20190828 SA backup

Current fundamentals, market price action, the yield curve and rate expectations are all telling us the bear market on deck could have a percentage decline equal too or greater than 1987, 2000 or 2007.

I’m in a different camp, in 2019 the fundamentals are are radically different than any bear market and recession in U.S. history.

These fundamentals although far worse than what the U.S. faced in 2007 are one of the main reasons the U.S. market has held up this high this long.

Had they not been in place the 2018 sell off would have fully engaged the S&P would be trading at 2,300 or lower by now not banging its head on the ceiling for over 19 months trying to break out to a meaningful new high.

What price action, the curve and rate expectations are telling us

S&P Price Action 1987, 2000, 2007 & 2020.

1987, top heavy, hard corrections, struggles to make new high, fails,

then collapses 35.90%
Source

2000, top heavy, hard corrections, struggles to make a new highs, fails,

with a deeper sell off of 50.50% without making a significant new high for 13.5 years.

Source

2007, top heavy, hard corrections, stalls at new highs,

, let’s widen up the chart of the sell off and take a closer look using an indicator that’s already in your trading platform.

Source

Nice easy to trade clean trend lower.

2019, Top heavy, hard corrections, stalls at new highs and now failing without putting in significant new high for 19 months.

1987, it was a very different world in 1987, 10 year Treasuries were yielding over 9.00%, 3 month over 8.00%, reported inflation 3.58%, total Federal debt 2.34 trillion (5.20 trillion in 2019 USD). In 1987 Treasuries made sense as a “flight to quality” alternative to stocks because they had a real rate of return in excess of 4.42% with potential upside instrument appreciation as the U.S. cut rates to stimulate the economy. The curve did invert but in 1988 after the October 1987 crash.

2000, The curve inverted in June 2000, the bear market fully engaged in October, average Treasury yield 6.43%, reported inflation 3.37%, total Federal debt 5.62 trillion (8.27 trillion in 2019 USD) a decade plus of irresponsible Federal spending had taken it’s tool on the U.S.’s balance sheet and fiscal credibility but Treasuries still made sense as a “flight to quality” alternative to stocks because they had a real rate of return of 3.06% with upside instrument appreciation when the U.S. cut interest rats to stimulate the economy.

2007, The curve inverted in January 2007, the bear market engaged in October, average Treasury yield 4.80%, reported inflation 1.93%, total Federal debt 8.95 trillion (10.97 trillion in 2019 USD) despite decades of escalating and reckless deficit spending U.S. Treasuries could still be justified as an alternative to stocks because they had a real rate of return of 2.97% with potential instrument appreciation when the Fed cut rates to stimulate the economy.

2019, The curve inverted in January 2019, average Treasury yield for 2018 2.44%, average reported inflation 2.44%, total Federal debt 22.51 trillion.

In 2019 investing in 5 to 30 year US Treasuries makes absolutely no sense as a “flight to quality instrument in”, they have a real rate of return using reported inflation of 0.00%, a negative rate of return using actual inflation of greater the 1.00%, with annual currency & instrument risk 5 to 30 times greater than annual yields, (depends on duration) and no significant upside instrument appreciation potential even if the US cut long-term rates to 0.00%.

Pre bear market priced in interest rate expectations 1987, 2000, 2007 to 2019.

You’ll find the derivatives markets infidelity more reliable and precise than the yield curve. The current face value of open positions exceeds 17 trillion USD, one glance at the price gives you the consensus of the traders behind the 17 trillion in positions for what rate is priced in for that month and year to the 0.01% or the change in rates between two periods to the 0.01%.

To calculate the rate for a given period take 100.00 – the period’s price (delivery month) = the expected rate that month example.

The current face value of open positions exceeds 17 trillion USD, one glance at the prices gives you the consensus of the traders behind the 17 trillion in positions for rate hikes or cuts within 0.01% for any period between now and June 2029.

Positive number = Rate hikes, all is good in the world of bullsNegative number = Rate cuts, all is good in the world of bears

Example97.98 GEU19 (3 month rate September 2019 98.23 GEM29 (3 month rate June 2029 delivery

To calculate the markets rate expectations between to periods take the nearby delivery month’s price and subtract the forward deliver

Today’s priced in rate expectations between September 2019 & December 2020

1987 17 August 1987, S&P price 335.40, 4+ trillion in interest rate derivatives were pricing in 1.60% in rate hikes, 13 October 1987 S&P price 314.52, down 20.88 points or -6.22%, during the same period (17 August – 13 October 1987) rate hike expectations had decreased by 0.53% pricing in just 1.07% hike, by the 20th of October 1987 (one week latter) the S&P had sold off a total of 35.90% to 216.50 and it didn’t didn’t see a new high until July 1989.

2000 25 January 2000, S&P price 1,410.03, 8+ trillion in rate derivatives were pricing in 0.45% in rate hikes. 15 December 2000, S&P 1,336.60, down 73.70 points or -5.21%, during this same period (Jan 2000 to Dec 2000) 8+ trillion in derivatives went from pricing in a 0.45% rate hikes to a 0.59% in rate cuts, by October 2002 the S&P had sold off 50.50% and didn’t see a significant new high until September 2013, 13.5 years latter.

200712 June 2007, S&P price 1,509.12, 10+ trillion in rate derivatives were pricing in a 0.1950% rate hike, by the 15th of November 2007 the S&P sold off 65.63 points to 1,443.49 -4.34%, during the same period (June 2007 through November 2007) 10+ trillion in rate derivatives went from pricing in a 0.1950% rate hike to 0.77% rate cut, by March 2009 the S&P had sold off a total of 57.70% and didn’t see a significant new high until September 2013.

2019 17 October 2018, S&P price 2,809.21, 17+ trillion in rate derivatives was pricing in a 0.2400% rate hike, 17 June 2019, S&P 2,889.67 up 80.46 +2.78% with 17+ trillion in rate derivatives now pricing in a 0.79% rate cut.

30 July 2019, S&P 3,012.80, the June 2019 rate derivative contact went off board pricing in the July 0.25% rate cut that occurred, September 2019 is now the next delivery month with deep liquidity.

15 August 2019 total additional rate cuts priced in between September 2019 and December 2020 0.48%. 17 trillion in rate rate derivatives is now pricing in a very hard sell off in stocks with the probability of it occurring prior to December 2020 at 100.00%.

Today’s priced in rate expectations between September 2019 & December 2020

But, it may not be as tenacious as price action and history would lead us to believe.

