April 2020 Video Call

All right. Hello and welcome. We are doing another special, a Coronavirus quarantine broadcast. This is going to all members of my service, so not just Codebreaker or Alpha Money Flow, I'm talking to everybody today. So my goal of doing this from my home office today is to go over where the markets are at right now, what folks are concerned with, what actually we've been seeing, the latest headlines, financial health lines, of course headlines related to coronavirus, the risk from here, everybody is talking about reopening, what does that look like? It's kind of turned into a red vs blue argument, libertarian versus big government. So it's going to be an argument as investors that we need to keep a close eye on, and I think we need to take part and participate in that conversation over the next few weeks. But as investors particularly, we have to keep our eye on it.

So probably the big news today is, I guess there's two things, the news out of Gilead, and the GDP numbers. So we'll get into both of them. We'll get into some of the metrics I'm looking at, some charts as well, but we'll start with the Gilead announcement this morning, and I guess we need to consider it an announcement. It's very preliminary, but there's good news out of the company. They're working on a drug that could potentially, it's not a cure or anything like that. It's almost like the Tamiflu for COVID-19, you inject it intravenously and it helps recovery. First results a couple of weeks ago, maybe last week were pretty bearish on the idea, and the stock dropped and folks weren't all that excited about it. And then some Chinese data, not so great, but then today we get a glimpse of a much bigger study. The actual figures aren't released yet. The company itself said numbers are looking good, so the market is reacting to that.

Some of the talking heads on TV and the media are saying, hey, this is the thing, if this works this is an excuse to open up the economy and get people back to work, get people shopping again, it's the cure for really what's ailing us. It's way too soon to put our chips on that bet, but it's something to look forward to or to look at as we get more news. I'm optimistic on it. I think something, we live in America, the greatest country on the planet. We live in the greatest time ever on the planet as far as medicine and science. Some great minds, some big money is behind all this. So I think we'll get something and hopefully get out of this mess sooner than later. Some people that are the pessimists saying there's no way we're ever going to have a vaccine. There's no curing this. I don't believe it. I think we're going to find something and I think it's going to come sooner than later, which is very good news for investors.

So the GDP numbers, we'll dive into those. I'll share my screen to help you do that. So let's just do that now. So what we're looking at here is the latest figures from the White House. But let me just summarize it for you. So during the first quarter, January through the end of March, gross domestic product in the country fell at 4.8%, so that's not a very usable figure. The thing to understand here is the expectation was for a dip of about 4%. Now the expectations were all across the spectrum, and you also have to remember that that's not equating January and most of February were pretty good. We hit some all time highs in the market in February, and then all this kind of started really early March, mid-March. So everybody is really looking at what the Q2 numbers are going to be like as far as GDP growth, and there they're going to be bad. They're going to be worse than this, this 4.8%, almost for sure. I can't imagine a scenario where they wouldn't be.

Within this report, some interesting ideas that we have to understand is personal consumption was way worse than the consensus estimate at negative 7.6%, so spending was down big time versus expectations of contraction at 3.6%. This time last year was actually growing at 1.8%, and it's important to note, this time last year GDP was growing at 2.1%, excuse me, in the fourth quarter of last year, not this time last year.

So you can see GDP is down. But the reason I brought up this chart, it just puts things into perspective, how bad are things right now compared to where they have been. So here's where we're at now. Obviously the big red, it's pretty bad. So that's a pretty bad quarter compared to all the other bad quarters since post World War II. Next quarter or this current quarter, the next reading is probably going to be down in here and it could challenge this guy right here. So that's going to be interesting. So that's really the tell where we're at right now. It's just how bad is it and how quickly will things come back.

So I saw a wall street journal article earlier today and it had the GDP expectations for the rest of the year. And what's interesting about that, and what's so pivotal is going into the third quarter, into the fourth quarter, right now the expectation is that things really kind of have that V shape recovery, where things start to go up. I think we're getting more and more that's showing that this is going to be slower than a lot of folks, and a lot of analysts initially thought that recovery, even as things open up, even as the laws allow stores to open back up and restaurants to open back up, are people going to take advantage of that? Are people going to go out there? Are all these people that aren't able to pay their mortgage and all their rent, are they going to go to the movies? Are they going to go buy new clothes? Probably not. So the longer this lingers, the less steep to flat or that recovery curve is going to be. And that could cause some trouble.

