The S&P 500 officially entered into a bear market after a December 24th record decline of 2.7%.  Prior to December 24, 2018, there had never been a prior Christmas Eve decline of even 1%.  The decline of 15% for December puts the month on pace to become the worst ever when compared to all prior end of the year months.  The S&P 500’s decline from its all-time high will reach 30% after it declines by another 10% to a temporary bottom of just above 2000, possibly as soon as year-end or in early January 2019.  A US and global recession, has either already been underway or, just began due to December’s global market meltdown. December and year-to-date returns for Bull & Bear Tracker’s signals have increased to 44% and 132% respectively.        

The S&P 500 will be unable to hit even a temporary bottom until it declines to below 2100 for two reasons:

• The probability has increased considerably that the US will enter into a recession at the beginning of 2019, if it has not already entered into one.  The shock from the December crash will cause a decline in consumer spending. The December crash being the main topic of conversation at all Christmas day gatherings will definitely spook the consumer into retrenching.  It’s what happened after the October 2018 crash. See chart below. The risk is high that those consumers who hold stocks will decide to make getting out of the market their New Year’s resolution.

• The technical support for the index as depicted in the chart below is approximately 2053.40.  The horizontal line depicts that the S&P 500 had been under accumulation during the first half of 2016.     When a market crashes the tendency is to go to previous accumulation levels. Therefore, the decline should at least temporarily slow down as soon at the S&P 500 gets to below 2100.

The odds of a recession happening are very high.  The chart below depicts that the market has declined prior to the beginning of every recession over the past 90 years with only one exception.   The market went up before the 1945 recession only because World War II ended in the summer of 1945.

Given that a recession will likely occur after the nine-year secular Bull Market reached its peak in September of 2018, the S&P 500 is likely to decline by at least 60% from peak to trough.   This projection is based on what happened after prior mature secular bull markets reached their peaks in the past. The chart below which depicts the inflation adjusted coordinates for the 1982 secular bull which peaked in 2000 is a good example.  The S&P 500 declined by more than 60% and the index did not eclipse its 2000 peak until February 2015.

To maximize upside in this highly volatile market I recommend a subscription to the Bull & Bear Tracker.  Its Green and Red signals are utilized 24/7/365 to trade two triple leveraged S&P 500, ETFs including the SPXL (Direxion Daily S&P 500 Bull 3X ETF) and the SPXS (Direxion Daily S&P 500 Bear 3X ETF).   

The statistics table below depicts that the for the 11 months the Bull & Bear Tracker’s published and back tested signals generated a return of 88%.  With the 44% that the signals have produced during the first three weeks of December the year to date return increased to 132% which is equivalent to 11% per month.  For more about how the Bull & Bear Tracker operates and how its Red signal produces profits in a down market and Green signal in an up market read my article entitled “Bull & Bear Tracker Gorging on Market Volatility”.  

Subscriptions to the Bull & Bear Tracker are currently available for free.  An automated alert and trade execution system is currently under development.  Upon the development being completed subscribers will be able to have their trades automatically and seamlessly executed by an online broker.  To subscribe for a 90-day free trial click here.   

Now that the market has gone from a secular bull to a secular bear, I highly recommend spending time at www.BullsNBears.com.   The videos on the home page are must views.   The site is loaded with educational information about crashes, recessions and depressions.   The dozen research categories below are covered:

• Crashes
• Crypto Infrastructure
• Secular Bull & Bear Markets
• Tesla
• Markets & Economy
• Tariffs
• Negative Cash Flow Research
• FANGAM stocks
• Digital Economy
• Startups & Microcaps
• Non-Public Markets
• Digital Tax Impact

Thursday December 6th may have been the final day in the life of the secular bull market.  Based on the S&P 500’s price and volume on the December 6th close and the December 7th open as depicted in the chart below it appears that the bull market which began in March 2009 has run out of gas.  For the week ended December 7th the Bull & Bear Tracker’s signals produced a return of 20.5%.  This compared to the S&P 500’s decline of 4.6% for the trade shortened week due to the market being closed on December 5th for President George Bush’s funeral.   See Bull & Bear Tracker’s signal performance statistics table below.     