Treasury ownership fundamentals are entirely different in 2019 than 2007 when the average Treasury yield was 4.80%, reported inflation 1.93%, Federal debt was 62.86% of GDP totaling 8.95 trillion (10.97 trillion in 2019 USD).  In 2007 Treasuries were rated AAA stable, owning a U.S. Treasury as an alternative to stocks to wait out a bear market could be justified because they had a real rate of return of 2.97% with instrument appreciation potential when the Fed cut rates to stimulate the economy.

Where we’ve been

2008 – 2018 Averages for the U.S. Federal Government (Trillions)2.773 = Reported  total revenue 3.607 = Reported total spending0.834 = Reported budge deficit0.303 = “Off Budget” expenditures not included in the deficit1.137 = Actual spending inclusive of items not in included in the reported deficit.

Spending deficit chart

One of the most decisive events that will impact the U.S.’s ability to borrow during the next recession and for decades to come was S&P’s downgrading of U.S. debt.

18 April S&P changes the U.S.’s credit rating from AAA stable to AAA Negative.

S&P statement: “We project the  total Federal debt level at $22.1 trillion by 2021 (93% of 2021 GDP)”

18 April 2011 total Federal debt 14.270 trillion USD

Source Federal Reserve

18 April 2011 Total Federal Debt to GDP ratio

Source Federal Reserve

Prior to 18 April 2011 U.S. Treasuries were seen as the undisputed safest investment in the world, they were now rated lower than bonds issued by countries such as the UK, Germany, France and Canada.

That week it became public that U.S. officials notified S&P that it had made a minimum of a $2 trillion dollar “mathematical error”  with their “senior analysts” all agreeing in reality it would be in excess of 3 trillion and told S&P if not corrected immediately and the stable rating restored they would pursue all legal channels against the company until corrected.

14 July 2011 S&P puts the U.S. government on credit watch with negative implications meaning there was at least a 50% chance the U.S.’s long-term debt wouild be downgraded from AAA negative to AA+ stable.

To avoid a downgrade, S&P said the United States “should not raise the debt ceiling, but also develop a “credible” plan to tackle the nation’s long-term debt.  on _______ The S&P downgraded U.S. debt from AAA to AA+ S&P said it best.

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

” More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policy making and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.” ” We project the debt level at $22.1 trillion by 2021 (93% of 2021 GDP)”

Shortly after the the U.S. Federal Government threatened S&P and told them their estimates we’re overstated stated by a minimum of 2 trillion with the consensus of their analysts saying the 22.21 trillion by 2021 (93% of projected 2021 GD) was overstated by more than 3 trillion.

believed was as high as 4 trillion.  and they told S&P they would pursue all legal avenues until the S&P corrected this 2 trillion dollar error and restored the U.S.’s credit rating to AAA.

In 2013 the Justice Department charged Standard & Poor’s with fraud in a $5 billion lawsuit: U.S. v. McGraw-Hill Cos et al., U.S. District Court, Central District of California, No. 13-00779. Where we’re going based on optimistic assumptions

During the next 4 and 1/2 years the U.S. Treasury needs to sell a minimum of 6.182 trillion in new issues with it’s worst credit rating in it’s history AA+ which most analysts wold tell you would be aa negative if they were any other country on the planet

with AA coming up quickly on the horizon AA+ negative .

. The U.S. was awarded the downgrade after creating trillions of dollars from nothing, backed by nothing to buy the

just to satiate their deficit spending habit and this projection is based on and U.S. economy with no recession and continued expansion.2019-2023 Projected averages for the U.S. Federal Government3.901 = Reported total revenue 3.607 = Reported total spending834.32 = Reported budge deficit303.09 = “Off Budget” expenditures not included in the deficit1.137 = Actual spending inclusive of items not in included in the reported deficit

Source USGovernemtSpending.com

During the next bear market and corresponding recession the U.S. Treasury  is going to need to sell to at least 4 trillion to  needs.

projected budget deficits over the next 3 years are conservatively 3 trillion USD with another one plus trillion plus in “off budget” deficits and this was calculated assuming no recession and moderate expansion. You have to ask yourself what magical financial ferry is going to show up and at Treasury Direct and buy 4+ trillion in new issues with 30 year yields of 2.10 of less percent?

In 2019 U.S. Treasury yields are at record lows, the instrument and currency risk of owning a U.S. Treasury is at record highs. In 2019 if you own a $100,000, 10 Year Treasury at the current yield of 1.60% and rates went down to 0.00% it would appreciate in value to $116,003 (+16.00%) to price in the drop in rates. If the Fed decided to end what Bernanke called in 2008 “emergency and temporary rate cuts” and 10 year yields normalized to their pre “Economic Stimulus”, pre “Quantitative Easing” 40 year average of 7.44% the 10 year’s price would fall to $59,800 (-49.20%) to price in the increase in 10 year rates. Add in plus or minus 20% currency risk and it’s game over.

10 Year Treasury treasuries rise in price when yields fall and fall in price when rats rise to price in the difference between the coupon rate at issue and current rate below is a $100,000 10 year Treasury Coupon rate of 5.30% with a current yield of

When you access the risk of holding a U.S Treasury against any quality stock that would benefit from a recession (not the glamor girls we talk about like CMG. MKTX, BLL, AMD, GOOGL, MSFT or AAPL but those stocks we quietly hold that we know when the going gets tough in America they’ll maintain like MCD, when an if the market tanks I see some of the crew from Newport Coast leveraged in the glamour girls not bragging about it at Mastro’s (Expensive Restaurant in Newport Coast CA.) but enjoying a cost effective meal from the dollar menu at Micky D’s in Costa Mesa. When you do the math on Micky D’s

MDC if you write the 1 week out of the money call you’ll collect over 6.50% annually in call premium, during periods of uncertainty you can collar her up by writing a call against her and using the credit premium to buy a put to define your risk on the trade and for the duration of the trading period, those living outside the U.S. can short a CFD to hedge risk buck for buck or capture the move lower. In 2007 when the est of the market started what would be an eventual sell of of of 57.50% this old gal although not glamorous held it together.

MCD

The historical risk on return aberration between U.S. Treasuries and recession resistant stocks has and should continue to support the market or at least slow down the decline down enabling us to adjustment our portfolios and short any of the 10 global Stock Indies with deep liquidity and capture the move lower or, at the very least hedge our risk on remaining long positions with one click.

Let’s start by looking at where we’ve been and where were at to prepare for where we’re going.

