Global financial markets were already hobbled by the original COVID-19 virus – struggling to regain their economic foundation after many months of the unprecedented central bank, government, and humanitarian efforts to move us towards recovery. Now, the Omicron strain of the COVID virus has potentially toppled the apple cart while global inflationary and economic concerns are peaking. What’s next?
Omicron Concerns – Why Traders Need To Consider Future Risks
This recent article caught my attention as I caught up on today’s morning events (Source: Yahoo! Finance). It highlights the incredible inflationary trends occurring because of disrupted supply channels related to the original COVID-19 disruption. Could you imaging what would happen if a new virus strain prompted further lockdowns and labor/supply disruptions for another 12+ months – or longer?
The massive amounts of stimulus and money printing that has taken place over the last 4+ years by global central banks may be acting as an anchor for growth and starting to weigh down global markets. Easy money policies lead individuals and corporations to borrow more and more capital expecting growing returns from sales. What happens when we start to see a mild economic slowdown take place, possibly complicated by inflationary price trends and consumers that pull away from making big purchases?
That exact type of scenario is playing out in China right now, and it is relatively easy to see that excessive debt and lack of economic growth lead to a disastrous outcome (Source: Yahoo! News). When you add extreme inflation into that mix, the equation becomes even more volatile.
- They don’t see the current vaccines working on it – yet.
- Various countries are talking about lockdowns again.
- Unemployment could spike.
- Inflation could spike out of control if lockdowns happen.
- The stock market could collapse.
- Housing could collapse.
- Certain Global Central Banks & Governments Could Collapse.
- And much more…
Custom Index Charts Show Price Weakness Is Already Putting Extreme Pressures On Global Markets
This Weekly Smart Cash Index, which tracks global market trends more efficiently, shows a decidedly Bearish price trend has been in place since February/March 2021. On the right edge of the chart, the recent price weakness is about to break below the $177 level – breaking downwards and attempting to reach new price lows.
This downward pressure on global markets shows how the US markets are acting in an opposite trend (trending higher right now) while global markets have experienced an extended price decline over the past 8+ months. If the Omicron virus strain prompts new lockdowns and/or supply and labor disruptions, we may see a significant collapse in foreign markets over the next 6 to 12+ months. Possibly taking place while inflation spikes higher – leading to a bigger problem for economies struggling to recover.
This Weekly Custom Volatility Index highlights a very interesting divergence between price trending and the RSI trends. While the Volatility Index was pushing higher and higher over the past 6+ months, RSI shifted into a downtrend – suggesting the momentum of the US stock market uptrend was weakening dramatically.
Now, with Omicron here, the US markets could break downward – pushing the Custom Volatility Index back below 6.0 or 7.0 and possibly falling to extreme lows near 1.0 or 2.0 for an extended period.
This is why I’m urging all of my followers and members to stay properly protected and hedged against major market risks.
The reality is that the stock market, the world, and how they function are pretty darn efficient. You can’t have great times without terrible times. If one country is doing very well, another is struggling to survive; it is just how things seem to be.
Generally, there is no easy or quick way to make money/build wealth, especially if it happens to almost everyone at the same time, which we are all experiencing.
The wealth you have accumulated in the past year must be protected as if your life depends on it. I hate to burst everyone’s bubble, but if you feel it’s easy to make money with stocks and real estate and you do not think you need to protect it, then you may be in for a rude awakening. When bubbles burst and manipulation stops working, prices revert to the mean or worse very quickly. Everyone without a game plan/strategy is caught off guard.
How can you protect your wealth?
Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase and may start a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into Metals.
Kindly take a minute to learn about my Total ETF Portfolio (TEP) and how it can help you identify and trade better sector setups. My team and I have built these strategies to help us identify the strongest and best trade setups in any market sector. Every day, we deliver these setups to our subscribers along with the TEP ETF sectors system trades. You owe it yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.
Have a great day!
