Proof the Market Could Drop Another 45%

Fellow Investor, Hold on to your hats… this ride down may not be over. I’m about to show you how history predicts that the market could go down another 45%. Let me explain. (Stay with me, because I'll also show how you can make a ton of money along the way – while others lose their shirts.) Since the bottom of the market in early 2009, we’ve been printing money like it's toilet paper. In fact, in the last two years, we witnessed the largest money-printing event in the history of the world. Get this: a whopping 31% of all dollars ever created were printed in the last two years! In other words, the Financial Crisis and crash was a financial event caused by too much easy money – for too long. Our “cure” to the financial crisis back in 2007-2009 was to do the same thing that caused it, but on steroids, creating this Super Financial Crisis. While the markets rebounded since 2009, the economy was still horrid during the “recovery.” Not until 2016 when some policies changed did real economic growth happen. And then we had the pandemic, and printed even more money. So here’s why we have 45% more downside. From 2007 to 2009, the S&P dropped 57%. Applying that same math, we have another 45% drop to go. So what do my traders and I do with that? Well, during the current downturn, I’ve been recommending both calls and puts on individual stocks. (Even in down markets, there are always stocks that go up.) We're able to make money both ways. We're ready for any market! Here are some of my gains: - 79% on Amazon puts in 6 days - 50% on Exxon calls in 22 days - 57% on Suncor Energy calls in 32 days - 49% on Newmont Corp puts in 7 days - 69% on Patterson-UTI Energy calls in 71 days - 62% on Cadence Design Systems puts in 19 days Keep in mind, these are gains taken just since the beginning of May... barely a month and a half ago – at a time when most investors were throwing their hands in the air watching their portfolios shrink or just sitting on the sidelines. That's why I put the following offer together. It's for new members who try out Technical Traders Alert. I convinced my publisher to (briefly) lower the price. (The list price is $3,995 a year, and you’ll often see us offer the service for as low as $1,495.) But we’re going to do one better – and cut that by another 33%. You’ll pay only $995 for [a full year of trades and commentary]( from me. This offer is only good until Monday, June 20th, so [click here now]( to ensure you get next week’s new trades! Sincerely, Jon Johnson Investment Director, Technical Traders Alert P.S. I’ve been talking about this market downturn for a while, so I thought I'd share some of my commentaries that have guided my trade decisions. 9/18/2021 If the market takes a seasonal plunge, the Fed likely puts it [tightening] off a bit more, meaning then we get a seasonal move upside into 2022 before something uglier happens. Hmmm, kind of a 1999 to 2000 setup. 9/25/21 Will this market ever seriously sell? Yes. It likely comes in the first half of 2022. 10/4/21 Here, we still think the market peaks in late Q1 2022 . . . – the elements are in place for the bull to end: Fed pulling back (and as MS noted Monday, tapering IS tightening), Fed pulling back too late allowing bubbles to form (financial assets, housing), oil exploding higher, supply shortages in everything (including labor) – and I am sure there are more but you get the picture. There is plenty out there to indicate markets and economics are way overcooked. It is just a matter of letting things run their course and then the chips fall . . . so to speak. 10/13/21 Yields falling, yield curve flattening. With the supply, housing market peak, and other issues upcoming, I have already made a call for a 2022 market drop, and that usually presages a recession when falling from these kind of lofty levels. The setup is just about as pat as the Q3/Q4 seasonal moves. Thus, we likely see the Fed finally starting to tighten, doing so into a slowing economy, turning a slowdown into a meltdown. Been there, done that. Many times. 10/16/21 How the Fed is always fighting the last war even as the new war rages. Its lagging foresight and strategy leads to mistakes that set the outcomes for the year in advance. The Fed has waited much, much too long to act on rates. Indeed, it has waited so long it has blown several bubbles, including housing and financial markets. Housing is starting to crack. Oil has doubled in a matter of months. Bond yields are heading lower again even as the economy is said to be booming. Markets will crack when the Fed engages in its taper/hiking. As is the usual case, the economy, due to forced layoffs due to vaccine mandates, due to massive supply chain clogging, will be unable to find workers and materials to manufacture, ship, and sell goods and services. The economy will start to roll over toward a Fed-tightening recession. 2022. The script plays out again. 