From its 12/4/18 close of 2700.06, the S&P 500 declined by 2.9% to it low of 2621.53 on 12/6/18.  The index then embarked on a steady climb that resulted in its closing at 2695.95, on 12/6/18 which was 4.1 points below its open.  The inability for the S&P 500 to go the additional 4.1 points to close up for the day is a good indicator of the bull being exhausted.  The second sign was that the bullish volume at the end of the day on December 6th did not follow through after the S&P 500’s weak opening on December 7th.   Its clear from the price and volume action in the chart below that the secular bull market is either struggling or has perished.

From its 12/4/18 close of 2700.06, the S&P 500 declined by 2.9% to it low of 2621.53 on 12/6/18.  The index then embarked on a steady climb that resulted in its closing at 2695.95, on 12/6/18 which was 4.1 points below its open.  The inability for the S&P 500 to go the additional 4.1 points to close up for the day is a good indicator of the bull being exhausted.  The second sign was that the bullish volume at the end of the day on December 6th did not follow through after the S&P 500’s weak opening on December 7th.   Its clear from the price and volume action in the chart below that the secular bull market is either struggling or has perished.

According to the most recent August 2018, University of Michigan Survey, Consumer Sentiment declined to 95.3.  The decline was the fourth consecutive monthly decline.  In April of 2018, the index had reached and had peaked at 100.0 for the first time since January of 2001.

Due to our discovery about consumer sentiment being a leading economic and market indicator BullsNBears.com will continue to monitor this economic metric very closely.  It’s especially since the recent high could prove to be the peak for the current nine-year economic expansion that began in 2009 based on the indicator’s steady decline.

The survey which has been published since 1960 is a great barometer that can be utilized to predict recessions, economic recoveries and also secular bull and bear markets.   As depicted by the chart below the results from the Michigan survey has predicted all recessions and economic recoveries since it was originally published.

The signal for the Bull & Bear Tracker is now GREEN.   The signal had been RED since July 20, 2018. See Equities article ​“Signal for Bull & Bear Tracker has gone RED”.  The signal switched from RED to GREEN due to the volatility between the US Dollar and Japanese Yen exchange rate decreasing.           

For the period that the signal had been RED the S&P 500 went from 2803.00 when it went became effective on July 20, 2018 at 2:00PM to 2815.15 at the market’s open on August 1, 2018.  During the eleven days the RED signal was in effect the S&P 500 increased by 0.42% .

The SPXS, the vehicle recommended to trade the RED signal went from $24.07 to $23.26, representing a 3.3% decline during the eleven days that the signal was in effect.  Now that the signal is GREEN, the recommended vehicle to trade the signal is the SPXL Direxion Daily S&P 500 Bear 3X ETF (SPXL), a triple leveraged long ETF derivative for the S&P 500.

To learn about Dollar Yen exchange rate volatility being a leading indicator of the direction of S&P 500 watch the 2-minute video below entitled “Dollar/Yen Leading indicator for S&P 500 Direction”.  There are charts and graphs on this page at ProfitFromTheCrash.com which provide additional information on the intimate relationship between the Dollar/Yen and the S&P 500.

For alerts and updates about the Bull & Bear Tracker’s signals and to insure access to all of my articles, reports and alerts go to www.profitfromthecrash.com.   My February 6, 2018 article “BULL DEAD, BEAR DOB 01/31/18: Expect Stock Market Decline of at Least 50%”) about the new bear market being born on January 31, 2018 is highly recommended.  

For those investors who do not want to take minimal risk and yet have the potential for their portfolios to grow I am recommending the deployment of a 90/10 Crash Protection Strategy.  For information on the strategy which is the only fail-safe strategy that one can utilize to protect their liquid assets from crashes, recessions and depressions view video below entitled “Profit From the Crash”.  

Facebook shares plummeted by 23% in after-hours trading when the company reported its quarterly earnings and held its conference call after the market closed. The company’s revenue and active users came in below analyst estimates. The big miss is the catalyst that will start a tech stock Armageddon. It virtually assures that all of the major US stock indices will reach new 2018 lows by year end.

To put the decline in perspective, the $145 billion decline in Facebook’s market cap from the market’s close is equivalent to the combined total market caps of IBM, McDonald’s and Nike. The share prices of the other three FANG stocks including Amazon, Netflix and Google also declined by 1.3% to 2.1% in after-hours trading. At the close of the markets and before Facebook’s infamous conference call and earnings report, its share price had closed at an all-time high. The share prices of all three of the other FANG companies had closed up earlier on the day.

