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

Based on the Bull & Bear Tracker’s back tested results the algorithm has been gorging on market volatility.   During the months of January, February, March and October of 2018, which featured some of the worst days for the stock market since the election of President Trump, the Bull & Bear Tracker’s signals generated a return of 76.1%.  Due to the damage that October’s carnage inflicted on the stock market’s technicals, I predict that the market’s 2018 lows will be tested by year end.  Retests of the lows could enable the Bull & Bear Tracker’s signals to potentially generate additional gains of 30% or more.

Throughout 2018, the Bull & Bear Tracker’s signals have generated an average return of approximately 10% per month.  The signals have had the highest productivity during 2018’s most volatile periods. For the October 4th to November 9th period, it generated a return of 14.9%.  The January 1st through April 9th period generated a return of 62.2%.  Year to date the Bull & Bear Tracker’s back tested and published signals have generated a return of 105.1% versus 4.5% for the S&P 500.  

Since the beginning of the stock market; scholars, researchers and analysts have been attempting to no avail to find the “Holy Grail” of marketing timing.  Investors have always sought to be out of the market during periods of substantial declines. The financial services industry has gone to great lengths to educate their clients to embrace a buy-and-hold philosophy thus remaining in market during recessions and other periods of high risk.  A statistic often used by financial advisors to pacify edgy clients is that being out of the market for its best days over a long period substantially reduces gains. An example that has been widely used is that $100 invested in 1970 grew to $1,910 by 2016 under a buy and hold strategy. The amount fell to $310 assuming the $100 was not in the market for the best 25 days of the 46-year period.  The statistic rarely cited in the chart below is $100 grew to $12,045 had it missed the 25 worst days during the 46 years.

Unfortunately, the best days for the bull market which began in 2009 are in the rear-view mirror.  Since the S&P 500 may have already peaked after a nine-year uptrend, the market’s worst days are now on the horizon.  The Bull & Bear Tracker is the solution for “the worst days of the market” dilemma which all investors will soon face.  The Bull & Bear Tracker’s signals enable investors to trade inverse Exchange Traded Funds (ETF) to profit from the market’s worst days.  It’s hard to fathom the returns that the Bull & Bear Tracker could have generated had it been operational during the worst days of the 1970 to 2016 period.  

The Bull & Bear Tracker’s algorithm monitors the global markets 24 hours per day to predict the direction the S&P 500, the world’s largest stock market index, is heading.  When the market is headed higher, the signal is green.  When the market is headed lower the signal is red. The Bull & Bear Tracker is always in the market with either a green or red signal.   

Exchange traded funds (ETFs), which mimic the performance of the S&P 500, are utilized to trade the Bull & Bear Tracker’s green and red signals.  The ETF which can be used by an investor when the signal is green and the market is heading higher is the S&P 500 SPDR (Symbol: SPY).  For example, if the S&P 500’s index consisting of 500 companies increases by 10%, the SPY would also increase by 10%.  The ETF which is used by traders and investors who are betting that the S&P 500 will decline is the Direxion Daily S&P 500 Bear 1X ETF (Symbol: SPDN).  It’s the inverse of the SPY.  Should the S&P 500 decline by 10% the SPDN would increase by 10%.  

Since the Bull & Bear Tracker’s signals proved to be very reliable during 2016, my recommendation for traders and investors when it was re-launched earlier this year was to utilize the two ETFs below to trade its signals.  Both of the ETFs enable an investor to deploy 300% leverage. For example, a 10% change for the S&P 500 would be equivalent to a 30% increase for each of the ETFs.

• Green: Symbol:  SPXL (Direxion Daily S&P 500 Bull 3X ETF)   
• Red: Symbol:  SPXS (Direxion Daily S&P 500 Bear 3X ETF)

The volatility for the S&P 500, which began on October 4, 2018, is not over.  The S&P 500 suffered technical damage which can only be repaired by the index first retesting the October 29th low.  The chart below for some of the S&P 500’s “worst days” earlier this year is a textbook case example for why the index will test its October 2018 low.  It depicts the S&P 500, which was in a steady uptrend and had reached an all-time high in January 2018, then crashed to its February 8th low.  After it rallied, it crashed again to just above the February low on March 23rd.  Finally, the index’s low was retested again on April 2nd.  The S&P 500’s retesting of the low is why it was able climb steadily from April through September to make a new all-time high.  The volatility due to the retests of the February low enabled both the red and green signals to each generate returns of more than 20% from the start of 2018 through April 9th.  

