In this video, i'm going to talk about six very important things that you need to pay attention to in order to evaluate whether or not you should be short or along this market. Folks, you don't hear this kind of content anywhere else and i would highly encourage you watch the entire video, because there is a lot in this one-to-one package. Let's get right into this quick note that this video is brought to you by extra linked down below and, of course, my courses on building your wealth today is my birthday, and since today is my birthday, that does mean the coupon code on building your wealth does Expire tonight i know it has been a volatile time but folks, the time to have somebody who can help you share ideas in terms of what's going on in this market in private course. Member live streams, or i insights on what i'm shorting.

If i'm shorting, when am i going back in what am i doing, what indicators am i looking for folks, you can get all of that. The stocks and psychology of money program link down below it's also very common for people to bundle that, with a real estate, investing course, which i've got huge updates coming out for in real estate. So you want to pay attention to that, especially with the market, and of course, people are bundling the path to wealth course as well, which will be updated to include exactly what to do in sort of situations like these bear markets. So we might be heading into.

Might anyway, let's get right into this, so first earnings. A lot of folks are extremely optimistic about earnings, suggesting that we should essentially reach all-time highs again because of well positive earnings at companies like apple or companies like microsoft, providing decent guidance. Take a look at this particular commentary here this particular person wrote apple earnings are astounding in this crazy market. I think i'm going to put all my money in apple.

For now this is literally herd mentality. This is the opposite of the psychology of money. Now i know some folks have been very confused as to how potentially selling could be part of the psychology of money, but we're going to talk about that in this video. But folks.

The last thing that we want to do is, in my opinion, follow the herd into apple, but instead what we want to do is use apple as an indicator, because here's, the thing apple and microsoft are two of the biggest weights that are holding up the s. P, 500 and the nasdaq the market turmoil, market pain has not yet fully spread to daily mainstream discussions on the streets and in coffee, shops and and throughout our society. That's when we know we have a real bear market when there is literally blood on the streets, because people are freaking out about what's happening in the market and the potential for a recession right now. What we're getting is money managers on cnbc playing a freaking violin, saying no, this is normal.

This is normal. All we're doing is rotating into quality and to companies with higher free cash flow. Look just because a company does not have profits today and is investing substantially for the future does not make it a low quality company. That is an excuse for money managers to keep money under management, because that's after all, how many managers get paid so keep that in mind.

But what happened with apple earnings? Apple earnings did crush it right exactly they did apple earnings were phenomenal. The only item of sales that was actually in decline was ipad ipad sales, which i was shocked by i thought ipads were in incredible demand and folks. This is where we have to understand. What's actually happening, ipad sales were in incredible demand, but apple of all companies.

In the world, one of the biggest companies in the world is having massive supply chain issues to where a lot of apple stores don't even have ipads in stock. A lot of their products like new laptops, are back, ordered and folks. Apples tim cook himself says that in inflationary supply chain, shortages have gotten substantially worse and hopefully will start getting better, but only because apple is doing their best to navigate them better, not because supply chain shortages are actually getting better. So add these two things together - and this is just the earnings part of this video - add these two things together: people spending more money like crazy on stuff, like apple products, which was reiterated by visa, that people are spending like crazy.

We know the bank said people have more money uh in their bank accounts. We don't expect those bank balances to grow this year because of the removal or the lack of new stimulative measures. But people have a lot of money and people are spending the money like crazy, but wait a minute. What happens when you add more demand for goods and services, which is literally what we're seeing with still persistent supply chain issues, which is literally, why raytheon took a 150 million dollar loss? It is why 3m is delaying guidance, because they're so confused in terms of supply chain issues.

It is why ge says they are having issues with persistent supply chain issues, and nobody really sees this issue being over until 2023., mcdonald's had a 15 increase in operating costs. Why? Because of these inflationary pressures now look i used to be in camp transitory and look. I know that was not a very popular camp because it was wrong. It was very wrong and it was wrong because we got new waves of covid that made it wrong that made the supply chain issues unrecoverable and the stimulus pacifier became larger and larger, and now we're under the weight of this massive pacifier, causing a lot of freaking Inflation, but that inflation is not getting better it's broadening, and this is bad when inflation broadens it means that the federal reserve has to act quickly to fight to bring inflation down, and when companies are complaining about worsening supply chain issues.

