Tuesday, December 22, 2020

Technically, The Market Is About To Take a Dive in Q1 2021

Technically, the market is about to take a dive in Q1. It's going to be brutal unless the Fed comes in and starts buying, which it very well might do. I'll talk about why I don't think that's going to matter in a moment. First, let's revisit bitcoin.

As advised, we hit a bottom in bitcoin in Sept/early Oct and then started trending up. We passed 13,500 by the end of October. Then we made new highs and now we're trading at 23,440.90. 

I told you to get in at 11,000 in October and now we're at 23,440.90. We doubled our stack!

I'm a HODLer, so I don't sell bitcoin, but if you're in this for the trading opportunity, now is the time to take profit. 

Don't fret, another opportunity is coming. 

What about equity futures?

I'm putting myself on the line here, because I know the Fed can come in and start buying up assets at any time (to the point of insolvency), but I think the pressure is going to be so strong, it won't matter. 

The Pressure

The pressure started last March. It's been gaining momentum all year. At some point, the bow will break and nothing will be able to stop it. That's just how the technical market goes. 

The Federal Reserve has warned of this. They've been staunch advocates of direct stimulus, but politics has made direct stimulus difficult. So now we're in a pressure cooker and all it takes is one spark. That spark is 12,000. That's the RUBICON.

How will it happen? 

The chart below is a daily Nasdaq futures chart. It's showing us that we need to start to selling when the Nasdaq breaks through 12,000. There might be a slight pullback on that, but it will continue down and it will continue for at least 30 days. 


There will also be a pullback at around 10,000. If the market continues through 10,000 -- hold on to your horses because we're in for a wild ride.

What Else Can You Do?

I'd also start looking at buying gold (offshore) and if you own equities, focus on companies that are in countries that had a large direct stimulus package. 

The graph below is from Time Magazine.

It shows that Japan has been the leader of the pack on spending as a percentage of GDP. Japan started direct payments before COVID to stave off deflation. That's where the Fed got the $1,200 figure from to begin with (10,000 HK = $1,200 US). Japan made the first direct payment in what is referred to as a helicopter drop by the Fed. In fact, Japan did it just before the market tanked in the US (February 2020). And, they've continued to be the front-runner in this effort. 

So, my money is on Japan. Specifically, I'm looking at companies/start-ups that rely primarily on Japanese spending.

I'll provide more commentary at the end of January. Until then, short US stocks, buy gold and companies that rely on Japanese spending, and HODL bitcoin.