Let’s take a look at the numbers leading up to the bear market that began in March of 2000, the recovery, leading up to the bear market starting in October 2007 through the current recovery.

Employment

From 1997 through 2007 45.69% of the U.S. population was employed, low 44.93% in 2003, high 46.79% in 2000.

2008 – 2018, average 43.61% with 8 consecutive yearly increases 2011-2018. Low 42.32% in 2010, high 45.76 in 2018.

At the 2007 -2018 high of 45.76% we’re 0.07% below the 1997-2007 average of 45.69 and 1.04% below the 1997-2007 high of 46.79%. The percentages factor in employment entries, exits, the aging population resulting in an increase in Retirees and & Social Security Beneficiaries.

Sources BLS.GOV, Fed Employed Population & Total Population.

Personal Income

From 1997 through 2007 growth in annual personal income outpaced reported inflation by an overall average of 1.85% with income outpacing inflation in 10 out of 11 years.

2008 -2018 personal income increased faster than inflation by an average of 1.02% with income outpacing inflation in 8 out of the 11 years.

In theory with personal income outpacing reported inflation in 18 out of the last 22 years by an overall average of 1.44% Americans should be living better in 2019 with more disposable income than in 1997.

Sources Reported Inflation, Personal Income

GDP Per Capita & Per Employed Person

From 1997 through 2007 the growth in GDP per capita outpaced reported inflation by an average of 1.82%, per capita GDP outpaced inflation 10 out of 11 years.

From 2008 – 2018 growth in GDP outpaced reported inflation by an average of 0.75% with GDP outpacing inflation 7 out of the 11 years.

From 1997 – 2018 GDP outpaced reported inflation by an average of 1.32%. In theory Americans should be proud of the growth in their GDP, businesses should be thriving, jobs secure, the economy stable and quality of life good.

Sources  GDPTotal Population, Total Employed, Reported Inflation

Growth in Total Federal Revenue per Capita & by Employed Person

From 1997 through 2007 the Growth in per capita out paced inflation by an average of  —– per taxpayer _______ Growth in Total Federal Revenue outpaced inflation in _______ out of 11 years.

From 2008 – 2018 per capita growth in Federal Revenue outpaced reported inflation by an average of ________. per taxpayer _______ Growth in Total Federal Revenue outpaced inflation in _______ out of 11 years.

Unfortunately for U.S. citizens, their children and grand children there’s a very big problem

Nixon Photo

1971 then president took the U.S. off the gold standard

https://owninggold.com/gold-standard/

JP Morgan?

The harsh reality everything has increased far faster than reported inflation

Annual Personal Income in ounces of gold has gone from a pre “Economic Stimulus average of 88.87 ounces down to 42.89 in 2018.

Sources  Personal Income,  Price of Gold

add in reported versus actual deficits

Federal Debt

Federal debt per taxpayer as a percentage of personal income increased from 162.97% ($64,863.07) in 2007 to 264.57% ($143.980.12) by the end of 2018.

Sources Total Employed, Total Federal Debt, Personal Income

The average yield on U.S. Treasuries above the reported inflation rate (real rate of return) has gone from a 2.95% pre “Economic Stimulus and Recovery” average to an average of 0.00% 2018. Sources  Treasury Debt, Interest Paid on Treasury Debt,  Reported Inflation,

The elimination of real rates of return has reduced Federal Debt Service cost by more than 3.233 trillion since the inception of “Economic Stimulus”.

The downside, it was done at the expense of those who own Treasuries and ultimately would have spent this 3.233 trillion in the Global Free Markets.

According to the US Federal Government removing over 3.233 trillion dollars from an economy qualifies as “Economic Stimulus”. Why raise taxes when you have the ability to pay your debtors less and you believe there is nothing they can do about it?

Why the bear on deck will be different than any other in history

First let’s catch up on a little debt and rate history enabling you to appreciate what U.S. markets are facing during the next recession and bear market.

1968 – 1986 the U.S. borrowed and spent it’s way out of every recession using moderation and impeccable timing. During this period Fed Chairs Burns, Miller and Volcker provided U.S. presidents and the Country responsible, effective guidance.

Despite a major and costly war (Vietnam 1965-1975 total troops that saw active duty 9,087,000), an impeached President (Nixon 1974) reported inflation as high as 13.50% (1980) and an unemployment as high as 8.48% (1975) they not only were able to contain the Federal debt but reduce it as qualified by Federal debt per taxpayer as a percentage of annual income.

From1968 through 1986 per taxpayer debt was reduced from 148.85% of annual personal income to 140.83%.

Sources Total U.S. Workforce  Annual Income  Federal Debt

During this same period U.S. Treasury rates averaged 10.22%, average inflation 3.85%, offering Treasury Investors an average real rate of return of 6.37%. This 6.37% pumped 967.17 billion dollars into the Global economy or 4.241 trillion in 2019 USD.

Sources  Federal Debt   Interest Expense on Outstanding Federal Debt

Going into the 1987 crash Treasuries made sense because of the real rate return of 6.24% and the potential instrument appreciation when the Federal Reserve lowered rates to resuscitate the U.S. Economy.

Instrument Return on Risk/Reward owning a 10 Year yielding 9.42%.

+97.20% = instrument appreciation potential if 10 year rates went to 0.00%+54.49% = at 1.50% +9.75%  = at the 1968-2007 pre “Quantitative Easing” average of 8.29%-26.50%  = at 15.00%

Sources Rates & Inflation  Treasury calculator

The market did cave in dropping a total of 35.90%.

Source

The Federal Reserve did lower rates, by July 1989 the 10 year yield dropped from 9.42% to 7.82%.

Source

As an owner of a 10 year Treasury while you were waiting for the market to bottom you we’re earning 9.42% in interest income and another 10.82% from the 10 year’s Treasury’s price appreciating to reflect the drop in rates.

Source

In 1987 the above average yield and potential instrument instrument made the 10 year Treasury a very attractive alternative to stocks, who’s price action was top heavy, experiencing hard corrections and struggling to make a new high.

Stock sales aggressively engaged exaggerating the move lower stocks as investors reallocated the proceeds from their stock sales to Treasuries exaggerating their move higher.

This exaggerated demand for Treasuries enabled the U.S. Government to easily borrow 933.10 billion (2.038 trillion in 2019 USD) to stabilize the U.S. economy and markets.

Source

1987 – 2000 in 1987 Alan Greenspan took over the helm of the Federal Reserve and was it’s chair. During this period the U.S. continued to borrow and spend it’s way out of every recession using less moderation, questionable timing and judgement.