So really when we look at the stock market and where things are right now, that's really the question that I'm asking longterm. So what I'm talking about now is kind of longterm, this really doesn't have anything to do with our trading strategies either in Cold Breaker or Alpha Money Flow. We're looking much more short term, trading opportunities there. But I'm just trying to give you a general picture, because I know all of us have longterm investments as well. So here's an interesting look at the S&P 500, let me zoom in here for us, using stock charts. Nope, I don't want to do that.

All right so here we go. Let me try to do this without closing everything down or breaking the internet. So this is the S&P 500, it should look pretty familiar to you. Had that big painful dip in March, and then bounced right up above it, lower KI line here, back above the mean, the mid channel line, and then we're back above it. So this is kind the Codebreaker look, and then looking at it from the Alpha Money Flow, here's the money flow indicator, and this is looking using a 20 day look back period. So you can see we went red. Now we're back into the green. But look here, this is kind of interesting. This is what I'm seeing right now, is what happens. Are we going to bounce off of this? Today we're getting some strong money flow, but it's pretty interesting over the last few weeks, it's kind of went sideways there for a couple of weeks, it dipped.

Volume is starting to come down. We can see that, been writing a lot about volume. As volume comes down, we may cross back over into the negative side here and that could be not a painful, but that could be a bit of a correction to what we've seen. I think a lot of folks that have been really watching the charts and paying attention to the data are kind of expecting that. Things got overheated, things are overheated as far as the recovery. So it wouldn't surprise me to see if things go, money flow goes negative here for a bit and gives us some more buying opportunities. I'd be all for that. We will take full advantage of those. And you can see it here using the KI system. We know when we get up against this upper barrier we tend to bounce off of it and head back down.

So these two indicators are working together and showing that we might be in for a short term dip. Hopefully it's not anything longterm. It would take a pretty monumental change in sentiment and data to get us back down. We'd have to see more closures. We'd have to reverse the current trends. So I was talking to a friend this morning on the phone and we were talking about what it takes to open things back up, and what things are looking at. And I said, it's the media, the media is really out there looking for a reason to show that all these libertarian minded governors that are opening back up are wrong. They're looking to show that infection rates are going back up. So if we start to see that and if that becomes a true problem, then we'll start seeing closures again and the markets will sell off because that V shaped recovery I mentioned will flat line. So that wouldn't be great. So that's about it on this.

we can look at, let me show you what a 50 day look back period. Some of you will find this interesting. Some folks, it might blur your eyes on the money flow, but you can see we were green this whole time. We're still getting kind of low over here. If we go back to 10 days, you can see we already crossed it. So I use 20 as my main indicator, but I definitely look around longer and shorter look back periods and you can see we went red there. So if you're a real short term trader, not intraday, but week to week, this is an interesting opportunity. You're going to have some buying opportunities I think over the next few days, next few weeks probably. So we'll see where that goes.

Of course, the Fed is meeting today, as soon as those GDP numbers were released this morning, it's debatable. Gilead released it's news almost at the same time. But future spiked, we went from S&P being up about a half a percent to over a percent and a half based on, I'm assuming, the bad news from the GDP, the worst unexpected news, which means you're going back to the longterm trend we've been talking about for the last two, three years, is that this bad news is actually good news because it means more government stimulus and more action from the Fed. So the Fed is meeting as I speak, and we'll get more from them later today and know exactly what their next steps are going to be. And I've talked about negative interest rates, they're buying bonds, they're even buying bond ETFs right now, trying to keep things propped up.

And so much of what they've done to date, it's important to understand is what they've done to date is really just trying to keep the wheels greased. They haven't done a whole lot of stimulative things yet. It has been stimulative, but really they're just trying to keep the bond market from imploding. That was the first, you look back a month ago, the first waves of the Fed's action, they were just trying to keep things alive. So now the market is just starting to look for that stimulus. So we'll start looking for that and hearing from them very soon on that.

So listen to me do what I do almost in all of these videos, is just look at CNN's Fear and Greed Index. I don't use CNN for a whole lot, but this is helpful. You can see a month ago we were in the extreme fear category, here I'll zoom in a bit more. Hopefully that's working for you. We were in the extreme fear area year ago. We were very greedy or greedy, I shouldn't say very, and then last week and prior to that we were in fearful. So things are getting better according to these sentiment indicators. What I thought it was interesting on here is the put to call ratio. In March we saw way more puts being sold than calls, makes sense. It's gone down and we're starting to see it rise up a little bit again. But it's kind of going back to the longterm trends. So we're in pretty good shape there. This calls agree, I say it's back to normal, which I guess given the long 11 year bull market ingredient, it would be normal.