Investors and analysts were completely surprised by Facebook not meeting estimates for its just ended quarter. Facebook also guided its estimates down for its next quarters. Gene Munster, a technology analyst who attended Facebook’s conference call and who was interviewed by CNBC stated:

• Analysts and investors were to blame and not Facebook for the massive sell-off of Facebook shares after hours. He reminded CNBC’s viewers that Facebook had warned of the possible softness during each of its last three quarterly conference calls.
• Facebook’s revenue growth could slow to 13% to 15% annually within 12 months. He and the CNBC anchor broached on the subject that Facebook at 2.1 billion users may have reached its saturation point.
• Facebook’s guide down for its projected sales and earnings was unprecedented.

CNBC’s audio clip of Mark Zuckerberg extolling the virtues of Instagram in the conference call, which has grown to $8 billion in annual revenue was telling. The tone of Zuckerberg’s voice and his emotion about Instagram, a business which represents a fraction of the parent company’s total revenue, confirmed to me that he sees the handwriting for Facebook on the wall.

With two of the FANG (Facebook-Amazon-Netflix-Google) stocks, Facebook and Netflix, missing their user growth estimates for the June 30 quarter the bloom is now off the rose for the FANG stocks. The FANG stocks, which have accounted for most of the market’s gain over the last year will no longer be the default investment vehicle.

The psychology has changed regardless of how well Amazon’s earnings come in. Google beat its quarterly estimates significantly earlier this week. Netflix’s share price spiked down after it reported its most recent earnings.

Facebook’s share price were steadily making new highs over the past couple of months after its earlier in the year election campaign interference issue, which required that it change its business model spoke volumes. What were investors thinking by bidding shares up before Facebook’s new business and revenue model had been proven? Investors then bidding Facebook shares to a new all-time closing high on the eve of the earnings announcement after they had been warned three times that there might be difficulties is INSANE.

There are 2,848 institutional investors who hold 74% of Facebook’s shares. They and the vast majority of the analysts who have “buy” or “strong buy” recommendations on its shares should be admonished.

Based on this fiasco, I am predicting the following for the markets.

• FANG has been de-fanged and will no longer be a place for passive institutional investors to hang out.
• Facebook shares will not eclipse the all-time high they made today for many years if ever.
• The S&P 500 will fail to exceed the new all-time highs that it made earlier this year and for the secular bull market which began in 2009.
• The recent all-time high that the NASDAQ made earlier this month will prove to be its all-time high for bull that began in 2009.
• The index for the FANG stocks (NYFANG) that was created in September 2017 will become infamous for the craziness that occurred at the top of 2009-2018 Secular Bull market. The period will vie with the roaring 20s.
• All US stock indices will reach new lows for 2018 by the end of 2018.

With the volatility due to pick up now that the S&P 500 and Dow 30 indices are close to their all-time highs my February 6, 2018 article “BULL DEAD, BEAR DOB 01/31/18: Expect Stock Market Decline of at Least 50%”) about the new bear market being born on January 31, 2018 is highly recommended.

For those investors who do not want to take even minimal risk and yet have the potential for their portfolios to grow I am recommending the deployment of a 90/10 Crash Protection Strategy. For information on the strategy which is the only fail-safe strategy that one can utilize to protect their liquid assets from crashes, recessions and depressions view video below entitled “Profit From the Crash”.

The signal for the Bull & Bear Tracker has gone to RED. The signal had been GREEN since June 1, 2018. See my article ​“Two signal changes for Bull & Bear Tracker since May 23rd”.  The signal switched from GREEN to RED due to the volatility of the US Dollar Japanese Yen exchange rate increasing over the last 48 hours.    

For the period that the signal had been GREEN the S&P 500 went from 2,718.70 to 2803.00 today July 20, 2018 at 2:00 PM US Eastern time.  During the period that the signal was green the S&P 500 increased by 3.1%.