Despite the countless mistakes and calls Greenspan made on the economy & markets he did a respectable job containing Federal debt as qualified by the Federal debt per taxpayer to annual income ratio however 1987 through 2000 were far less challenging times than his predecessors.  Unemployment average 5.61%, high 7.49% (1992) low 4.22% (1999)Inflation, average3.28%, high 5.40% (1990) low 1.55% (1998)

1987 Fed debt per taxpayer as a percent of income 140.83%, 2000 139.14%

Sources Total U.S. Workforce Annual Income Federal Debt

During this same period U.S. Treasury rates averaged xxxxx while inflation was contained averaging xxxx, offering Treasury Investors a real rate of return of XXXX This XXXX pumped XXXX 17 billion dollars into the Global economy or 4.241 trillion in 2019 USD.

Greenspan was an original member Ann Rand’s group “the collective” during the 50’s while she was penning Atlas Shrugged (advocacy of reason, individualism, and capitalism, and depicts what Rand saw to be the failures of governmental coercion) but I  believe by 2000 he had forgotten the majority of Rand’s ideology. The endgame, Greenspan succumbed too and facilitated the wishes of 4 U.S. presidents, Regan, Bush Sr. Clinton and little Bush. His failure to keep the Fed’s agenda separate from the Federal government’s was the kindling of what his successors would turn into a bonfire of debt and failures.

was no Paul Volcker and more often that not succumbed

During this period Fed Chair Greenspan

advocated a

s Burns, Miller and Volcker provided U.S. presidents and the Country responsible, effective guidance.

Despite a major and costly war (Vietnam 1965-1975 total troops that saw active duty 9,087,000), an impeached President (Nixon 1974) reported inflation as high as 13.50% (1980) and an unemployment as high as 8.48% (1975) they not only were able to contain the Federal debt but reduce it as qualified by Federal debt per taxpayer as a percentage of annual income.

From1968 through 1986 per taxpayer debt was reduced from 148.85% of annual personal income to 140.83%.

Sources Total U.S. Workforce Annual Income Federal Debt

Prior to the financial crisis of 2008 the U.S.’s policy of borrowing & spending to resuscitate a weakening economy was done with some degree of moderation and responsibility to ensure the U.S.’s credit rating and borrowing credibility remained intact enabling the U.S. to borrow and spend another day.

In 2019 the U.S.’s recessionary war chest is near empty, depleted from borrowing and spending out of every recession since World War II.

Prior to the financial crisis of 2008 U.S. policy of borrowing & spending to resuscitate a weakening U.S. economy was done with some degree of moderation and responsibility to ensure the U.S.’s credit rating and borrowing credibility remained intact enabling the U.S. to borrow another day.

In 2019 the U.S.’s recessionary war chest is nearly depleted from borrowing and spending out of every recession since World War II.

2007 Bernanke, the newly appointed chairman

. Prior to becoming Fed chair his calls on the economy & market were notoriously wrong, after he became Fed chair worse.

Prior to working at the Fed Bernanke was a life long academic with zero professional trading experience who essentially believed lose monetary policy would solve any monetary crisis. Bernanke’s untested and purely academic monetary theories with a major Financial crisis on deck was equivalent to appointing a serial arsonist as Fire Chief.

From 2008 through 2017 the U.S. borrowed 11.29o trillion dollars increasing Federal debt by 125.74% from 8.951 trillion at the end of 2007 to 20.205 trillion in 2017.

Source Federal Reserve

In 2006 Ben Bernanke was appointed as Fed Chairman. Prior to becoming Fed chair his calls on the economy & market were notoriously wrong, after he became Fed chair worse. Prior to working at the Fed Bernanke was a life long academic with zero professional trading experience who essentially believed lose monetary policy would solve any crisis. With the considering the Monetary crisis on deck his appointment to the Fed was equivalent to appointing a serial arsonist as Fire Chief.

2008 should serve as a warning of the scale and speed with which global financial crises can unfold in the twenty-first century.

.46 trillion US Treasury debt owned by the Federal Reserve

Source Federal Reserve

During this period several debt ranking lowered the U.S.’s credit rating to the lowest in it history starting with S&P’s downgrade from AAA to AA+ stable in August 2011. The S&P issued additional warning to the U.S. Treasury in June of 2017 if they did not suspend their “Quantitative Easing” that U.S. debt would suffer another downgrade form AA+ stable to AA+ negative, in July 2017 the U.S. suspended their “Quantitative Easing” program.

maxed out the U.S.’s debt and damaged their credibility as a borrower to the extent S&P any other debt rating services lowered the the U.S.’s credit rating to the lowest level in history in August 2011 From AAA down to AA+ stable.

in May of 2017 these ranking services warned the U.S. Treasury that additional credit rating downgrades were on the horizon unless they refrained from “Quantitative Easing” or the creation of money from nothing backed by nothing the initially purchase bad bank debt the Free market wouln’t touch

history from

With the issue of “Special Issue Securities” at no competitive rates to the Trusts the oversee such as the Social Security, Civilian Pension & Military Pension

Ability to show a budget surplus

In 2018 the reported Federal deficit was 779.14 billion, the expected deficit in 2019 over 1 trillion, expected deficit in 2021 over $1.1 trillion, in 2022 greater than $1.2 trillion, these deficit estimates are based continued expansion without recession and exclude “Off budget Expenditures”

Source Federal Reserve

Actual budget deficits

In all but 1 of the past 50 years actual budget deficits have exceed reported budget deficits.

From 1998 to 2001 the U.S. reported a cumulative budget surplus of 559.35 billion when in reality the cumulative budget deficit totaled 400.68 billion.

In 2018 the reported budget deficit was 779.14 billion when the actual budget deficit 447.48 billion or 57.43% higher coming in at 1,256,62 billion.

Sources U.S Government Spending & Federal Reserve

Since 1968 reported Federal deficits have totaled 13.763 trillion USD

Actual Federal deficits have totaled 21.129 trillion

Sources U.S Government Spending & Federal Reserve

Explanation

According to the Federal Government this “discrepancy” was generated by “Off Budget Expenditures” in short if politicians don’t get to vote on an expenditure it’s labeled “mandatory” and doesn’t count in the Federal deficit calculations.

Growth in Federal debt

1968, Federal Debt 368.68 billion, (2.72 trillion in 2019 USD)1987, 2.34 trillion (5.20 trillion in 2019 USD)2000, 5.62 trillion (8.27 trillion in 2019 USD)2007, 8.95 trillion (10.97 trillion in 2019 USD)2019 22.51 trillion and growing by 3.44 billion a day.

