win will signal gridlock in D.C. and will stop stimulus for at least the next 6 months. We believe eventually the Republicans will cave and double down on so called targeted stimulus adding to even more targeted chaos in the market place. But with a strict mandate to cut spending and reduce the deficit we think Republican leaders will at least go through the motions of real conservatism for at least the first 6 months, hopefully we’re wrong. Either way Wall St. will know that now is the time to bail, with QE2 expectations way north of 1 trillion dollars the perfect catalyst for a major correction in asset prices could arrive next week.
Don’t believe us, then believe the insiders. Insider selling compared to insider buying is getting a bit ridiculous and when looking at the largest companies insider selling is currently 3,177 to one! When looking at the entire New York Stock Exchange, a normal reading would be two sales for every buy, right now we are seeing just over four sales for every buy. Now this trend has been going on throughout 2010, yet what concerns us now is that the big players are already out and waiting for a new entry point. If the Federal Reserve comes out with any number less than 1 trillion this could push asset prices down significantly. As the old saying goes, ‘buy the rumor sell the news.’
What has changed in the last 24 hours is that our worst fears are coming true. Today fear took over the markets. We pride ourselves in not only picking major multi-decade trends, but timing our entry points perfectly for our subscribers. For the next two weeks expect the most in depth analysis from FutureMoneyTrends.com. We will be focused like a laser on the markets not only to find a perfect entry point for our mining picks, but to see if we should be shorting the market if things look like they might avalanche. For those of you waiting for our next mining pick please be patient, mining stocks tend to do better than the metals in up times and far worse than the metals in down times. The last thing we would ever want to do is suggest a trend right before a major pull back because even if the trend is a major winner for the next 10 years there’s no reason, in our opinion, to jump into an empty pool. It’s best to wait until the water is good and ready.