The Other Side of the Camera at a Federal Reserve Press Conference - Mike Swanson (08/31/2016)
I have two new posts on WallStreetWindow that will probably interest you.
The first one is an interview I did with Jordan-Roy Byrne on the drop in gold stocks that has happened this month.
The gold price chart and gold stocks had been in a huge stairway to heaven straight up rally since February without ever dropping and finally they have come down to the tune of a 15% drop this month.
You can listen to the interview I did with Jordan here:
Secondly on Monday I did a video explaining how the Bollinger Bands indicator works:
They are important because stock market history was made yesterday as the 20-day Bollinger Bands width indicator made a new low for the S&P 500.
They have never generated a reading this low in all of my years of trading. Take a look at the chart.
The stock market has traded like a dead money penny stock this month with no volume and no volatility.
Everyone knows it is trading in a very narrow range and it is obvious that if it closes below this range it will start to dump again.
The next support level is in the 2050 area of the S&P 500 so if it closes below current support in the 2150-2164 area I expect that will happen.
Internals have been weakening all month and I expect this to happen even if almost all of the commentators you see are predicting the opposite.
CNBC talking heads in particular are very bullish as they always are.
Here is the thing though you know and everyone knows that the way to make money in the financial markets is to buy on dips and drops and not to buy at tops.
That is common sense.
But to buy on a dip you need to have money on hand to do so.
That means that you need to have cash on hand to buy in the future.
That means that you need cash reserves.
And that is why people need to do some selling if they are fully invested now in my opinion.
CASH RESERVES are going to be king.
The problem is most people love to buy when things go up a long time and then get themselves fully invested and CNBC encourages them to do that.
Then when the market falls they become sellers on declines.
So they sell on dips and buy on tops when they need to do the opposite.
A simple money management rebalancing system like I talk about in my Bubble Bust book and teach in my private group helps people do selling on rallies and buying on dips.
The biggest problem most American investors have is that they do not trust their own instincts and instead just sit and listen to supposed experts to tell them what to do.
A few hundred thousand people watch CNBC every day, but CNBC will never tell them to take money off the table right now.
This picture shows why.
This is what a Janet Yellen press conference looks like on the other side of the camera.
At a Janet Yellen press conference the only people permitted to ask questions are people who never ask real questions.
Steve Liesman is the guy in the arrow and he is one of these anointed people.
Steve Liesman is CNBC's head "economics" reporter.
He missed warning people of the housing bubble and banking crisis of 2008 so he missed the story of his lifetime.
He just can't look into things and ask tough questions and still be able to do his reporting job.
CNBC watchers are never told to sell or to diversify into gold.
All they are told is to believe that the stock market will go up forever.
And so they can never have cash reserves during drops and crashes.
CASH RESERVES ARE GOING TO BE KING.
I do not care if the S&P 500 somehow makes a new high here.
At some point you have to take money off the table to make money.
And I think the S&P 500 is going to go down and make people sell later at lower prices who refuse to sell now.
The next big move will come when the S&P 500 closes below or above this range.
If you think it is going to go up (almost everyone does) do not simply ignore it if it breaks down.
Plan ahead for all scenarios, because the winners are those that plan and few plan for anything in the markets.
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