Source Federal Reserve

Federal debt per taxpayer has increased from an amount equivalent of 139.14% of annual median income in 1979 to 268.33% in 2018.

1979, Fed debt per taxpayer $9,222, equivalent to 99.69% of median income 1987, $22,923, 140.83% of median income. 2000, $30,640, 139.14% 2007, $39,801, 162.97%

2018, $143,980, equivalent to 268.33% of median personal income.

Sources Fed Reserve, Income, Federal Debt, Employed Population

Debt as a percentage of GDP

Source Federal Reserve

The U.S.’s ability to be competitive in the Global market place to keep it’s companies open and citizens employed.

Trade surplus = competitive in the Global marketsTrade Deficit  = non competitive

The U.S has not had a meaningful and sustained trade surplus in over 50 years.

In 2018 the reported trade deficit was 627.68 billion, 2019 year-to-date deficit 316.33 billion, projected trade deficit for 2019 between 605 billion to 721 billion dependent on potential tariffs and trade-wars.

From 1968 to 2019 U.S. trade deficits tell us U.S. citizens & entities have lost over 12.54 trillion in wealth to foreign competitors, 10.56 trillion of the 12.54 since 2000.

Source Federal Reserve

Taxation, increasing but less effective regulation, product plagiarization, escalating litigation and unionization have gradually forced U.S. manufacturing out of the United States to survive.

From 1968 through 2019 the United States has lost over 14 million manufacturing jobs resulting in the loss of Federal tax revenue these jobs would have generated from through 2019.

From 1968 through 2007 manufacturing represented an average of 17.86% of the total U.S. workforce, in 2018 only 8.51%, 0.04% from it’s all time historic low of 8.47% in 2017.

Source Federal Reserve

Real rates of return

1968 through 2007

2007 through 2019

Instrument Risk/Reward of owning a 10 Year Treasury with at the 1987, 2000 2007 average pre bear market yield of

Currency potential gain or loss

Instrument Risk/Reward of owning a 10 Year Treasury yielding 1.72%. in 2019

+17.20% – instrument appreciation potential if 10 year rates go to 0.00%+3.25% – at 1.37% their all time historic low (July 2016) -26.93% – at the 2007 average rate of 5.25%-39.37% – at their 1968-2007 pre “Quantitative Easing” average of 7.44%-68.65% – at their historic high of 15.84% (September 1981)

Owning US Treasuries in 2019 doesn’t make sense

Instrument appreciation potential in on a $100,000 10 year Treasury in green is 17.20%, if 10 year rates went to 0.00%.

Risk in red is -26.93% at the 2007 average 10 year yield of 5.25% and -39.73% at the 1968-2007 average of 7.44%.

Sources, Fed’s website, Treasury calculator & Today’s Treasury Rates

USD Currency potential gain or loss

From 2019 levels (98.00) it’s plus or minus 20.00%, when the hard sell off engages there will be an initial flight to USD and the USD will initially rally as the market realizes there is no demand for U.S. Treasuries with yields below 2.00% aggressive selling of U.S. Treasuries and dollars will engage.

1987 – 2019 USD chart

Investors not familiar with derivatives are sticking with quality stocks

examples up trends and dividends

Strait quality McDonald’s,

Updates and exits for the long-term recommendations made in 2015

Inflation misrepresentations

Income priced in gold

saves on debt service cost, strips economy

Ability to attract bids

2007 demonstrated U.S. spending requires more now issues than the free market will purchase and this was when the return on risk was far greater then 2019

Sources the U.S borrowed from in the free market in 2007

When free market bids dried up in 20007 they resorted selling long-term Special issues securities at non competitive rates depriving Social Security recipients, Military and civilian retirees of fair compensation for a lifetime of involuntary contributions.

When sales to special issues were at capacity they resorted to QE

Chart of US federal debt, fed owned debt, foreign owned debt total federal debt

2019 the free market is no longer interested

Trusts are at capacity example of chart

Foreign buyer wont put out unless they gt their way with trade

only remaining option more QE on deck

Blame it on China dollar and debt devalution.

Inflationary recession

dollar and debt devaluation

Gold above 2000

Incomes, prices of good and services increase

Home values increase

Income increase

Tax receipts increase

Debt worth 1/2 as much with twice the revenue to service it

S&P makes new highs

Interest rates normalize

But the US dollars buying power in minimized

Potentially the hardships the U.S will endue during the next recession will motivate it’s citizens to demand more responsible Government, less taxation, more capable and efficient regulation, a curb on merit-less and costly litigation and more realistic Unionization that could potentially motive business and manufacturing relocation back to the shores of U.S civilization.

One solution you may find more profitable, easier and more cost effective to implement during the coming bear market than trying to cherry pick stocks for asset preservation and capital appreciation.

In all but 1 of the past 50 years actual budget deficits have exceed reported budget deficits.

From 1998 to 2001 the U.S. reported a cumulative budget surplus of 559.35 billion when in reality the cumulative budget deficit totaled 400.68 billion.

In 2018 the reported budget deficit was 779.14 billion when the actual budget deficit 447.48 billion or 57.43% higher coming in at 1,256,62 billion.

Sources U.S Government Spending & Federal Reserve

Since 1968 reported Federal deficits have totaled 13.763 trillion USD

Actual Federal deficits have totaled 21.129 trillion

“Discrepancy” 7.266 trillion to put this into perspective total defense spending from 1968 though 2018 was 20.365 trillion.

Sources U.S Government Spending & Federal Reserve

Federal Government’s Explanation

According to the Federal Government this “discrepancy” was generated by “Off Budget Expenditures” in short if politicians don’t get to vote on an expenditure it’s labeled “mandatory” and doesn’t count in the Federal deficit calculations.

We’re told the majority of these expenditures are from Social Security, the Federal Reserve’s operating costs and the United States Postal Service, let’s take a look at the credibility of this explanation.

Social Security

Over the past 50 years the Social Security Trust fund has collected $2.894 trillion USD more than it paid out, over the last 10 years $476.271 billion, the Social Security Trust Fund hasn’t had a deficit since 1981.

Source Social Security Trust

Of the 2.894 trillion surplus collected involuntarily from the U.S workforce the Federal Government has borrowed 2.828 trillion at non competitive rates or nearly as much as as much as the 2.71 trillion borrowed from all other funds they oversee combined. Borrowing from these funds is done by creating “Special Issue Securities” which are non marketable, have a redemption of up to 15 years and pay a non competitive rate.

