Okay folks, we need to talk. We have a big problem. I've been sitting on this possibility for quite a while. I have alluded to it a few dozen times in the past, but now that Goldman Sachs came out this morning with a pressing warning about this very same thing, I just have to come out and say this.

and honestly, I know that Goldman Sachs doesn't quite measure up to the global prestige of Ziptrader, so I am sorry to quote a less renowned firm, but let me just tell you that this is going to be one of the most important videos that you watch if you are trading in this current market. and this is so important because I've seen many of you buy into mainstream stocks and be like, why the hell isn't this moving Or you buy into Catalyst stocks and be like, why the hell is this moving so much And folks, if you are in one of these boats, not watching this video will be the mistake of your lifetime and perhaps will destroy your family lineage for the next 200 years. and I do not want to beat around the bush. But let me just first tell you folks, I've never been a fear-mongerer It's not like I do this sort of thing every week.

If you look back at all of my videos, even going back to the beginning of this crisis, I never made thumbnails that were like death and destruction or the world is ending. The closest I've gotten to that is just these thumbnails where I look slightly distressed. but I also make that face after Chipotle, so at best it's ambiguous. For those of you who have been following me throughout this crisis, you know I'm not the type that is always like the sky is falling or the type that's trying to be alarmist.

That's because as traders, we actually want the sky to fall. It makes it easier for us to make money. And that's why Since day one, we've covered opportunities that did well when the market went down such as Uv Xy that formally traded as Schwix, Spxs which shorts the market and many, many other beat down opportunities in different sectors since March, and we also covered tons of opportunities that allowed you to trade off the upside of the market from Spxl to Lab U to Gold Etfs to Catalyst plays like mrna and of course a ton of our flagship Over Reaction plays. Why am I saying this? Well, because as traders, we swing both ways and quite frankly we don't care what the direction of the market is as long as it's moving.

But now it is time that we have this conversation, it's time for a different conversation. The amount of people trading in the market continues to drop week after week. The volatility that we were accustomed to back here has almost completely died down to a standstill pace, and we've pretty much been trading in the same range since early June. If you look at the difference between here and here versus here and here you can see what I mean.

The increases month over month are almost nothing. Now, the only thing more pathetic than this is eating cereal with a big spoon. It's just pathetic. But at the same time as this gold and precious metals which we've spoken about again and again continue to run up, and dollar printing continues to accelerate as the Fed prints endless dollars in order to pay and bear the brunt of this global pandemic.

So what is going on? Charlie? Well, a few weeks ago, I made the case that the run-up since March lows wasn't just fueled by the slowing down of fear, a bouncing partially back of many industries, but was actually majorly caused by an expected increase in real inflation. And this is where Goldman Sachs's warning ties in Goldman Sachs made an even more extreme case for why the market has run up so much. They said, and I quote, the rise in markets in recent months had not been based on optimism on growth, but rather optimism on inflation. Think about it.

At this point, it wasn't hard to be optimistic about the economy. It wasn't hard to be optimistic that companies didn't deserve a 40 to 50 reduction in their share price. It was easy to be optimistic that shutdowns would end in the near future. You have to ask yourself at what point in this run-up to pre-crisis highs? What point was really fueled by people expecting a fast recovery? Let me put this another way, if you were a large investor during this time period, whether that be an individual or an institution with tons of cash on the sidelines, and you saw the Fed printing tons and tons of capital and also using lots of that capital to bolster the market, while also continuously seeing new signs of massive government expenditure in the current day.

and on the horizon with new lines of stimulus packages, new lines of likely state bailouts, and new lines of further increasing intense deficits. And you're looking at the dollar stance in the world, and you're seeing prices of the dollar, The value of the dollar plummet. But you have hundreds of millions and billions of dollars in cash, and you're like, well, I'm holding billions of dollars in cash. I have the option of either waiting with my cash that's guaranteed to go down in value because of the plummeting dollar because of inflation expectations over the next five years, or I have the option of piling my cash into the stock market, which is still mostly distressed during this period.

Would I rather buy cheaper stocks that are almost certainly going to recover over the next 10 years? Or would I hold hold and hold dollars that are going to be beat down. And if you choose to invest in the market, in this case, would you be investing in the market because you see the actual underlying value of the market increasing in the near future? Or would you be investing because you see intense, intense, intense, intense capital expenditures that are going to be applying inflationary pressures. Goldman points out that at the same time as this run up, you still have very high uncertainty on growth outlook both in the near term and in the long term, and this is projected amongst many, many industries. At some point you're like, okay, well, wait a second.

if you're expecting intense inflationary pressures in the next five years, that means your analysis is that the dollar is going to be worth less in 2025 as it is in 2020. But if there are more dollars chasing the same amount of stocks, that means that your analysis is. Even if the stock market doesn't go up in real value, each stock is still going to be worth more because it's going to rise with inflation, because you have the same amount of stocks and you have more dollars chasing those stocks. So it causes a inflationary rise as compared to a real value rise.

