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You Have No Choice But To Be Bullish on US Stocks

Just two weeks ago the S&P 500 was down at 2000, and we currently are around 120 points higher.

This "call" may seem a little late, but in the context of the range we've been in, this current move could just simply be a blip.


Given the current situation, we have been in a cyclical bear market in the context of a secular bull market.

You  may ask yourself...

"Self, how can we be in a bear market when we haven't seen a 20% drop?"


Markets can correct through three ways: price, time, and momentum.

For two years, US stocks have been in a sideways corrective pattern with plenty of shakeouts.

Now let's put in the past two years in the context of a few global macro events:

The Crude Oil Market Collapsed


Too much leverage and too much supply led to a structural collapse in oil. Over the course of two years, oil ran from 110 to 30... basically a 70% drop in prices.

It wasn't just crude oil... the entire energy and materials complex was hit aggressively:


Over the course of a year, XLB (S&P 500 Materials ETF) dropped over 30%.

And XLE (S&P 500 Energy ETF) was cut in half.

What happens if we look across the pond?

Overseas Markets Finished Their Bear Markets

A look at EEM (Emerging Markets ETF) shows how much damage was done over the past few years:


A 40% drop.

Similar instances can be found across the globe.

If you've been waiting for a bear market... you missed out. There were and have been plenty of established and mature bear markets and it's possible that those cycles are over.

3 Volatility Events

spy-standard deviation

This is a weekly chart of the S&P 500. The lower study is a standard deviation plot, which shows us how big the week's move was in relation to the past half year's volatility.

We have seen 3 major volatility events over the past two years: the ebola crisis, the China currency crash, and the risk rotation at the beginning of the year.

Three major shakeouts. If investors were scared for any reason whatsoever, they've had plenty of opportunities to sell their stocks.

In fact, that's what we've seen. Equity fund outflows have been negative for basically the entire year.

US Treasuries Have Gone Parabolic


This is a weekly chart of TLT, an etf that tracks long duration US Treasuries.

The lower study shows us how many weeks in a row that we have seen the etf overbought.

As it stands right now we have had 5 consecutive weeks above the weekly upper bollinger band.

That has happened only 2 other times since 2008.

In fact, for the first tie since the market crash in 2008, the S&P 500 dividend yield is now higher than the 30 year treasury yield.

The reason for this move is pretty simple.

30% of all sovereign debt now have negative yields. That means you have to pay their governments to own their debt. This doesn't make sense to me, but it is what it is.

So we've seen capital flight back into US Treasuries as it is the best yielding instrument right now.

The Total Setup

Let's put this all together.

Over the past two years, we've seen a Brexit, a Chinese currency crisis, an oil shock, and a biological outbreak scare.

During this time, oil stocks got cut in half, emerging markets were down over 30%, the BRIC countries are getting slammed, and European stocks also got nailed.

There was also a crash in the British Pound to levels not seen since 1985, and the Swiss Franc had something like a 20 standard deviation move.

We're also sitting with US Treasury 10 year yield at 1.3%.

Oh and one more thing: the Fed stops their Quantitative Easing at the end of 2014.

Now think about this...

If I came to you back at the end of 2013 and told you all of this would happen in the next two years, where would you put the price of the S&P 500, the Nasdaq, and the Dow Jones Industrial average?

Unchanged? Heck no.

You'd say we'd already be off 20% along with the rest of the global macro landscape.

What we are seeing here is an "in spite of" trade setup.

The S&P 500 is about to hit all time highs in spite of all that has gone on.

The US Markets have "zagged" while everthing else "zigged."

Absence of a trading signal is just as important as the obvious one.

Think very carefully about how you want to position yourself headed into the Fall of this year.

How to Get the 10,000 Foot View

I'm a believer that knowing the big picture will help you better frame your trading decisions in the short term.

Yet there is a problem...

You can end up getting lost in the wash.

Too many headlines, too many talking heads, too much noise.

That's why it's absolutely critical that you follow price action instead of the headlines.

Because if you'd listened to everyone else over the past two years, then you're probably one of those people that contributed to net outflows in stocks.

Yet if you follow price and keep a level head about you, it's much simpler and much more profitable as an investor.

We're Seeing a Blow Off Top in Silver

If you haven't been paying attention, Silver has been on quite a tear lately.

Here's a daily chart of silver futures:


The chart also has Bollinger Bands, which show us when a market is seeing movement larger than normal.

And for three days in a row now, silver has been above its upper Bollingr Band. That defines a parabolic move, and often it is a blowoff top.

That last candle?

Silver moved from 19.84 and hit a high of 21.22. 7% in a single day.

That in and of itself is interesting, but here's the kicker...

... that entire move happened during a 3-day weekend, not regular trading hours.

When we see a big move like that and it's not during a normal market session, we tend to see yet another attempt of those recent highs. I wouldn't be surprised if it cracked back above 20 this week.

Into any short term strength and I'll be looking to fade it.

Keep in mind, this is a short term trade. If we look at where silver sits on a longer term basis, this is probably the start of a new trend higher.


Timeframes matter. Short term, I'm bearish and it's worth a look to take the short side.

Yet into any weakness that feels like the bulls giving up, then it's worth a look to start a new longer term position and play for the move into the 27 level.