The chart for below for July 31st through October 31st has a similar chart pattern as the above chart.  It depicts the steady uptrend of the S&P 500 to a new all-time high on September 20th.  The crash began on October 3rd and the S&P 500 reached its low on October 29th.  The pattern being almost identical to the above chart is why I am predicting that the signals could potentially generate a combined return of 30% from now through year end.    

The chart for below for July 31st through October 31st has a similar chart pattern as the above chart.  It depicts the steady uptrend of the S&P 500 to a new all-time high on September 20th.  The crash began on October 3rd and the S&P 500 reached its low on October 29th.  The pattern being almost identical to the above chart is why I am predicting that the signals could potentially generate a combined return of 30% from now through year end.    

The Bull & Bear Tracker was originally developed to be a market crash predictor.  From March of 2016, when it became operational through November 2016, its signals were very reliable and predicted the Brexit crash.  Due to volatility being almost non-existent after Donald Trump was elected, the crash predictor was mothballed. After the signals were modified, the indicator was relaunched on April 9, 2018.  The back test was conducted to cover gap from the beginning of 2018 to April 9th.  See my article , “NIRP Crash Indicator renamed ‘Bull & Bear Tracker’; new signal issued”.        

Subscriptions to the Bull & Bear Tracker will continue to be available free of cost until the development of the automated alert and trade execution system is completed.  The new system will enable subscribers to automatically and seamlessly have their trades executed by an online broker. To subscribe click here.  

The Bull & Bear tracker is the third algorithm I developed.  Point is, The Bull & Bear Tracker is not a one-off. It is the third in a series of “hit-the-nail-on-the-head” algorithms that effectively and accurately enable investors to stay in the market and trade confidently such that they can have the courage of their convictions.

My first algorithm, The EPS Syndrome was developed in 2002 and was used to in my September 2007 magazine article to predict the demise of Lehman, Bear Stearns and Merrill Lynch, etc.  See “Have Wall Street’s Brokers Been Pigging Out?”, September 2007.  For more about the algorithm and its performance click here.  

My second algorithm, Free Cash Yield was developed in 2003 to find the most undervalued companies in the market based on their Free Cash Yields.  The share prices of the two companies that it discovered multiplied by 20 times within four years. One of the two companies, Think or Swim was acquired by Ameritrade for $606 million.  For more information click here to view Free Cash Flow yield video.

Due to the stock market’s trading action for the first half of today, the probability has increased that the stock market could enter next week into a serious correction or even a crash.  There are three reasons. Two of them are covered in my October 3rd article entitled,  “Frenzied Market Blow Off Underway” and my October 4, article, entitled “Market Vulnerable due to Buyback Blackout; Bull & Bear Tracker signal now Red”.  Both of these articles are available at BullsNBears.com.  I suggest you also read my October 4th article, “Nobel Laureate Shiller says Current Market is Eerily similar to late 1920s”.  Furthermore; should the Dow Jones close down by 200 points or more today, it will have had two consecutive days of losses.  Yesterday’s loss of more than 200 points for the Dow Jones was the most significant loss since June. To have two consecutive days of significant of declines will make around-the-world headlines.  This is made even more poignant as October is infamous for crashes.

Given this perfect storm, the market is set up for a 1929 style crash.  To understand why, read my June 27, 2016; article entitled, “Perfect Storm Now Brewing Could Soon Cause 1929-Style Crash”.  This article was written after the Brexit Crash which the NIRP Crash Indicator* predicted.

To protect your portfolio or to profit from a potential crash, I suggest that you wait until 3:30PM to purchase shares of the Direxion Daily S&P 500 Bear 3X ETF (symbol: SPXS).  The reason why I recommend that you wait is because the market could make a comeback.  If the Dow is down by at least 200 points at 3:30PM, the odds of it making a comeback would be low.  

If you purchase these shares, I highly recommend that you become a subscriber to Bull & Bear Tracker to maximize your profit.   When the signal turns GREEN, you can take profits. You can then make a profit from the market going back up by purchasing the SPXL.  The Bull & Bear Tracker is a good indicator for trading volatile markets.

According to my math the S&P 500 will decline by at least 60% from the current bull market’s peak to the new bear market’s trough.  I am also predicting that it will be 2030 before the S&P 500 is able to eclipse the high- water mark for the bull market which began in 2009.  