You've got to understand that earnings calls are your best leading indicator of these problems, they're, not cpi. Looking one month back, they are ceos going to answer the questions of analysts this week and next week saying supply chain issues are disastrous. Even tesla's, elon musk said the same thing: supply chain issues are holding everything back. So when you couple strong earnings or what's normally good news with supply chain constraints, you actually end up getting bad news, because this is a signal to the federal reserve that inflation has broadened and we need to do more to control inflation, which means raising interest rates.

But i want you to ask yourself this: when the federal reserve, which is now expected, raises interest rates a half of a percent on march 16th, do you actually think consumers are going to stop spending? How much demand is actually going to go down and how quickly is that demand actually going to go down for goods and services by consumers and businesses to actually bring inflation down? My expectation is it's going to do virtually nothing and if a half percent did virtually nothing, then we got to get to the point where yields on bonds uh start going up even higher and the discount rate at the federal reserve goes up even higher. To actually start having a constraining effect on the economy? Okay, let's pause on that for a moment, we'll come back to inflation, but i want you to think about that. How much do we actually have to raise rates to get people to stop spending like crazy? The more you hear about how strong our gdp is, the worse. It is, let's now talk about the short squeeze and then we're going to come back to gdp and inflation.

We're going to wrap it up with this and it's scary. But i i don't want to sound like a mega. Bear here. Number two shorts on the federal reserve, announcement date or meeting uh date.

Where we had the press conference from jerome powell, i expected that we would see a short squeeze in small caps. I was wrong about this, rather than seeing shorts get offloaded for what could have been a hedged event, which would have meant that jerome powell's actions were priced in and that the market didn't have any further to fall. And if the market didn't have any further the fall and the fed's actions were priced in, then we should see shorts off load and and uh. We potentially see valuations of small caps come back up right.

Unfortunately, that's not what happened? What happened instead, shorts actually increased, in fact we're starting to see record levels of shorting in various different markets, not only the united states stock market, but other markets, like the hong kong stock exchange, has hit record levels of short selling. This is because short selling is not only where the money is being made right now, but institutions are more and more increasing the size of their hedge bets that this market has the potential falling. Some of that has to do with the fact that the yield curve is inverting, and it's a crystal clear sign that we have problems, but we'll we'll talk about that in a bit we don't need to. We haven't inverted yet there's just there's fears anyway.

The fact that shorts are going up is bad because it means more selling pressure in the short term. That's not good! So keep this in mind. Good earnings with high inflationary pressures is actually the worst case scenario. Shorts going up is more selling pressure and it usually manifests in retail, buying the dip and then getting screwed by institutions later in the day.

Now we need a. We got to understand what our next catalyst is, but now for a quick message from our sponsor folks. Getting into real estate, in my opinion, is the best way to build your wealth in order to get into real estate. You got ta have a great credit score.

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California time i will be covering it live as usual right now. We do not have year-over-year expectations out just yet for inflation, but month-over-month inflation expectations are expected to be 0.5 percent, which means inflation is still moving at an annualized pace of six percent. It is substantially too high for the federal reserve to ignore - and i need to make this so clear, because people still don't understand this. The fed does not care about your stock values.

The fed only cares because jerome powell said it himself about the stock market, to the point where it affects employment and to the point where it affects inflation and right now a roaring stock market is or what had been. A growing stock market is just feeding people's wealth impression and leading them to spend more money. That is actually bad for inflation, and we've got plenty of job openings. So, even if we raised rates and compressed job openings a little bit, we would still have a massive amount of labor demand.

So we have no issue with the federal reserve needing to make businesses want to hire people more. They already want to hire people enough. They've got to deal with inflation, and the cpi read on february 10th is going to be one of our early catalysts for potentially a u-turn, so that we could finally go back to a rallying and optimistic market. The problem with this cpi catalyst is, if the cpi catalyst comes in worse than expected, which is the trend that we're on the federal reserve will start seeing the bond market price in more action by the fed, and this is what happens.