This is pretty interesting. The number of companies hitting 52 week highs versus lows. Of course in March it was almost everything was hitting lows or definitely more stocks were hitting lows than highs. Not everything was hitting lows, but now we're getting back to this equilibrium point. I've been looking at charts where stocks are back above where they were in February, and are hitting those highs again. So it's like I wrote earlier this week that it's a stock pickers market. Going from the lows in March to mid April, almost all the charts look the same, big dip and then that kind of stair-step way up. Now we're starting to see some differentiation there, which is really exciting. That's what this chart here is showing is that some stocks are doing poorly, some stocks are doing well. Boeing came out today where they are laying off another 16,000 folks in sewing production and they're in trouble. But Netflix, Amazon, a lot of these companies are doing well.

So I wrote about the breadth on S&P 500, five companies represent 20% of that indices capitalization. That's a really important fact to understand. And as that index goes up, it's really those big tech behemoths helping to push that forward. So this is something to watch. Hopefully it climbs above this kind of neutral line and we start seeing more 52 week highs again, that'd be very optimistic. Market volatility, so the VIX is back below it's 50 day moving average. That's good to see. Hopefully it stays there. Not a whole lot to say on that. We talk about the 125 day moving average a bunch. We were bouncing off that. We've got a little ways to go until we hit that again, and we'll likely bounce off of it and once we get there, but hopefully it's not too much of a barrier and we can flip over it and use it as a support again.

Bond market, junk bonds versus investment grade, this one is really hard to put any weight into right now. There's so much manipulation and just wonkiness in the bond market. If you guys have followed me for a while, you know I'm a big interest rate wonk, there's just so much going on in there. I can't put much, other than the fact that we can say there's so much trouble and so many variables and wonkiness and manipulation in the bond market, which is troubling, that's about the only thing I can get out of a chart like this and what's happening in the market. When the Fed and Washington is intervening so heavy, we can't rely on that data at all.

For this one we can rely on, fear and greed over time. We went from extreme fear, but we really, you remember the end of 2018, it was a big dip there. But man, I can't say that the markets were as fearful then as they are now. But this is really just a kind of a summation of, not emotions but these fear greed data points that are showing this. The main thing is we're climbing back up basically back into the normal range, and the VIX has been coming down pretty steadily over the last few weeks, which is good. So if you're an options buyer, the lower VIX means options prices are coming down. So it means looking at some of the trades that I've wanted to make over the last few weeks and the options are just so expensive. We'd have to have a quick 50% move, if not more to make any good money on these options. So option sellers have been doing well, but now we're getting back into the normal range and we're seeing it with our gains, both services we've taken some a hundred percent gains this week. We're seeing where we can get some options back into a decent buying price and some good activity there. So I'm excited about that.

I'm also excited about Bitcoin. I've been watching Bitcoin closer and closer. Here, I'll zoom in again. Look at this, this was a have, having if you follow the Bitcoin market and the payouts and the mining and all the algorithms and all that, related to that, there was a Bitcoin having, there's talk of or there's plans of another one here soon. So that's sending the prices back up.

And we just crossed that upper level, upper KI level again, and it's been pretty bullish. I've been looking at it, I think I recommend it to some friends down in this level and it did very well. That's cool. So Bitcoin is interesting to watch. Why wouldn't it be, there's so much currency issues, manipulation across the world. Now is the time for Bitcoin to really shine. So again, if you follow me, I've never been a huge Bitcoin speculator. I love the idea, the freedom of this non-government asset or form of money currency, but now is the time for it, when everybody was speculating and pushing it to 17,000, that's a little wonky, but now we got that noise out of the market. We're starting to see some truer action and an environment like this, when our government is locking us in our house, stimulating anybody from cruise lines to airlines to hospitals and everybody is getting free money right now and our deficit is soaring. Why would you not start to look at a cryptocurrency, something out there.

