Hey There Income Hunter,

What a whipsaw trade yesterday.

For me, it’s further proof that we’re in a bear market.

This will go down as the week that investors began the massive shift from financial assets to hard assets.

Look, you can’t wait until the Fed tells you they won’t hike as much as expected (which they eventually will) … because they are always way behind the market.

We were getting incredibly bad internals a month ago.

Clues including internal signals showing that ex-FAANGMT stocks were falling below the 200-day moving average and heading for bear markets one by one. 

Now the mentality has to switch somewhat to when the Fed change its tune on hikes.

Either way the place you should consider allocating to is GOLD.

Today, I’ll share supporting data so you can be prepared for the massive move coming in the precious metal. 

Let’s mine this information for profits.

Survey Says

First, let me show you the new survey on what the most crowded trades are.

This will give you an idea on how long the move from growth to value can last.

It is hard to believe the needle hasn’t budged much on the long US tech stock trade …

I look at that chart and I immediately want to buy healthcare and sell tech, but it’s not because I am a contrarian …

It’s because Stage 4 tells you to sell tech and buy healthcare and bonds.

What’s Stage 4?

As a reminder, my Power Income Trader system breaks Fed and US Government policy, growth, and inflation into 4 stages:

1. Balance – growth is accelerating, and inflation is decelerating

2. Explosive – both growth and inflation are accelerating

3. Stagflation – growth is decelerating, and Inflation is accelerating 

4. Deflation – both growth and inflation are decelerating

Based on a custom array of input, these are the sectors I have targeted to be long and short in Stage 4:

 

That is why I say if you get the Fed policy right, you get the market trends right.

In this case it’s a bonus that the right trades to do now are ones that investors are still on the wrong side of.

So, here is the way I see it. …

• If the Fed doesn’t say anything and goes ahead and hikes rates, money will move out of tech and into silver and gold miners. 

• If the Fed does say something and walks back the tightening stocks will recover, but gold miners will soar on that news. 

Look at the move gold has made against SPX in the past couple of days …

The chart above shows a pretty big breakdown in the SPX/Gold ratio. When it gets going it’s hard to stop. 

Here is another very good indicator of a U-turn uptrend in the metals. 

Silver has had a couple of great days and is now breaking the recent uptrend in the gold/silver ratio. This signals a period of silver outperformance.

The gold / silver ratio has been a solid leading indicator. Once silver starts to outperform gold, it is a great signal of a major uptrend for the entire precious metals sector.

Bring It Home

The markets are aligned, as the sectors that should do well in Stage 4 acting as they should – and the ones that should perform badly are acting according to type, as well.

I am sure the White House is as confused as the Fed is. So, the critical timing is when the Fed starts its walk back. 

The Nasdaq-100 is down almost 12% and the survey I mentioned earlier was unchanged as to what the most crowded trade is. 

So, let’s see what Jerome Powell says next Wednesday. If this continues I expect him to turn more dovish.

The sector I want to be long for that possibility is Bonds. TLT, ZROZ and IEF are my choices. Maybe LQD also.

I’ll firm that up early next week. Until then …

Live and Trade With Passion My Friend,

Griff