Transformity MacroMarket Index Drops to Event Driven Bear Market
Dear Subscriber,
#1--Web Site is BACK UP!!!
#2 Our Game Plan remains the same--continue to hold CASH and XOP/SPY PUT options hedges--do NOT cash them in yet. Same for $10k-a-Month Investment Income Club portfolio--hold the case we got going to cash Feb 25.
PS: IF you followed our advice on the XOP put options--that put option is up about 1800% as I type this. We did not, of course, think that Russia and Saudi Arabia would decide to detonate a virtual nuclear bomb in the American fracking sites.
#3 All-Access Club Members: We are scheduling a conference call with Jay Hatfield the portfolio manager of PFFA and AMZA Friday afternoon after the close of market (and will publish a transcript ASAP after the call). Be on the lookout for an email with directions. If you want to join us on the call and not an All-Access member, you can still join here--we have 3 seats left! Make to sure you scroll down the All-Access offer.
Quick Market/Economic Summary: WE NOW Project an Event-Driven US Recession & 30% ish BEAR Market
The basic premise of Transformity Research is to profit from and leverage the ripple effects and huge wealth/profit creation from world-class transformative events in the commercial and regulatory world. Covid-19 pandemic IS a global economic transformative event--unfortunately to the negative.
The Transformity Wealth Creation & Destruction Principle in Real-Time
In essence, the Covid-19 pandemic was the first domino to fall that has set off a vicious circle feedback loop of multiple domino/second-order effect economic bombs:
a supply chain nuke into China/S.Korea/Singapore that globalized into
a global virus pandemic based demand nuke which morphed into a virtual plague in now-infamous "social distancing" industries--travel, transportation, hospitality, food services, sports, public events creating and then
Russia/Saudi simultaneously launched their own nuke into the America energy industry with a price war which created a systemic bomb in the high yield hydrocarbon reserve lending business with $200 billion of bank loans and $300 billion in high yield debt (we have BK rate in the energy world of 18% now and goes to 50% without government intervention)
We have a White House and the POTUS with a track record of making facts up out of thin air and daily gross exaggeration. As such, they have completely misinformed and continue to contradict actual epidemiologists in their own administration which obviously creates investor distrust.
A Congress that is not basically unable to act quickly on anything
With the combined economic effect of all these economic nukes being a stock market panic with a negative wealth effect of $10 trillion worldwide which means
USA gets a mild event-based recession in Q2/Q3 even with $1.50 gasoline and mortgage refinancing
#3 FINALLY--wow--the WHO finally tells us what we have been telling you for weeks--Covid-19 is a global pandemic. As of this moment, we (the world) have a new coronavirus that features
NO natural immunity
NO vaccine--and won't till next Spring latest
No effective therapeutic treatment while
We are not taken the tough social distancing measures that we need to take like e.g., New York state cordoning off Covid-19 hot spots like New Rochelle/Italy or Wuhan China
We have a POTUS and White House who are allergic to admitting bad news and have contradicted the actual pandemic risk identified by real experts
We know from Wuhan that late reaction to Covid-19 containment creates a 100% certainty that US hospitals in hotspots especially in WA and California will be overrun with cases and elderly death rates at 18%
An Event-Based US Recession IS NOW OUR BASE CASE
Our latest Transformity Research MacroMarket Index reading is BELOW 15--14.2--which means we should expect to see an economic recession (two straight quarters of negative GDP growth) in the next 4-6 months Q2/Q3 UNLESS Washington gets $1 trillion+ fiscal stimulus package is done by April (not holding my breath.)
Final Word-- with no "Biden Bounce" today, the market has priced in Biden as POTUS candidate. With no headlines in the near term that would make normal people optimistic, our market support levels remain the same:
IF We break and stay below SP 500 2850 we go to
Next strong support is around 2600 and if we break that
We go to 2350 on panic capitulation melt-down--30%+ drawdown
The options market is hitting an 80 VIX which is a real panic
As always, the stock market carnage ends when stocks have moved from weak hands to strong hands with the foresight and conviction to imagine the world in 2021 snapping back from pent-up demand.
The good news? IF we get below 200--our favorite Industrial Revolution 4.0 stocks will EXPLODE higher with the economic recovery! BUILD CASH--HOLD PUT OPTIONS and roll them out to September--and be ready to leg in 1/3, 1/3, 1/3 when we get a legit bottom.
A legitimate bottom will be an "I give up--get me the f%^k out--I can't take the pain any longer" capitulation with 65-70 VIX and our Industrial Revolution 4.0 stocks ready to SNAPBACK like a rocket ship.
PS--Our "6-Month Portfolio Protection Plan Membership" to Transformity Investor PRO is here to help family and friends to navigate this 3-6 month bear market. They need CASH to earn a lifetime of wealth when the US and global economy snap back.
My mission here is for Transformity Research to make a positive impact inform as many investors as possible this year about
WHY this 30%+ Bear Market for Stocks will be powerful but relatively short as its an event-driven bear market
HOW they can protect their retirement nest egg (raising cash and using XOP XLE SPU QQQ put options)
WHY there will be SOON another historic buying opportunity like late 2018 to earn 100-200%+ gains over just 6-12 months. With average stock market return since 1988 8%--there will be a once in a lifetime opportunity to earn 20-30 YEARS of stock market wealth in 24 months or less.
We know the leading 20%+ unstoppable secular growth sectors of the great Industrial Revolution 4.0 being led primarily by American based disruptors WILL BOUNCE BACK HARD because
"Value Investing is Dead" in a world where you discount future earnings and terminal value of companies growing just 2-4% at 1%!
IF YOU HAVE family and friends that have a lot at stake and at risk in this now undeniable global pandemic and the negative real-time second-order global economic effects that are rippling through the world economy, feel free to forward them our Code Red Updates and invite them to click here and join us for just $49 in the Transformity Research digital bunker.
Our Game Plan Remains Intact
Action to Take: HOLD your XOP Put Options and SPY PUT OPTIONS. IF we get a bounce off of 2850 FADE THE BOUNCE to build cash or PFFA shares under $22-BUILD CASH
PS--final message. We are down to 3 seats left for our All-Access program (which includes 5-year subscriptions to both newsletters for just $495--savings of over $500). If you want to take advantage of this one-time promotion, here is how you sign up (I suggest you do it on a laptop or PC)
To complete your registration,
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Final Word: Hold on--this crisis will end when it ends and it ends relatively soon.
We will publish our entire list of favorite companies and plays to prep you for the demand snap-back that is coming. Stock markets are always driven by fear of missing out (FOMO) ALWAYS overshoot tops and overshot bottoms on fear of losing money.
We will take advantage of our still Paleolithic brain stem and behavioral instinct to start legging into our top 12-15 plays in Industrial Revolution 4.0 industries and high income plays for $10k-a-Month Investment Income Club as the mild US event recession peaks and hopefully Federal fiscal stimulus gets approved and rolls out.
We will not catch the absolute bottom. The pandemic will get worse before better. The leaders of the old bull market will be the leaders again--that is the ONE certainty here as "value investing" in 2020-21 in a world with <1% Fed Funds rates is as dead as it was in 2009-2019.