By denying workers a fair a fair return on their involuntary investment either the payroll tax rates will have to be set higher than necessary to sustain any given level of benefits or pensions will have to be lowered.

To date the Federal Government has “issued” a total of 5.54 trillion of these “Special Issue Securities” to the Trusts they oversee.

Source Committee for a Responsible Federal Deficit & U.S. Treasury

The Social Security Trust has to be ruled out as cause of the “Off Budget” expenditures.

Can the Federal Reserve be responsible for the 7.366 trillion in “Off Budget” expenditures?

The Federal Reserve the U.S.’s “Independent Central Bank”,  prior to “Quantitative Easing” in 2008 had an average annual net income of 28.40 billion.

Since “Quantitative Easing” their average annual income has jumped by 165.90% to 75.52 billion, unfortunately for the U.S’s “private and Independent Central Bank” they have to forfeit all profits to their boss the U.S. Treasury.

Source Federal Reserve

The Federal Reserve has to be ruled out out as the cause of the “Off Budget” expenditures.

That leaves the  U.S. postal Service  According the Government Accountability Office the United States Postal Service is in the red a total of 121 billion, annual loses are currently running at 3.9 billion. Yes the United States Postal Service loses money, in majority it always has but 121 billion certainly cannot explain the 7.366 trillion in “Off Budget” expenditures since 1968.

Source Federal Reserve

What looks better?

How comfortable would you feel lending money to a borrower for 30 years at a fixed rate of 2.03% (taxed at the short-term rate) that had misrepresented their actual operating loss by a total of 7.265 trillion or 53.51% over a 50 year period?

Or would you stay in a stock of a company you own, that overall has made made money for 20 years, has continually upgraded and improved it’s products & services to stay competitive?

Real rates of return

Inflation

Impact of inflation on Federal Debt service

Let’s look at he U.S as if we were doing a risk assessment on a company, this company

  • Hadn’t been competitive on the Global market in 50 years
  • Hadn’t shown an actual profit in 50 years
  • Had no ability to show a profit in the future.
  • Had the worst credit rating in it’s history.
  • Stated a loss of 13.763 trillion when their balance sheet shows 21.128 trillion
  • Misrepresented their cost increases to save money
  • Has no ability to pay a competitive rate on their existing debt
  • Has no ability to ability to pay off their existing debt
  • It’s board was more concerned about destroying each other and taking over the company than the company’s profitability and the well being of it’s employees.
  • Provides the absolute minimum benefits to their employees and only because they inherited these programs from previous management.
  • The company raids it’s own pension fund when they needed money, currently have now ability to pay a competitive rate on what they’ve already borrowed much less pay back what they’ve borrowed.
  • And you didn’t know who will be running this company 2021or what kind of litigation it’s current board members facing.

Would you buy a 10 year taxable bond in this company yielding 1.55% that had very limited upside potential, instrument and currency risk greater than 35%?

Or would you stay in a stock of a company you own, that overall has made  made money for 20 years, has continually upgraded and improved it’s products to stay competitive Globally, has impeccable financials, a board that works together to get things done, health care, fully funded pensions for it’s employees and is paying you a dividend of 4.02%?

The U.S. is borrowed out, Federal Debt per Taxpayer

As of 10 June 2013 the U.S. has the lowest credit rating in it’s history

Real rates of return disappeared by 2018

Sources Federal Reserve & Treasury Direct

The U.S.’s credibility as a borrower

The the reported Federal deficit in 2018 was 779.14 billion, the Actual Federal Deficit was 1,256.62 billion. The U.S. Government explains the discrepancy between the reported deficits and increase in the Federal debt as “Off Budget” expenditures, their classified as mandatory to running the County therefore politicians don’t get to vote on them so they don’t count in the Federal deficit calculations. From 1968 through 2018 reported Federal deficits totaled 13.76 trillion, during the same period Federal debt increased by 21.13 trillion, with 34.88% or 7.36 trillion being attributed to “Off Budget’

You’ll find a search of “Off Budget” expenditures is disclosed as Social Security and the U.S. Postal Service, dig a little deeper and you find the the Social Security Trust has taken in

They currently can’t afford to pay a competitive rate on what they’ve already borrowed

2019 = Opportunity

Volatility and Bear markets are nothing new, traders like myself look forward to them.

Although I always trade with the trend up or down, the last 25+ years my profit/loss statements tell me bear markets generally have higher return on risk and make more in a shorter period of time.

Looking at the chart below, I think you can appreciate the potential I see trading this market lower.

1983 through 2019 chart

1) Index Educational videos & resources

1.) Definition Of A Futures Contract
11) What is an Equity Index Futures? 
01) About S&P Futures Contracts
01) Benefits Of Futures Margins
01) Who Trades Equity Index Futures?  
01) Trading Stock Indices Versus ETFs?  
01) Fundamentals And Equity Index Futures
01) Trading Opportunities In Equity Index Futures
01) Additional Education S&P Videos

2) One solution to capture the move

The simple trading methodology disclosed in this report is easy to understand, implement and has captured the majority of every major up and down trend since 1980, it’s outperformed the market and the majority 15,000+ ETFs and Hedge Funds I track.

Performance Summary 1 July 1980 through 14 August 2019

2.01) Performance is calculated trading one S&P E-Mini (ES) 1.00 = $50.00 from 1 July 1980 through 14 August 2019, never adding positions, assuming worst case order execution and deducting a ridiculously high $100.00 per round-turn trade to cover any bid/ask spreads, order execution issues, clearing and regulatory cost. For those just venturing into the world of trading derivatives  there is a micro contact 1/10th the size of an E-Mini see S&P Micro (MES) 1.00 = $5.00.

Performance Summary From 1 July 1980 to 14 August 2019
Start Date 28-Jul-1980 S&P 1980 – 2019 2,251.88%
End Date 31-Jul-2019 Net No leverage 3497.28%
Net Gain $211,200.50 Net 2 to 1 leverage 6,994.55%
Max-Draw -$13,973.00 Net 3 to 1 leverage 10,491.83%
Winning % 62.50% Net 4 to 1 leverage 13,989.10%
AVG Winner $11,164.11 Contracts Traded
Losing % 37.50% S&P E-Mini (ES) 1.00 = $50.00
AVG Loser -$1,814.71 S&P Micro (MES) 1.00 $5.00
– Per Trade $100.00 Risk Disclosure Statement
3) Trading Procedure

Longs:

If price action is above the EMA9 (red line on the charts below) and the EMA9 is above the EMA18 (blue line) = long. Risk on long positions, if the EMA9 (red) moves below the EMA18 (blue) exit longs and reverse to short.