More inflation comes in worse or the worse. Inflation comes in the more the market starts pricing in that the fed is going to be much more aggressive, and if the fed's more aggressive stocks get whacked, don't kid yourself that you could flee to safety in the financials or in apple? Those are good until they're, not now. I will say, though, one of the things that has been doing very well are oil prices and therefore gas or energy related companies. Not only have oil prices and gas prices been rising because geopolitical tensions, not just in china, but in russia and the ukraine, but because of fears of a potential recession and a tax on oil plants in the middle east.

All of this is pure pressure on energy prices and folks, what is one of your largest components within cpi energy prices? So, in addition to companies, basically telling us, people are demanding more, but supply is more constrained. Energy prices continue to rise home prices and rents have not shown any sign of alleviation, so in other words, the core components of cpi are increasing, not decreasing. Now there are some statistics that suggest that used car prices might finally be inflecting down, which is fine, but if used, car prices are just offset by higher labor costs. Higher input costs higher rent prices and higher energy costs or higher food prices, which exactly what a mcdonald's is feeling.

Then it don't matter if used, car prices go down. These car prices might start plummeting because used car prices might potentially go into essentially a recession, because the economy broadly might go into a recession, which just means we end up with inflation, as used cars get cheaper again, it does not matter anyway, is what i'm saying This is why originally the fed and myself believed that inflation was transitory. Ah, it's just used cars. It's just travel like hotels and stuff.

This is normal. We expected those prices to skyrocket, uh with the beginning of the chip, shortages and the reopening boom. But now the problem is those aren't the issues anymore. Everything else is the issue now dangerous, very dangerous, okay, something that's critical - that we have to pay attention to is known as the relative strength index and a lot of trading finance, gurus and stuff are trying to say: oh we're oversold right now.

That means we're. Definitely in a buy time and destined for a reversal, because what they do is say, hey look right here. This was 2018. This right here was the pandemic and look if we go right here to the weak chart see the little blue lines.

That means we were oversold anytime. That line goes below that horizontal right here. It means we're technically oversold. According to this one indicator, which you should never make a trading decision based off just one indicator, it should be the confluence of the most important factors that are going on in the economy and with a particular stock or company at a time right, but anyway, uh.

This over here would be the overbought condition. Here's the problem, though, and people regularly forget this they're, like oh look when it was blue here and here that was by time. Well now, oh, look, it's blue, so it must be by time that's sort of the logic right. Well, let's hop on over here and show you how that logic is so flawed.

Let's go over here and this is the march 2020 pandemic. Let me show you uh, where you would have bought had you bought when we first moved into an oversold condition, which is what we're in right now all right. Let's follow this rsi chart right here to the oversold territory. Ah, there we go we're oversold.

On february 25th, we went to an oversold condition, and this is when the s p. 500 fell, uh about three percent uh in a day uh, and in a week it probably fell somewhere around ten percent. So you have this nice curve down from about 339 to roughly the low 300s lost about 30 points there 310-ish 313., and so you would have been buying the s p, 500 or the spy in this case, at about 3 30.. Okay cool.

You got 10 off. Oh wow, we're oversold by the dip right, but take a look at this. We stayed bobbing along the overbought condition from february 25th, all the way through the bottom for another month. The problem is: had you had patience, you would have saved another 30.

You would have gotten another 30 off coupon code on the courses link down below on building your wealth that teach you this kind of logic and gives you a freaking update when i think there are problems in the market. I'd rather tell you the truth than la dia. Oh sorry, we're talking about the rsi uh 30 discount on the s p. 500.

Okay! So that's an issue! Keep that in mind. Don't be misled by this garbage next folks. The yield curve is once again flattening, and this is bad. All you have to do is type in the 10-year two-year curve on google and you will immediately get the 10-year minus the two-year from st louis uh, the st louis federal reserve and after the j-pal meeting, and it's not ideal.