So I don't know ultimately if it'll be Bitcoin or what it'll be, but this is a fascinating space and I'm starting to get more and more curious and more and more excited about it. So that's cool. Hopefully I'll be writing about it and telling you some plays there. Write in if you want me to start looking at Bitcoin closer and making some recommendations. I used a pretty cool indicator recently to track it down using some overnight techniques, and it worked really well. So I'm willing to beta trade that here. And speaking of beta training, we did a some beta trades in Codebreaker two weeks ago, and we're making some good profits on that. We just locked in 117% yesterday in one of those. And our other one GoPro, playing GoPro is doing very well and that should be a double here very soon as long as things behave. So that's really cool. That system is showing good signs of working and I'm excited about it.

Before I ramble too long, I just wanted to kind of sticking in that that macro idea, I've written about this in Manward Digest over the last few, probably a few months by this point, but these are the stages of a disaster. So you'll see a bunch of different things. Throughout my career I've been involved in different community things and emergency management that sort of thing. And these are the sorts of things we talk about there, and I've seen it firsthand. So I just wanted to kind of go through this with you and just show you where we're at.

So obviously through the warning and threat stage, the pre disaster stage. We've seen the impact, was it three weeks ago, New York City was the headline, everybody was following the counts and worried about hospital space, ventilator space, that sort of thing. So we saw the impact and then our local highway here about a week or two ago, there were people lined up on the bridge waving flags for the frontline workers, grocery store workers, nurses, police officers, EMS officials, this new breed of heroes. So community cohesion, you can't go on social media without people making masks, giving masks away and really coming together. So this has been spot on and now we're getting into this disillusionment phase. Politics are coming in, it's becoming red versus blue. And we're starting to, this inventory. That's a huge word to understand where really tomorrow's Manward Digest, in fact, will be about the idea of we pulled the ejection handle, we popped out of the airplane, you're going to have to read it to understand it, but we're parachuting back down to ground, trying to figure out what went wrong, where we're headed, that sort of thing. That's where this inventory, what really happened over the last few months. That's where we're at.

And it's going to create some disillusionment and then here's these trigger events. That's really key. That's what I was just mentioning where the media is really going to start to try to show these waves of these new pockets of COVID outbreaks, that sort of thing. And again, some will be hype, some won't be, but these trigger events, it's going to have an effect on the markets and it's going to create some pretty good trading opportunities, I think. And so we're going to start to see the VIX bounce again, and we're going to come out of this honeymoon phase and then we're going to have politics and news threats. It will be much smaller scale than what we saw. As you can see here, this is a great way of looking at it. But then we'll finally get into the reconstruction phase. And to me, this is probably 2021 at this point, maybe late fall, early winter. But to really get into this construction phase and out of this trigger event, this disillusionment phase, I think it's going to be next year. We got to go through flu season and you know it's going to be a big topic once again in the fall, as soon as folks start getting sick, I'm sure local schools are going to take a week off because somebody in somebody's family got sick.

So we're going to have these bounce backs over the next few months, and that's just totally normal. So that's the goal here of really what I'm trying to show you is stick with it. Stick with these strategies, because we know they're working, we're going to follow the money, we're going to follow the charts and really take advantage of these short term gyrations. They're going to play to our advantage. Especially going back to my favorite word, know how, because we know this is what happens and we know that's how it goes. So I'm going to go back to my webcam here, sorry, and say thank you. I've got a lot of great notes recently from subscribers thanking me for the research and like the calm tone through all this. I appreciate that.

It's been an odd, if not rough couple of months, but I think we've come through it with our senses. I'm really excited to see the debate over the government's reaction to it all. I think it's a great conversation for our nation to be having is whether governors can lock us up and the next debate is going to be, can they give us a vaccine? Maybe part of this is the recovery, is we all get vaccinated, do what the government says, and that's going to be a good healthy debate. There's a lot of arguments on each side and that's important. I think if we all agreed on something, if we were all down in the middle of the road, it'd be trouble. We need to argue on the tails of the equation, tales of the curve, and come somewhere in the middle to get the true facts.

If we just go by what we read in the headlines, if we don't push for ourselves and think for ourselves, there's going to be trouble. So that's my goal in this. Manward Press is not your typical publisher, and we take great pride in that. We're not your typical financial publisher. We try to use different tricks, different strategies, and really focus on that, that know how. So that's the goal of these videos. I hope you appreciate it. If you do, let me know, tell a friend, whatever. But I hope you're making some good money. I hope you're staying safe and thanks for listening to me mumble through all this today. I appreciate it. Stay safe and stay in touch for sure. Thank you.