Shorts:

If price action is below the EMA9 and the EMA9 is below the EMA18 = short.Risk on short positions, if the EMA9 moves above the EMA18 exit shorts and reverse to long.

The EMA4.5 (green) crossing the EMA9 and EMA18 is a wake up call warning you to get prepared to modify your position should the EMA9 cross the EMA18.

There are no secret filters, no stops, no holy grail algorithms and you don’t require a direct line to Federal Reserve chair Powell to trade this.

4) Qualifying this procedure over the last 39 years in less than 5 minutes

To make performance verification easy I’ve divided the last 39 years into 13, 3 year periods, circled all trades and linked all charts with trade date, price, entries & reversals enabling you to easily verify performance. Cumulative net trading 1 S&P E-Mini (ES) 1.00 = $50.00 last vertical column on your right.

Period 1 July 1980 – July 1983

Date & Chart L or S Price Value Profit/Loss Cumulative
28-Jul-1980 Long 120.78 $6,039.00 $0.00
06-Jul-1981 Short 129.37 $6,467.50 $329.50 $329.50
06-Sep-1982 Long 120.97 $6,048.50 $320.00 $649.50

Period 2 July 1983 – July 1987

Date – Chart L or S Price Value Profit/Loss Cumulative
30-Jan-1984 Short 160.91 $8,045.50 $1,897.00 $2,546.50
14-Jan-1985 Long 171.32 $8,566.00 -$620.50 $1,926.00
06-Oct-1986 Short 233.84 $11,692.00 $3,026.00 $4,952.00

Period 3 Chart July 1986 – July 1989 & Daily here for 1987 crash

Date – Chart L or S Price Value Profit/Loss Cumulative
03-Nov-1986 Long 245.77 $12,288.50 -$696.50 $4,255.50
15-Oct-1987 Short 298.08 $14,904.00 $2,515.50 $6,771.00
06-Jun-1988 Long 266.45 $13,322.50 $1,481.50 $8,252.50

Period 4 July 1989 -July 1992

Date – Chart L or S Price Value Profit/Loss Cumulative
15-Jan-1990 Short 339.93 $16,996.50 $3,574.00 $11,826.50
07-May-1990 Long 340.53 $17,026.50 -$130.00 $11,696.50
30-Jul-1990 Short 344.86 $17,243.00 $116.50 $11,813.00
14-Jan-1991 Long 332.23 $16,611.50 $531.50 $12,344.50
18-Nov-1991 Short 376.14 $18,807.00 $2,095.50 $14,440.00
23-Dec-1991 Long 387.05 $19,352.50 -$645.50 $13,794.50

Period 5 July 1992 -July 1995

Date – Chart L or S Price Value Profit/Loss Cumulative
28-Sep-1992 Short 414.27 $20,713.50 $1,261.00 $15,055.50
26-Oct-1992 Long 418.68 $20,934.00 -$320.50 $14,735.00
28-Mar-1994 Short 460.58 $23,029.00 $1,995.00 $16,730.00
01-Aug-1994 Long 458.28 $22,914.00 $15.00 $16,745.00
21-Nov-1994 Short 461.69 $23,084.50 $70.50 $16,815.50
16-Jan-1995 Long 464.78 $23,239.00 -$254.50 $16,561.00

Period 6 July 1995 – July 1998 The EMA9 never crossed below the EMA18, the long was maintained during this 3 year year period.

Period 7 July 1998 – July 2000

Date – Chart L or S Price Value Profit/Loss Cumulative
03-Aug-1998 Short 1089.45 $54,472.50 $31,133.50 $47,694.50
26-Oct-1998 Long 1070.67 $53,533.50 $839.00 $48,533.50
27-Sep-1999 Short 1282.81 $64,140.50 $10,607.00 $59,140.50
25-Oct-1999 Long 1362.93 $68,146.50 -$4,106.00 $55,034.50

Period 8 July 2000 – July 2003

Date – Chart L or S Price Value Profit/Loss Cumulative
25-Sep-2000 Short 1450.30 $72,515.00 $4,268.50 $59,303.00
24-Dec-2001 Long 1161.02 $58,051.00 $14,364.00 $73,667.00
28-Jan-2002 Short 1122.20 $56,110.00 -$2,041.00 $71,626.00
04-Mar-2002 Long 1164.31 $58,215.50 -$2,205.50 $69,420.50
15-Apr-2002 Short 1125.17 $56,258.50 -$2,057.00 $67,363.50
28-Apr-2003 Long 930.08 $46,504.00 $9,654.50 $77,018.00

Period 9 July 2003 – July 2006

Date – Chart L or S Price Value Profit/Loss Cumulative
12-Jul-2004 Short 1101.39 $55,069.50 $8,465.50 $85,483.50
06-Sep-2004 Long 1123.92 $56,196.00 -$1,226.50 $84,257.00
18-Apr-2005 Short 1152.12 $57,606.00 $1,310.00 $85,567.00
23-May-2005 Long 1189.28 $59,464.00 -$1,958.00 $83,609.00
10-Oct-2005 Short 1186.57 $59,328.50 -$235.50 $83,373.50
31-Oct-2005 Long 1220.14 $61,007.00 -$1,778.50 $81,595.00
05-Jun-2006 Short 1252.30 $62,615.00 $1,508.00 $83,103.00

Period 10 June 2006 – July 2009

Date – Chart L or S Price Value Profit/Loss Cumulative
21-Aug-2006 Long 1295.09 $64,754.50 -$2,239.50 $80,863.50
30-Jul-2007 Short 1458.93 $72,946.50 $8,092.00 $91,195.00
17-Sep-2007 Long 1484.24 $74,212.00 -$1,365.50 $89,829.50
05-Nov-2007 Short 1453.53 $72,676.50 -$1,635.50 $88,194.00
04-May-2009 Long 879.21 $43,960.50 $28,616.00 $116,810.00

Period 11 July 2009 – July 2012

Date – Chart L or S Price Value Profit/Loss Cumulative
17-May-2010 Short 1136.52 $56,826.00 $12,765.50 $129,575.50
06-Sep-2010 Long 1109.25 $55,462.50 $1,263.50 $130,839.00
01-Aug-2011 Short 1286.94 $64,347.00 $8,784.50 $139,623.50
17-Oct-2011 Long 1224.47 $61,223.50 $3,023.50 $142,647.00
14-May-2012 Short 1351.93 $67,596.50 $6,273.00 $148,920.00
02-Jul-2012 Long 1362.33 $68,116.50 -$620.00 $148,300.00

Period 12 July 2012 – July 2015 The EMA9 never crossed below the EMA18, maintained the long for this 3 year year period.