To understand my math and also the bear market and recession investing strategies that I am recommending from now through 2030, watch my recently taped two-part interview about the “Day of Reckoning Approaching for the market” which will air on the Fox Business Channel during the second half of October.   A private and pre-screening of my interview is exclusively available to alert subscribers. Click here to subscribe to BullsNBears.com free alerts.   

Below are my most recent must-read articles which pertain to the market being at high risk for a significant correction or a crash:

• Significant Correction and Bear Market Predicted by Q1 by Respected Institutional Analyst, October 6, 2018
• Perfect Storm Brewing for Possible Market Crash Next Week, October 5, 2018   
• Market Vulnerable due to Buyback Blackout; Bull & Bea Tracker signal now Red , October 4, 2018
• Nobel Laureate Shiller says Current Market is Eerily similar to late 1920s, October 4, 2018
• Frenzied Market Blow Off Underway, October 3, 2018

The September 22, 2018, article entitled “Next Crash will be Worse than the Great Depression: experts” is a must read.   The article contains predictions from Wall Streeter Peter Schiff who was unsuccessful in his bid to become a US Senator in 2010.  Even though he was more than a year early, Mr. Schiff correctly predicted the 2008 housing crash.  On December 31, 2006, in a telecast debate on Fox News, Schiff forecast that “what’s going to happen in 2007 is that real estate prices,” which had peaked in December 2005,[20] “are going to come crashing back down to Earth.”  Below are some of the 2008-2018 economic statistics comparisons from the article which can be read in a couple of minutes:

• US household debt of $13.3 trillion now exceeds the 2008 peak.
• Mortgage debt of $9 trillion-plus is near its 2008 level.
• Student loans outstanding have more than doubled from $611 billion to $1.5 trillion.
• $1.25 trillion of auto loans have exceeded the 2008 total.
• Credit card balances are back to the same level as just before the Great Recession.Global debt has gone from $177 trillion to $247 trillion.
• Global debt is now more than 2.5 times the size of the global economy.    

BullsNBears was created since it shares the same vision for the future as Mr. Schiff.  I highly recommend that you watch the “Profit from the Crash” video below. It covers the 90/10 Crash Protection Strategy, which is the only fail-safe solution that one can use to protect their assets from crashes, recessions and depressions.  More information about crashes and the 90/10 Crash Protection strategy are available at BullsNBears.com.

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”.

A high reading for the “Main Street Meter”, a stock market gauge that was developed by institutional investor James Paulsen of the Leuthold Group is indicating that the stock market will go much lower.  Readings for the meter are calculated by dividing the consumer confidence reading by the unemployment rate.  A high reading indicates that consumers and investors are optimistic. This is certainly the case now due to unemployment being at 3.9% which is the lowest level since 2000.  Also, consumer sentiment is now at its highest levels since the 2008/2009 Crash and Great Recession.

The meter is a good measure for the markets.  A high reading comprised of low unemployment and a high level of consumer confidence indicates that that everyone has a job and a positive outlook.  A low reading indicates that a lot of people are out of work and a pessimistic outlook prevails. When the reading is high reading investors are less fearful and greedy.  When the reading is low investors are more fearful and less willing to take risk. Both of the readings coincide with market highs and lows respectively. The meter is a great contrary indicator to predict market peaks and troughs.  The chart below compares the S&P 500 with the meters actual and projected readings from 1962 through 2023.

The NIRP Crash Indicator which was in service during 2016 has been pulled out of retirement.  The signal is now GREEN which indicates that the S&P 500 at least for the short term will go higher.  In my February article, I predicted that the highs for the 2009 Bull that were made in January of 2018 would not be eclipsed until the next secular Bull market.

The NIRP Crash Indicator has undergone a makeover and a name change to “Bull & Bear Tracker”.  There is no longer a yellow signal.  The old YELLOW was switched to the color GREEN and the old green which had never been used has been eliminated.

The proprietary indicator is being rushed back into service due to market volatility increasing substantially in 2018 as compared to 2017.  The chart below depicts that for the first year of Mr. Trump’s Presidency the market had the lowest volatility for any year over the past 68 years.

The NIRP Crash Indicator’s was developed by myself in 2016 to monitor for potential crashes.  The impetus for its development had been my concerns about the Bank of Japan’s (BoJ) instituting of a negative interest rate policy (NIRP) and the spreading of negative interest rates putting the global markets and banking systems on the verge of a crash.  See “Here’s How ​Japan’s NIRP Increases the Probability of Global Market Crash” and “New Indicator to Predict Future Market Crashes”.