The trading vehicle that I recommended to trade the GREEN signal which is the SPXL performed significantly better than the S&P 500 and increased by 7.5%.  The SPXL which is a triple leveraged long ETF derivative for the S&P 500 went from $45.26, as of the close of June 1st to $48.66, on July 20, 2018.  Now that the signal is RED, the recommended vehicle to trade the signal is the SPXS, a triple leveraged short ETF derivative for the S&P 500.   The SPXS is presently trading for $24.12 per share.

To learn about Dollar Yen exchange rate volatility being a leading indicator of the direction of S&P 500 and why the potential for a market crash is heightened while a RED signal is in effect watch the 2-minute video below entitled “Dollar/Yen Leading indicator for S&P 500 Direction”.   Also, my article “NIRP Crash Indicator Renamed “Bull & Bear Tracker”; Signal Now GREEN” is highly recommended.  Finally, there are charts and graphs at BullsNBears.net which provide additional information about the intimate relationship between the Dollar/Yen and the S&P 500.

For those investors who do not want to take minimal risk and not be exposed to a potential crash and yet have the potential for their portfolios to be safe and to also grow I am recommending the deployment of a 90/10 Crash Protection Strategy.  For information on the strategy which is the only fail-safe strategy that one can utilize to protect their liquid assets from crashes, recessions and depressions view video below entitled “Profit From the Crash”.

For alerts and updates about the Bull & Bear Tracker’s signals and to ensure access to all of my articles, reports and alerts go to www.bullsNbears.net.  My February 6, 2018 article “BULL DEAD, BEAR DOB 01/31/18: Expect Stock Market Decline of at Least 50%”) about the new bear market being born on January 31, 2018 is highly recommended.  

Research subjects covered by BullsNBears include Crashes, Crypto Infrastructure, Secular Bull & Bear Markets, Tesla, Markets & Economy, Tariffs, Perfect Shorts Research, $Yen Indicator, Digital Economy, Startups & Microcaps, Non-Public Markets and Digital Tax Impact.

The University of Michigan Consumer sentiment survey which has been published since 1960 is a great barometer that can be utilized to predict recessions, economic recoveries and also secular bull and bear markets.   As depicted by the chart below the results from the Michigan survey has predicted all recessions and economic recoveries since it was originally published.

In April of 2018, Consumer Sentiment reached 100.0 for the first time since January of 2001.  In July 2018, the reading was 97.8, the third consecutive monthly decline.

Due to our discovery about consumer sentiment being a leading economic and market indicator BullsNBears.com will continue to monitor this economic metric very closely.  Its especially since the recent high could prove to be the peak for the current nine-year economic expansion that began in 2009.

On Tuesday of this week General Electric, the oldest of the 30 members of the Dow Jones Industrial (DJIA) average was replaced by global drugstore chain Walgreens Boots Alliance.  General Electric was one of the original dozen companies which comprised the Dow Jones Industrial Average (DJIA) in 1896. For complete history of DJIA go to http://www.dow-jones-djia.com/history-of-dow-jones-industrial-average-index/.  

In hindsight the timing for Walgreens Boots to replace General Electric in the DJIA, the most famous stock index in the world was horrible.  GE shares increased by 7.8% on Tuesday after they announced that they would spin off most of their businesses.

On Thursday June 28, Walgreens Boots got out of the wrong side of the bed.   The company in its quarterly report before the market open announced that its same store sales had declined versus the year earlier same quarter.  It got even worse after Amazon later in the morning announced that it had acquired PillPack a mail order pharmacy with licenses to dispense drugs in all 50 US states.  PillPack was a perfect fit for Amazon. It sells and delivers packets of prescriptions drugs to its customers in their homes. It has software that verifies when a refill is due and determines co-pays and confirms insurers.  The acquisition is going to enable Amazon to wreak havoc on the drugstore industry. Walgreens Boots shares declined by 9.4% for the day.

My guess is that the stewards of the DJIA probably would not have picked Walgreens had they known about Amazon’s intentions.  Its shares will surely be a Dow laggard and will underperform versus all the rest of the 29 members of the DJIA. Amazon will decimate its customer base by providing more convenience and lower prices.   The DJIA has a history of replacing its members who have deteriorating fundamentals with companies that have strong fundamentals. It stewards thought that they were doing that when they replaced General Electric.      

