All posts by Chad Shoop

Insider Trading, Options

The Most Likely Time for Market Panics Is Over the Next 30 Days

At our Total Wealth Symposium conference two weeks ago, the main question I got was: Where do I see the market headed in the next few months?

It’s one of those questions you need a crystal ball for, because the truth is, no one knows.

We have an idea, and we follow our indicators and other tools to help us gauge where the market is heading. But in the end, it’s an answer that changes from day to day.

One of the tools I use is a calendar based on an 18.5-year cycle.

The calendar dates back to 1784 and has identified major bear and bull markets, as well as shorter-term market panics and stock market rallies.

And 2017 is a year where, according to the calendar, market panics are likely.

But here we are, starting the 10th month of the year, and there hasn’t been any.

However, the year’s not over yet. And the most likely time for market panics is over the next 30 days…

A Pattern of Pullbacks

The calendar identifies each year with a letter.

For example, in 2007 to 2008 the calendar called for extreme low prices, and it expected a new stock market cycle to begin after that, which would lead to several years of rising prices. Just like the calendar predicted, the market bottomed in March of 2009 and rose rapidly for several years.

The year 2017 is annotated by the letter F, which means stock market panics are likely.

So, in April, I went back and showed you how each year that ended with an F stacked up since 1900.

Take a look at this chart of the previous years marked with an F and the max drawdown during those years (from highs to lows):

A 233-year-old calendar has predicted history’s major bear and bull markets. And 2017 is a year where, according to the calendar, market panics are likely.

According to data based on the Dow Jones Industrial Average, each of those years suffered at least a 5% pullback.

So far in 2017, the max drawdown (the difference from the highs and lows this year) is about 3%.

Does that mean this year will not have a 5% correction? I don’t know yet.

But what I do know is that if we are to see one, the month of October is the most likely time it will occur. Here’s why…

The Most Volatile Month

Going back over 100 years, October is a historically volatile month. It’s actually the most volatile, with a standard deviation (a measure of volatility) of 1.44%. The average of all 12 months is just 1.08%.

You can attribute the reasons for October being the most volatile to many historic drops, crashes and downright panics occurring during the month.

The Dow experienced a 554-point drop on October 27, 1997. A 733-point drop on October 15, 2008. And in 1987, the Dow plunged 22% on October 19.

It also experienced crashes in October of 1929, 1978 and 1979, and October marked the highest just before the bear market in 2007.

With the 18.5-year cycle calling for at least a 5% correction this year, October poses the best opportunity for that.

I’ll continue to follow the markets closely. Even though this calendar is accurate overall, precise dates are off, and the panics could be up to a year from today. So even if we survive 2017 without a panic, we are not in the clear yet — a panic is still likely.

The good news is that this will be just a correction. The calendar doesn’t call for an all-out bear market until we get into the 2020s.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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Growth Stocks

The Future Is Here. Now’s the Time to Grab These Investments

“Think about all the money that will be made.”

We were having a somewhat uneducated discussion about the money that will be made from self-driving cars.

At the time, self-driving cars were still just in the movies. But the possibility of them being on our roads soon was in the works.

“Every road will need new sensors for the car to know it is still in its lane. The stop lights will have to talk to the cars too. This is going to make someone a ton of money.”

At the time, it seemed like the future of self-driving cars relied on expensive changes, like the need for computer chips inserted in everything.

Fast-forward to today and, man, were we wrong.

 Now Tesla Inc. (Nasdaq: TSLA) has multiple cars already on roads that are able to drive themselves, yet our roads have not added one chip to assist in this transition.

So how’s it possible for self-driving cars to work without these changes?

Well, it’s all in the advancement of technology. But to be specific, it’s in the high-powered cameras that Tesla uses, and the uses for this technology extend well beyond self-driving cars.

And that’s our opportunity to profit today.

Our Never-Ending Push for Convenience

Apple Inc. (Nasdaq: AAPL) announced last week that its high-end iPhone will use facial recognition software to secure your phone. But its only possible thanks to improvements to its camera display and other camera-based sensors.

Other experts behind self-driving car technology recently designed a security camera for your home that identifies objects and people more specifically — such as if your kids are home instead of an adult. Or if an adult enters your home with your kids. Even if your dog got out. The possibilities are endless.

And as Apple showed off in its presentation, when you give the world the greatest facial recognition technology that exists, what do they do with it? They make a poop “animoji” (an emoji that your face controls).

At this point, a Minority Report-type of environment is not hard to envision.

Your self-driving car drops you off at the mall entrance. From the moment you enter, every sign, every store automatically knows you are there. They know what you like or don’t like right away, and can point you in the right direction. Checkout no longer becomes a physical experience.

Amazon.com Inc. (Nasdaq: AMZN) is testing several stores where you scan a device to enter the store, pick up what you want and simply walk out. The checkout process is an automatic experience that charges you for the items you selected.

With the improvements in recent years in facial recognition software, that’s easily the next step in our never-ending push for convenience.

It’s seamless, as Apple proved you can unlock your phone in just seconds by looking at it.

No wallets, no phones and no computer chips. Just your face.

That’s the future, and here’s how you can profit…

The Big Winners

Each of the stocks mentioned so far are all winners in the space.

Tesla has worked to a great extent with using camera technology, and its breakthroughs could easily lead to another profit segment for the company.

Apple could eventually use its knowledge and facial recognition software to sell to other companies or license its own new product line to other businesses. Plus, it makes many of its own chips now, and that could end up as a new revenue stream to sell to other companies if necessary.

Amazon is all over the place with its operations, but it is looking to change our retail experience. So it is going to be part of the future of retail.

But it’s stocks like Intel Corp. (Nasdaq: INTC) that are going to be the big winners.

The company recently bought Mobileye, one of the leading tech stocks in the self-driving car industry.

Its technology is what helps cars detect other cars on the road, people walking and other objects. This is the technology that retailers will eventually use to know if you put the leather jacket in your cart, or if you grabbed the pants that were just below it.

It will be the seamless checkout Amazon is looking for, and it doesn’t require added infrastructure.

All it requires are a few cameras located in the store, which are already in place for security reasons.

We are not talking decades away, either. This will happen in the next few years. Now is the time to grab these investments.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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