The signals were effective throughout 2016.  From March 1, 2016, through December 31, 2016, the ORANGE signals predicted heightened volatility and the RED signal predicted the BREXIT crash.  See equities.com article “NIRP Crash Indicator Signals Very Reliable for 2016”  and chart below.

Due to the ebbing of the negative interest rates immediately after Mr. Trump’s election as President and the unprecedented period of low volatility the NIRP Crash Indicator was disengaged in March of 2017.  See equities.com article “No Longer a Need for NIRP Crash Indicator Signals”.

In my reviewing of the NIRP Crash Indicator’s 2016 signals it dawned on me that the YELLOW or LONG signals could have been utilized by my readers at equities.com and also Seeking Alpha to trade leveraged ETFs such as the SPXL.  I had never before given that consideration since I had been intently focused to develop the indicator to monitor for crashes.  It had never occurred to me to see how an investor who utilized its yellow non-crash signal to purchase a triple leveraged S&P 500 ETF such as the SPXL would have performed.

Upon conducting further research, I calculated that an investor could have made a return of 36.79% from utilizing the indicator’s ORANGE, RED and YELLOW signals to trade the SPXL and also the SPXS, a triple leveraged S&P 500 short ETF.  For each day during the 10-month March 1 through December 31, 2016 period that the NIRP Crash Indicator was monitoring the market one of the NIRP’s three signals had been in effect.  The hypothetical returns based on trading the SPXL and SPXS compared to a gain of 13.4% for the S&P 500 and a net return of 4.2% for those investors who bought and held the two S&P 500 related ETFS during the 10-month period.  See table below.

For more information about the Bull & Bear Tracker go to www.bullbeartracker.com.  To insure access to all of my articles, reports and alerts covering the new bear market which was born on January 31, 2018 (see my February 6, article “BULL DEAD, BEAR DOB 01/31/18: Expect Stock Market Decline of at Least 50%”) go to www.profitfromthecrash.com.

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 “Crash! & 90/10 Crash Protection Strategy”.

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 chart below which depicts the stock market’s bubbles since 2007 is based on the price history of the S&P 500 versus long-term US government bonds for the period of 2003 through February 2018. The large bubble, which had been in place prior to the election of Donald Trump as U.S. President has expanded significantly.

I have been monitoring this bubble since 2016. It was originally discovered from my crash research that I have been conducting since the Bank of Japan (BOJ) instituted a Negative Interest Rate Policy (NIRP) in February 2016. My research enabled me to find the bubble and other historical anomalies or distortions in the capital markets that have been present for the last several years. Watch the video below to view the charts and graphs for the anomalies and distortions which have put the markets on the precipice of a crash.

To insure access to all of my articles, reports and alerts covering the new bear market which was born on January 31, 2018 (see my article “BULL DEAD, BEAR DOB 01/31/18: Expect Stock Market Decline of at Least 50%”) sign up for the free newsletter at http://www.dynastywealth.com/news-nviro-1.php. Additionally, all of my updates including my play by play on the 2018 crash upon its commencing will be sent to the newsletter’s subscribers. See also, my February 28, 2018, “Another Nail Pounded into 2009 Bull’s Coffin” equities.com article.

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 “Crash! & 90/10 Crash Protection Strategy”.

My crash research that I began to conduct in 2016, resulted in my developing an algorithm that I utilized to issue market crash warnings during 2016 when negative interest rates posed great risks to the global economy. See equities.com article “NIRP Crash Indicator Signals Very Reliable for 2016”.Due to the ebbing of negative rates in 2017, after Mr. Trump’s election as President and the unprecedented low stock market and especially currency volatility, the NIRP Crash Indicator was disengaged in March of 2017. See equities.com article “No Longer a Need for NIRP Crash Indicator Signals”. Upon currencies volatility picking up the NIRP Crash Indicator will be re-engaged.Its warnings will be available to Trophy Investing’s members.