10/28/2021 Perhaps this is the start of a final topping phase in this long, Fed-driven run. I had projected the peak in late Q1 or Q2 2022, and the earnings action could be a part of that process. Q3 GDP at 2.0% missed expectations and tumbled from Q2’s 6.7%. Consumption shriveled (1.6% vs 12%) while prices remained strong at 5.7% inflation. Bonds - The yield curve is flattening out, even inverting at the longer end (though it is the short and long end inversions that are key). Fed - You also have the Fed ready to tighten right into a slowdown as is usual, ready to turn a slowdown into a recession preceded by a market top. Those are powerful forces that can end the party, despite how strong the party is raging at the moment. For now, however, the party is certainly raging as the seasonal move continues full force, hardly skipping a beat with a 2-day pause. 10/30/2021 Many things are on the horizon and we expect that to start coalescing though we are looking more toward late Q1 2022. It could come earlier if there is a further deterioration in data, inflation continues, and the Fed has to accelerate its schedule. 11/29/21 Holiday Conversations Reveal Bullishness. I am always intrigued by holiday talk of markets. In 1999 I knew the market was making a run to some kind of talk when at several parties that holiday season many who were never involved in the market were saying they needed to get in – everyone was doing it. This past Thanksgiving weekend we had many over and visited others. People were coming up to me telling me how they had just bought Nvidia (NVDA) and this and that – all big name brand tech stocks. These people had never really been involved in individual stocks, but they were doing so now. To me, that suggests that once again a top is in the making. Housing has already put in the same kind of peak as in 2005. So many buyers are now ‘investors.’ Zillow just jeopardized the company by not following its algos and instead buying when the conditions were not right. Now we have the last non-investors getting very active, buying and selling individual stocks. Time-tested signs of a top in several markets 11/30/21 The ghost of Michigan Sentiment. Recall the sharp drop in Michigan sentiment 3 months back. At the time I noted that such drops occur rarely, and when they do they herald slowing economics. As negatives for the consumer continue to pile up, this could very well be when we start to feel the economic slowing that has brewed the past several months even as the experts called for robust growth. 11/24/21 Michigan Sentiment, Nov final: 67.4 vs 66.8 preliminary vs 71.7 October. Still the lowest since 2011. Some improvement in the expectations (63.5 vs 62.3), current conditions (73.6 vs 73.2 prelim vs 77.7 October), but again, still at 10 year lows. As a reminder, the degree of drop seen the past four months is historically indicative of economic slowing. As you know, we are looking for serious economic slowing the first half of 2022, even as early as the end of Q1. 12/1/2021 2022 market crash pulled forward? With the Fed ramping up its tightening – and again, taper equals tighten – combined with the worries of new restrictions and thus the chain reaction of negative impacts on everything from the supply chain to Christmas guests, is it possible that the market crash and subsequent economic recession I called for at 2022 Q1 end or early Q2 be pulled forward into 2021 and ruin the seasonal rally and the holidays? Well, the seasonal rally is buried. That question is answered, though for SOX it could still laugh all the way to Christmas, unless the worries hit about chips again becoming scarce. 12/2/21 Discussing how the Fed will act, accelerate rate hikes: ... [Federal Reserve Chairman] Powell, on the other hand, is having his hand forced because this time there is a return to admittedly non-transitory inflation. He has to deal with it and possibly another several trillion dollars in the system from a stimulus package we desperately need given predictions of Q4 GDP growth ranging from 10% to 15%. Thus, Powell will hike and drain liquidity, likely at the same time just as Greenspan, trying to deflate the bubbles easy fiat money created in an attempt to fight actual inflation versus Greenspan fighting the idea of possible inflation. Problem is, after so much easy money, the excesses in housing and stocks and no doubt other areas of the economy will be hard to control, hard to slow to a soft landing. Powell and the Fed will become impatient and take more aggressive action. Thing is, it takes time for the hikes to work into the economy. Accordingly, the typical pattern is faster and stronger rate hikes that finally hit in effect, typically all at once, resulting in a market then economic crash. How pleasant to look forward to that! 12/18/2021 Post-FOMC action different this time? Perhaps the yearend rally can resume with the two weeks left before 2022, but the volatility was sharp and rather ruthless, suggesting there is some change ongoing in the markets. As I said quite some time back, we anticipate a market top in late Q1 or into Q2 2022. I know some put it farther down the road than that, and they could be correct. If, however, the market sees a policy mistake ongoing, it won’t wait. 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