But in your mind, you see a guaranteed loss if you hold cash and on the other side you see a guaranteed win if you hold stocks. And they say we have break even inflation at incredibly depressed levels, to some extent giving a pretty high probability of deflation in the near term, but even over a 10-year horizon. Inflation expectations were low and those have gotten repriced. What they are saying is that expectations for inflation were quite quite low over the long term back here pre-crisis but now, well, they've exploded in terms of the 10-year horizon.

Many, many people are expecting huge inflation, and that's why it's getting factored in to the share prices. But they are also saying that they're expecting deflation in the near term because huge economic devastation is usually associated with short-term deflation. Because people aren't spending money, you can print as much as you want, but if people don't spend it, well, you don't get the same sort of inflation. But Charlie, you idiot, Inflation isn't even here yet.

The data show that price of goods and services have barely budged. Well, Yes, well, yes, that's because the prices of goods and services aren't as anticipatory as the stock market and other asset classes are. That's why the stock market dove 40 in March, but the price of goods and services didn't. Obviously, everything in the world is to some degree anticipatory, but the stock market, being this huge liquid market where everybody trades on, is one of the most anticipatory markets in the world.

Hardware stores aren't going to be like, oh, I see inflation three years down the line, so I'm going to drastically increase the price of a hammer today. No, if they are a large-scale hardware store, they're going to forecast and do it very, very gradually. But most of them are going to say oh, hey, why would you raise the price of hammers if more people aren't buying them? If there's not more demand, there's no reason to raise the price. Actual goods and services.

They aren't as anticipatory as the stock market and even other asset classes. The stock market is way, way, way more reactive to anticipation than Main Street is. So we've already talked about how we are stuck in this range because we've already factored in inflation, we've already factored in some level of bounce back of growth, and we've already eaten away at a lot of the fear that we had back in March. But this is sort of giving us this unfortunate market condition where it's very, very stagnant.

This is actually quite dangerous because barring a change of this, for example, a stimulus package that will lead investors to expect more inflation, or an announcement of a catalyst or more reopening of economies. For in one of these things, the market remains stagnant. If it's stagnant, that means that we are reaching lower highs and higher lows. It means that you are buying positions that look like good deals, but then just don't have any capital influx into them causing you to just randomly buy and lose on positions.

People are not buying stocks as rapidly as they were before and the ones that are still doing that are congregating into fewer and fewer positions. This is a problem because people who keep buying stocks that are just like stagnating at their all-time highs aren't realizing that. No, there isn't much immediate upward potential by chasing stocks that aren't moving. You're missing out on the many, many better opportunities.

So let's come up with a plan to trade this market. Number one find. Catalyst plays. Catalysts can be macro, or they can be micro.

In the case of macro, that means things that affect the entire market. For example, as the dollar gets crushed, gold has continued to run up. We've talked about gold again and again for the last few weeks as it continued to run up even on Sunday. We reiterated trading Jnug on days where gold goes up.

J Nug goes up massively, and we saw that today, on days when gold goes down, Jdst goes up massively. This allows you to trade both sides of the move. Another example would be overreaction. b.

Downs to bad news: This is in a way, another type of catalyst. The best catalyst plays that I like are actually the negative ones. Again, since the market is anticipatory, that means that every reaction is an overreaction. and when you have a slower market, the catalyst plays are much, much more extreme as that is where all the fast money piles into.

If you look at Nvx today, a bad news report came out on their vaccine, but because Nvax is almost entirely a vaccine play, this caused the share price to drop 45 in the span of like 10 minutes and then it recovered completely and broke into new highs another 15 minutes later. These reactions are so powerful because there's so much capital watching these stocks. there's so many eyes on it. But knowing this ahead of time means that we have the front row for over-reaction plays.

but you don't just buy them randomly, you buy them with elevating factors. For example, at this point we had just gone from oversold, had our clean price strength confirmation, and then a clean run up to validation at validation. We were also overbought. Very clean run.

We got another clean run later on. By the way, this isn't a hindsight analysis. I actually tweeted about this one on Twitter at Zip Charlie, but that being said, this all happened after hours and if you weren't using a broker that allows you to trade pre-market and after hours, then you would have missed out. My suggested broker for this is Weeble.

I'll put the link below if you'd like to sign up with them. they are offering two free stocks if you sign up with our link below, but I really don't give a hoot which broker you trade with as long as it has pre-market and after hours trading so that you can play these moves. But going back to the point, the point is that catalyst plays are much much more juicy when we are in slow markets like this. But anyways, folks, the moral of this story is: be prepared, be informed, and always trade like a spoiled brat.

Okay folks, well I do hope this video was valuable to you. If you have any questions whatsoever, feel free to reach out to us in the comment section below or join us on our lovely Zip Trader Circle. On Zip Trader Circle, we also post our nightly watch lists and we have a ton of other great stuff on there. So if you are dedicated to trading, go ahead and join us on Zip Trader Circle.

And lastly, if you're wondering what broker to trade these stocks on, we always like to send new traders over to Weeble, and Weeble is offering two free stocks if you sign up with our link below. Anyways, folks, have a great day and I'll see you in the next video.