Weekly Briefing 5/16/21 - The Forecast

Weekly Briefing 5/16/21

Weekly Briefing 5/16/21

Most corrections historically are just profit-taking events. From time to time markets will witness a binary crash event like COVID in 2020.  But due to the record amounts of central bank driven liquidity as a result of a fragile global economic picture, markets have not been allowed to correct over the past 14 months. Each time the market has attempted to enter into a -10%+ correction, we have witnessed unprecedented Federal Reserve intervention. With the recovery still on weak footing and global economic fears at record levels from a Federal Reserve standpoint, allowing the stock market to start even a mild 10% correction would be a recipe for disaster.  However, all things must come to an end and our briefings for Gold Members will continue to supply the exact window for the next significant correction.

Investors would have to go back decades to see a similar record of euphoric sentiment that we have witnessed this past year. Periods of overbought, propped up, and liquidity driven markets have almost always been followed by periods of violent correction once the dam finally breaks. There will be headlines attached to such corrections to justify them, but the main reason almost always comes back to the same reason: an inevitable profit-taking event.
We expect a violent 15%-25% correction sometime in the third quarter of 2021. It has potential to start as early as the next 25 trading days.  One last attempt at strength is expected with some indexes participating more than others. The cracks in the dam have started to show as we have seen significant divergences the last 60 days in a number of key indexes. Dating back a year we have forecasted: “a major bull market into late May/June of 2021 and investors may hold equity positions with confidence into this time frame.” This forecast allowed Gold Members of The Forecast to keep their favorite long positions with little to no fear into this AI target. Trimming long positions, applying hedges, and raising cash will all be themes at The Forecast over the near term. We are currently riding some very strong trending commodity trades we expect to continue to flourish into early third quarter and will be entering short positions on major indexes in the near future. Finally, there will be a strong cryptocurrency trade in Bitcoin as a mini-crash occurs and creates a great entry.
Free trial Gold membership’s are available at The Forecast. Remember – even though the broad market may correct in the near future, there is always a bull market occurring in some asset class that we trade and profit from.