My prediction is that Boots Walgreen will not last long as a member of the DJIA.  More importantly, now that Walgreens Boots is a member of the DJIA will make it all the more difficult for the venerable index to eclipse the all-time high that it made in January 2018.  The inability for the Dow to make the new high will be bull fodder for the baby secular bear that was born in January 2018.

Today the Trump administration enacted steel and aluminum tariffs against a majority of the countries in the world including Mexico, Canada, Japan, China and the European Union.  The 10% tariff on aluminum and 25% tariff on steel becomes effective at midnight on June 1, 2018. The global trade war has begun.

There had been much debate by the pundits and analysts about President Trump not being serious about enacting tariffs and instead threatening to invoke them as a negotiating tactic.  The market now will have to fully discount President Trump’s decision.

Shortly after the announcement the European Union retaliated by announcing that they were increasing the duties for $3.1 billion of goods that are exported into Europe by Harley Davidson, Levi Strauss and US distillers of bourbon whiskey.  Canada imposed $16.6 billion of dollar for dollar 10% and 25% tariffs for US goods which are being exported to Canada by US companies.

With the trade war now commencing at full speed ahead the fate for the 2009-2018 secular bull market has been sealed.   The funeral for the nine-year old bull will soon be held. My February 6, 2018 article “BULL DEAD, BEAR DOB 01/31/18: Expect Stock Market Decline of at Least 50%”) about the new bear market being born on January 31, 2018 is highly recommended.

Tariffs did not work very well for President Bush’s steel tariffs.  The market declined by 28.7% by the first anniversary that the steel tariffs had been in effect.

The charts below depict that tariffs negatively impact the market because they contract PE multiples.  The tariffs work in reverse of expanding free trade and PE multiples when communism fell in 1990.

My 3:55 minute video interview about the negative impact that the tariffs will have on the markets is recommended.

The video below entitled “How a Tariff enacted in 1930 caused the crash of 1929” is a must view.  There is additional information about tariffs and how they negatively impact economies and markets.

For those investors who do not want to take minimal risk and yet have the potential for their portfolios to grow I am recommending the deployment of a 90/10 Crash Protection Strategy.  For information on the strategy which is the only fail-safe strategy that one can utilize to protect their liquid assets from crashes, recessions and depressions view video below entitled “Profit From the Crash”.

Disclaimer.  Mr. Markowski’s predictions are frequently ahead of the curve. The September 2007 predictions that appeared in his EquitiesMagazine.com column stated that share-price collapses of the five major brokers, including Lehman and Bear Stearns, were imminent. While accurate, they proved to be premature. For this reason he had to advise readers to get out a second time in his January 2008 column entitled “Brokerages and the Sub-Prime Crash”.  His third and final warning to get out, and stay out, occurred in October of 2008 after Lehman had filed for bankruptcy.  In that article “The Carnage for Financials Isn’t Over” he reiterated that share prices for Goldman and Morgan Stanley were too high.  By the end of November 2008, the share prices of both had fallen by an additional 60% and 70%, respectively — new all-time lows.

The 10-year US Treasury note closed at 3.08%, its highest level since 2011 was the catalyst for today’s stock market sell-off.  The strong close above 3.0%, the resistance level that the notes had been flirting with since April, is a clear signal that interest rates are on their way to 4% or higher.  The decline for the Dow Jones Composite index was the first after increasing for the last eight consecutive trading days. During the streak the Dow increased by 4%.

The one-year chart below for US 10 Year US Treasury note depicts that its yield has risen sharply from just above 2% in September of 2017.  

The markets are very especially sensitive to the 10 Year US Treasury note.  It’s because its yield is the bench mark that is used to set mortgage rates.  Therefore, mortgage rates are also on their way up. Its why the XHB, which is the symbol for the Homebuilder ETF fell by more than 2% today.  The chart below depicts that the ETF has been in a steady decline since February 2018. It was when the Federal Reserve announced that the discount rate would be raised four times throughout 2018.

With the yield on the 10-year note and mortgage rates increasing the peak for home prices for the current economic cycle is in.  It’s just one more reason why investors should prepare for a secular bear market that I believe could last 15 to 20 years and into the decade beginning 2030.  The video below which is about how you can protect your liquid assets from and also profit from the secular bear market is highly recommended.

A viewing of the video about all of the secular bulls and bears over the last 200 years is also highly recommended.