Period 13 July 2015 – Current

Date – Chart L or S Price Value Profit/Loss Cumulative
17-Aug-2015 Short 1970.89 $98,544.50 $30,328.00 $178,628.00
12-Oct-2015 Long 2033.11 $101,655.50 -$3,211.00 $175,417.00
04-Jan-2016 Short 1922.03 $96,101.50 -$5,654.00 $169,763.00
07-Mar-2016 Long 2022.19 $101,109.50 -$5,108.00 $164,655.00
08-Oct-2018 Short 2767.13 $138,356.50 $37,147.00 $201,802.00
04-Feb-2019 Long 2707.88 $135,394.00 $2,862.50 $204,664.50
23-Jul-2019 Settle 2951.90 $147,595.00 $12,101.00 $216,765.50

Risk Disclosure Statement

When you get the hang of the weekly you’ll find trading multiple time periods will produce and better return on risk (based on OTE)

5) Trading multiple time periods simultaneously

In this example I’m trading the same EMA4.5, EMA9 and EMA18 on 4 different time periods, 120 minute, daily, weekly and monthly simultaneously over an 18 month period.

I’ve deducted $38.90 per round-turn trade to cover all bid/ask spreads, clearing, and regulatory fees including automated order entry and 24 hour a day position monitoring. Using an ATA I’m paying the brokerage team in Chicago to place and monitor all trades for me, guarantee order accuracy and an an account risk (called a maintenance balance) defined in writing before the first trade goes on. A maintenance balance is a top loss based on the equity of the account, should the account balance go down to the defined maintenance balance all positions would be liquidated automatically on or before the next close or the ATA team ia liable. Works like a stop if your maintenance balance is 100K and it drops to 99.5K the firm has until the next settlement to get you flat so liquidation value might be 97.9K.

6) Performance trading multiple time periods simultaneously

Linked Here is a spreadsheet containing the trade-by-trade performance, I’ve linked all charts with entry, offsets, dates & prices enabling easy performance verification, download, open and enable editing (with some operating systems you may have to save it as a new file)

On the spreadsheet you can change the number of contracts traded for each time period in cells B5, B7, B9 & B11. To change the staring balance see cell D3, contract size cell B3, use $50.00 a point for trading the S&P E-Mini (ES) or $5.00 a point for S&P Micro (MES), to modify the Bid/Ask spread and all fees deducted per trade change cell B13 to $39.80 for the S&P E-Mini (ES) or $12.95 for the S&P Micro (MES), margin requirement, cell B15, use $6,300 for S&P E-Mini (ES) or $630 for S&P Micro (MES).

Performance below is based on trading one E-Mini S&P (ES) contract for each time period, 120 Minute, Daily, Weekly and Monthly.

Performance dates from 1 January 2018 to 14 August 2019

Net profit = $163,147.10  Maximum drawdown = -$23,158.90 Drawdown period 26 March 2018 – 6 July 2018Total number of trades = 180 Average winning trade = $2,565.57 Average losing trade = $819.64 Percent winning trades = 41.67% Percent losing trades = 58.33%Maximum margin requirement = $25,200 (shown in cell D17)Closed out trades = $140,798.40 (shown in cell D13)Open trade equity (14 August) = $23,348.60 (cell D15)Starting balance 2 January 2018 = $100,000.00 (cell D3)Ending balance 28 June 2019 = $263,147.00 (cell D17)Trade-by-trade performance = vertical column M

Linked Here is the spreadsheet

7) To track this procedure forward

Follow procedure reviewed in section 3, use the same procedure for all 4 time periods, EMA’s are already dropped into to charts, charts are updated every 10 minutes enabling you to track trades for the period(S) of your choice as they occur.

Using 120 minute price bars this chartDaily price bars this chartWeekly this chartMonthly this chart

When all 4 periods generate a short you’ve just confirmed the beginning of the next bear market, 119 years of price history tells us we won’t see a new significant high for a minimum of 2 years up to 13.5 years.

Obviously you can enhance performance using additional indicators for trend confirmation like the ones linked here, trading additional time periods simultaneously and/or implementing strategies like collars that define risk on every trade and for the duration of every trading period. I did this spreadsheet a few years back on collars and dropped in an instructional video into the spreadsheet on how to set up a collar, experiment with different strategies and time periods.

11) If you’re going to track your ATA or trade this strategy on your own get organized.

Set up your platform by sector, in the example below one glance at the EMA 4.5,9,18 Index profile page gives me all the information I need to track the 9 Stock Indices I’m in trading using these EMAs on 5 different time periods per Index.

List your market symbols alphabetically left to right, time periods traded vertically shortest to longest in descending order, this enables you to sort trades alphabetically & time, look at the charts and knock out ATA trade and position confirmations quickly.

You should be able to fit up to 9 markets across, 5 time periods deep.

When your trading 5+ time periods in 45+ markets, set up different profile pages using the exact same format for each, in this example FX1, FX2, FX3, FX4, FX5.

One glance at each the FX profile page tells me the direction for each market, each time period and which markets have the cleanest trends to trade allowing me to check my positions quickly and confirm the ATA team is doing their job correctly.

FX2

FX3

FX4

FX5

Once you get the hang of it you can go though 45 different markets trading 5 time periods in each in less than 5 minutes.

When your trading, Indices, Currencies, Energies, Interest Rates, Individual Stocks, ETFs and CFD’s using multiple time periods its easy to have several hundred positions on in multiple accounts at once, it’s imperative to stay organized and always have a one click eject button in place enabling immediate liquidation of all positions and/or to cancel all open orders. Have another for every sector, one for each program and one for all positions in a given market, you’ll probably never use them but it’s nice to know they’re there if things get quick & nasty.

11) Be prepared for volatility

There is a very big difference in order execution capabilities in 2019 versus all other bear markets in history, internet speed and computer capability are literally 10 times faster in 2019 than 2007, in 2019 order execution is 100’s of times faster, we’ve gone from flip phones and open outcry on the Exchange floor to online order execution in nano seconds in 2019.

5 February 2018 chart using 10 minute bars

Going to be a very fun year packed with major market moves in just about every sector.

Published by

Asset Investment Management

Family Office, Advisors