But after the j-pal meeting it started happening again. Folks, the yield curve started flattening, flattening basically just means going to zero, and the issue is when it trends towards zero and ultimately becomes negative. Without going into all the details of the ten. The the inversion of the earthquake again, it could signal a recession.

So if we zoom out, you can see look at this downtrend right here and then we had. We did have a pandemic recession here which is kind of wild, because nobody really thinks that the the inverted yields curve could predict the pandemic. But it is an indicator that maybe we might revert back to this trend and have the recession we were supposed to have before the pandemic. Uh kind of delayed everything with all the stimulus we got now.

The last thing i want to talk about is this video that i put together and i created this and made this obviously not the titanic video. But this is a scene from the titanic and i put the overlays on and i just want to point out a few things. That's that are very, very important in this. I pretend you've got folks storming into essentially the bridge of the titanic, but it's as if it's the white house and the fed are like.

Oh my gosh look, the economy is, is freaking out and we've got all this inflation in all these different compartments. In other words, this ship is filling with water, we're sinking right and impatient investors, which is this guy over here. The impatient investors are like come on. Man buy the dip we're going to the moon like stop.

This nonsense like get get back to driving the ship. Uh and and the the person who helped design this ship is like you're. Out of your mind, there is so much inflation. We've got massive issues here, uh, and this is a critical part right now right here and obviously he makes references to water levels.

I make references to inflation, but we can sustain certain levels of inflation. In this case i wrote three to four percent. We could sustain that and rates can push this down, but the problem with the titanic was water, spread to too many different compartments of the ship and when too many different compartments of the ship fill with water, you can't isolate those and call the problem transitory anymore. It becomes a persistent problem, a broadened problem, both the federal reserve and the international monetary fund have recently like, within the last weeks, reiterated that inflation is broadening and that's very, very bad.

And so this means - and as i sort of show here in the video that we have a big flip here, when the federal reserve at our institutions start suggesting uh. Oh, we have an inflation problem that is broadening well. That could lead to a lot of substantial pain and the pain comes wave after wave after wave, but you've got to ask yourself: where are we in the cycle? Now? Yes, prices have come down, the ship got damaged, we got hurt, we already lost some money. We hit the iceberg, but are we gon na put on our fancy clothing now and go to dinner, so we can listen to music with the orchestra and jim cramer telling us everything is fine, or do we want to consider looking at the lifeboats? This question is for you, you have to make that decision.

I can't make that decision for you. Additionally, you've got to ask yourself: where are we in this sort of cycle here? I think this is a beautiful representation of what's going on, take a look at this. I've got a stock here that could really excel really excel excel sell, and so where are? We is the question right? Where in this chart, are we i'll tell you where i think we are sell, sell sell? So i was all right everybody freaks out this. This is when you get blood on the street.

This is where you want to buy right when everybody's yelling sell. If everybody's yelling buy the dip, you're, probably more here, where people excel what well sell. Why well think about it? Uh, then you get this pandemonium, which that's the nature of the cartoon and the nature of boom and bust cycles. I can't take this anymore this madness.

I can't take it anymore. Somebody yells goodbye goodbye, bye, bye, bye, bye, here's, your momentum, meme movement right and then and then, of course it always cycles back. I got a stock here uh so anyway, you got ta. Ask yourself this, but put together the pieces of the puzzle.

Folks, jpow is no longer our friend, that's because he has to fight inflation, and i cannot buy in this market until i get a u-turn on inflation which we're not getting in earnings calls cpi reports, everything everything is reiterating it's getting worse, not better, and i cannot Buy until j-pal u-turns, so one of those got to happen now. Some folks quick note are thinking, oh, but but uh. What about like with omicron and how's omicron, going to affect inflation yeah? The problem with omicron is, if anything people spent a little less in january, which means we might get a little bit of a fake out of a cpi read in february showing that maybe inflation was a little bit less bad in january. But it would be a fake out because when people go back to spending - and we start getting our february data or late january data averaged into february - it's gon na be a problem again anyway.

Thanks so much for watching check out the programs on building your wealth down below, if you like my perspective, if not then leave a hate comment or a clown emoji and see you later.