Disclaimer: Mr. Markowski’s predictions are frequently ahead of the curve. The September 2007 predictionsthat 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 2009 Bull that had a nine-year run died and the 2018 BEAR market was born on January 31, 2018. The market’s taking less than two weeks to decline by 8% from its all-time high that it made on January 26, 2018 and be at a loss of 1% for 2018 is a game changer. The volatility has severely damaged investor psychology. The abnormal period of historically low market volatility has ended. The market having a severe correction within days after reaching an all-time high has added a new level of stress for investors who had become complacent during an extended period of historically low volatility. This sudden shock insures that the market’s highs for the decade ending 2020 were made on January 26, 2018. The inability of the market to reach new highs will cause investors to become increasingly frustrated. Investors going from a buy-and-hold to a locking-in-gains investment philosophy will provide all of the nutrition that an infant bear needs to become very vicious and powerful. The VIX chart below depicts the spike in market volatility as compared to the volatility of the markets since 2013.

Based on the decline’s velocity its either a prelude to an all-out crash soon happening or the beginning of a prolonged bear market. For either case, my prediction is that the market will decline by at least 50% from peak to trough before the new bull is born. I am recommending the deployment of a 90/10 Crash Protection Strategy. For information on the 90/10 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 “Crash! & 90/10 Crash Protection Strategy”.

Based on my 41 years of experience and the extensive research that I have conducted on bull and bear markets my prediction is that the recent 2018 all-time high will prove to be the market’s high for the decade ending 2020. A new bear market, the first since 2007 is now underway. The 2007 to 2018 time-span of 11 years between bear markets is the third longest since 1929. The 1948 to 1962 period spanned 14 years and the span for 1987 to 2000 was 13 years. The table below provides the peak to trough percentage declines and the duration for all bear markets that have occurred since 1929.

The S&P 500’s dividend yield of 1.7% in January of 2018 ranks as the second lowest yield as compared to all market peaks dating back to 1870. The market for the two prior peaks of the dotcom bubble bursting and the Lehman bankruptcy declined by approximately 50% from peak to trough. My prediction is that the decline from the 2018 peak will at the least mimic the peak to trough declines of the Dotcom bubble and pre-Lehman crash market peaks.

The catalyst for February 2018’s swift and the steepest of declines for the markets since August 2011 was the release of the January 2018 jobs report on February 2, 2018. The report disclosed that the unemployment rate in the US had reached a 45 year low of 4.1%. However, what disturbed the market is that the wages for a worker had increased by 2.9% for January 2018 as compared to the year earlier January. The Jobs report was in support of a January 31, 2018, Bureau of Labor report which indicated that employee compensation costs for a business in 2017 rose 2.6% as compared to 2016. The data indicates that the US economy is overheating and that the risk of inflation beginning has increased. This in turn has increased the probability that the US Federal Reserve Bank will take a much more aggressive approach to raising interest rates throughout 2018. Prior to the most recent jobs data announcement all indications were that the Federal Reserve would raise rates three times during 2018.

The Federal Reserve is now facing an extremely difficult situation. It has no historical experience in how to navigate from an extremely low interest rate environment due to interest rates having been at historic and unprecedented lows for the last ten years. Since rates are still relatively low and inflation is lurking in the background the Federal Reserve does not have the option to lower rates to stop a stock market decline. An increase from historically low rates to even historically moderate interest rates could easily cause a recession. The extremely low interest rates for an extended period of time has:

• Created significant capital markets anomalies.
• Caused excesses in US economy including real estate valuations going to all-time highs and the returns or yields on real estate going to all-time lows.
• Resulted in the dividend yield for stocks being lower than government guaranteed bonds for the first time ever.
• Expanded the price earnings multiples for the stock market.
• Altered the inverse relationship that stocks and bonds have had since the formation of markets.

Many of the above causes and effects which had been highlighted in Trophy Investing’s October 2016 video entitled “Five Bubbles Putting Market on Verge of Crash” intensified throughout 2017 and early 2018. The video is currently viewable at www.trophyinvesting.com and is in the process of being updated.

During 2016, I conducted a significant amount of research on the prior market crashes. It resulted in my developing an algorithm that I utilized to issue market crash warnings during 2016 when negative interest rates posed great risks to the global economy. See equities.com article “NIRP Crash Indicator Signals Very Reliable for 2016”. I also produced numerous articles and videos about the impact that interest rate volatility could have on the stock market and global economy. These videos and articles are in the process of being made available to Trophy Investing’s members. Trophy Investing will also be updating some of the videos and will be producing additional crash related content including reports and videos. For access to this content register for a FREE membership at www.trophyinvesting.com.

Disclaimer. Mr. Markowski’s predictions are frequently ahead of the curve. The September 2007 predictionsthat 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 November2008 the share prices of both had fallen by an additional 60% and 70%, respectively — new all-time lows.