Want to know the exact way to play this using options? Join IWO Premium and you'll get the setups I take every day to earn money in the options market.

Breaking Down the Brexit

During a slow summer trade, Great Britain rocked the markets by voting to leave the eurozone.

The Dow Jones Industrial Average plummeted 800 points.

It looked as though the end of western civilization was upon us.

This harbinger of doom would bring plagues, locusts, rivers of fire...

Cats and dogs living together! Madness!

Yet, all it took was a single week, and we are already back to post-Brexit levels.

dow futures

What the heck happened?

I'm going to lay it all out for you so you can get a better feel for how markets actually work.

Don't Look at The Dow

If all you do is focus on the "big 3," you'll never see the entire picture.

The big 3 are the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100.

What do they all have in common?

They are all US-based indexes, and the are large cap stocks.

If you had been paying attention at all for the past few months, you would have seen a sustained "risk off" trade going on in stocks.

For example, look at the Russell 2000 index. This is made up of smallcap stocks, which tend to be viewed as riskier instruments as they can move around a lot more.

When the Russell underperforms the S&P 500, it means that there is a "risk off" feel for US stocks.

So while the S&P 500 is within spitting distance of all time highs, the past year's action has not been great for small cap stocks.


Watch Across the Pond

The Brexit news would mainly affect two areas: Britain, and the rest of Europe.

How have those indexes performed over the past few months?

First, let's look at the FTSE 100-- it's like the Dow Jones in Great Britain:


From the highs from May 2015, the index dropped 22% to the lows put in back in February of 2016. Since then, it's been a choppy mess.

We can also look at Germany for the other side... the DAX is the main index to watch for German stocks:


Same kind of movement as Great Britain... dropping almost 30% off the highs from 2015.

Clearly, the narrative in these markets is different than what we are seeing in the US. While the Dow doesn't look half bad, there has been siginficant technical damage in European markets, even before the Brexit vote took place.

It Was A Known Unknown

Often times when we have an event like the "Brexit," it has a tendency to fade the first move.

And the bigger the hype of the event, the higher the odds that the event will be faded.

The phrase is called "buy the rumour, sell the news."

So we came into June knowing that the Brexit vote was going to happen.

It was all anyone could really talk about.

And if fund managers were scared about the risks, maybe they would park their money into safer stocks and divest out of Europe for a while.

It's possible that the drops we saw in the markets several months ago had already started to price in some of the Brexit risks.

So when everyone is expecting the markets to run lower... it's possible that those investors who were anticipating that are already out before the event, or have hedged their bets. This creates a floor so the market doesn't find followthrough.

How To View the Field and Profit From Global Events

To get a better edge in the markets, you have to take a step back and look at other things besides the Dow Jones.

For this week only, we are offering a 50% off deal for our Macro Investing Course.

The Macro Investing Course is a 13 video training on how to understand the relationships in the global markets.

Once you finish it, you'll be confident and prepared for whatever the market throws at you.

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3 Reasons Why Our Iron Condor Service Is Winning

While the rest of the market is flat, our IncomeLab portfolio is up 13.29% YTD.

Last year, we were up 60%.

What's our strategy?

All we do is trade iron condors, an option trading strategy that gets results as long as the market stays rangebound.

1. No Trading Weeklies

If you sell premium on short term options, you have the ability to earn fast returns.

But that comes at a price.

If the market moves too fast, you end up getting blown out of the trade with no ability to adjust or manage your risk.

And there were two big moves in the past year...

The market crash in August 2015, and the correction at the beginning of 2016.

A lot of people got hurt by not planning for those kinds of moves.

It may seem lucrative to trade iron condors on weekly options, but the risk is too great if a big move does come.

2. Take Profits When You Can

There's no law that says you have to hold iron condors all the way to options expiratio.

In fact, doing that can introduce a lot more risk to your position.

You may be trying to pull the last bit of premium out of the position, but what you'll find is that the position will be "stubborn" for that last round of profits and you'll be stuck holding onto the trade.

Our goal at IncomeLab is to earn money as quickly as possible and not expose ourselves to uneccessary risk.

That's why we have a set of guidelines on how to take profits when a position is working for us.

3. Hedge Before You Have To

Way too many traders view iron condors as "set and forget" strategies.

In fact, they are dynamic risk positions that should be managed aggressively before the trade gets away from you.

We have a complete trading framework that dictates exactly when to adjust our trade to reduce risk.

Your "Teach You To Fish" Offer

If you are struggling to get any kind of returns out of this market...

... or you want a new strategy that offers actual diversification against other assets...

Then iron condor trading is right for you.

Here's how this works:

We have a specialized way of trading iron condors that gives us aggressive and consistent returns in the market.

And we have put all of our knowledge into a class called the Iron Condor Bootcamp.

I'd like to give it to you, today, for free.

All I ask is that you try out IncomeLab for a full 30 days.

You'll see the power of iron condor trading and how simple it can be to beat the market without timing the market.

After that month, you can stay on as a subscriber, or if you don't see how it's right for you, then we'll part ways as friends.

And you'll keep your copy of the Iron Condor Bootcamp as my gift to you.

To claim your special offer, simply follow the link below to go to your secure order form.

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