Markets.

The world economy is deflating, and the S&P is rallying, these two things don't go well together. When the economy deflates the stock market dives.
 
Investors hope the US and China will agree on a trade deal. Any rally caused by government stimulus and trade deals will fade away and the stock market will decline to new lows. The difficult bit is knowing when the decline will resume. Government interventions can support the market for longer than we can expect.  
 
Inflation is falling which is in line with the start of deflation, I expect goods, services and asset prices to fall in the months ahead. Right now some people are talking about a possible recession in the US. It will take a long time, months before the recession starts and then some time before the depression starts.
 
At the end of the depression a new crisis will emerge, the dollar will collapse. The economic crisis will have taken its toll on the dollar, this will probably cause a run on the dollar and this will trigger a collapse in bond prices. The result will be inflation. The dollar will lose purchasing power, the stock market will be considerably lower and it could take a long time, a decade or more before the stock market reaches the bottom.
 
This will not happen in a straight line, governments will intervene along the way and in the process they'll create some huge rallies like the one we are having now.

Vanguard founder Jack Bogle, who passed away last week, began his book Enough with the following paragraph.

At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds,“Yes, but I have something he will never have . . . enough.”

Enjoy your day !!

Good example, LFVN mentioned yesterday.

There are still stocks that are working, like LFVN's break-out today, but got to be fast and nimble in this environment, as lots of them reverse and reverse hard after they break out.

Looks like the machines can't handle VIX above 20 for a long time !

It’s a good idea to keep your eyes on the VIX relative to its 200-day moving average.

Briefly stated, the VIX is the “implied” volatility of the S&P 500. It's where market participants believe market volatility will be over the next 30 days. The VIX doesn’t look backward (historical volatility does), it looks forward. 

The VIX has been above its 200-day moving average since early December,  For long-only traders, it’s been treacherous since early December. For the short side traders, and long volatility traders, the past month and the first few days of January have been a bonanza.

The VIX will eventually move back under its 200-day moving average again and as it does, market behaviour will likely change back again. 

For now, expect heightened daily volatility. And please be careful here because as you’ve seen over the past month, there are a lot of smart people out there, and none have been able to pick a bottom. 

Good luck.

THE SELF-CONFIDENCE FORMULA

This formula is from Napoleon Hill’s classic book, ‘Think and Grow Rich’.  If you haven’t read the book yet, then I highly recommend you read it. Of course, you don’t have to have read the book before putting this effective confidence formula to work for you.

The formula is essentially a declaration that you read to yourself.  It is suggested that you read it aloud, with an open mind, and with faith that it can help fortify your confidence.

It will require some faith on your part, but I can assure you, if you believe in it, it will work.

So without further ado, below is your new highly effective confidence tool that you will be sure to benefit from.

Here you go:

1. I know that I have the ability to achieve the object of my Definite Purpose in life. Therefore, I demand of myself persistent, continuous action towards its attainment, and I here and now promise to take such action.
2. I realise the dominating thoughts of my mind will eventually reproduce themselves in outward, physical action and gradually transform themselves into physical reality. Therefore, I will concentrate my thoughts for 30 minutes daily upon the task of thinking of the person I intend to become, thereby creating in my mind a clear mental picture of that person.
3. I know through the principle of autosuggestion that any desire I persistently hold in my mind will eventually seek expression through some practical means of attaining the object. Therefore, I will devote 10 minutes daily to demanding of myself the development of self-confidence.
4. I have clearly written down a description of my Definite Chief Aim in life. I will never stop trying until I have developed sufficient self-confidence for its attainment.
5. I fully realise that no wealth or position can long endure unless built upon truth and justice. Therefore, I will engage in no transaction that does not benefit all whom it affects. I will succeed by attracting to myself the forces I wish to use, and the cooperation of other people. I will induce others to serve me because of my willingness to serve others.  I will eliminate hatred, envy, jealousy, selfishness and cynicism by developing love for all humanity because I know that a negative attitude towards others can never bring me success.  I will cause others to believe in me, because I will believe in them, and in myself.  I will sign my name to this formula, commit it to memory and repeat it aloud once a day, with full faith that it will gradually influence my thoughts and actions so that I will become a self-reliant and successful person