#858 October 4, 2017
  • Feature: October 2017 Market Update: Bull Quiet Market Type by Van K. Tharp, Ph.D.
  • Workshops: January thru February dates announced with a sneak peek at March and beyond!
  • Tips: October 2017 System Quality Number® Report The SQN® Report by Van K. Tharp, Ph.D.
  • FREE BOOK!: Trading Beyond the Matrix
This November Forex Returns!
November Workshops
NEW BONUS OFFER. For the first time Gabriel is extending a combo discount on the workshop and live trading. Attend both for an additional $500 discount on live trading.

Special price offers:
  • Start your study early. Order the Forex Home Study Course now and walk through the door with a thorough understanding of the Busted Breakout (System 1). Home study buyers get $600 off the price of the live workshop!
  • Combo discount: We have never before offered a combo discount on the live portion of the Forex training. But now, for a limited time, when you register for both November events you'll get an extra $500 off on live trading. Learn More...

To read more about these courses see below.

Feature Article

October 2017 Market Update:
Bull Quiet Market Type
by Van K. Tharp, Ph.D.
I always say that people do not trade the markets; they trade their beliefs about the markets. In that same way, I'd like to point out that these updates reflect my beliefs. I find the market update information useful for my trading, so I do the work each month and am happy to share that information with my readers. If your beliefs are not similar to mine, however, then this information may not be useful to you. Thus, if you are inclined to go through some sort of intellectual exercise to prove one of my beliefs wrong, simply remember that everyone can usually find lots of evidence to support their beliefs and refute others. Simply know that I admit that these are my beliefs and that your beliefs might be different.

These monthly updates are in the first issue of Tharp's Thoughts each month which allows us to get the closing data from the previous month. These updates cover 1) the market type (first mentioned in the April 30, 2008 edition of Tharp's Thoughts), 2) the debt statistics for the US, 3) the five-week status on each of the major US stock market indices, 4) our four-star inflation-deflation model, and 5) tracking the US dollar. I also write a report on the strongest and weakest areas of the overall market as a separate SQN™ Report. Significant market changes may mean the SQN Report comes out more than once a month.

Part I: The Big Picture

The equity markets right now continue in Bull Quiet mode. The S&P has been in Bull or Strong Bull since early in the year.

The US National Debt has finally surpassed $20 trillion. Federal spending is listed at $4 trillion for the first time. Right now there are 23.4 million government employees which is pretty much the same as it’s always been. Trump just fires his own people in the White House, not government employees.

Currently there are 120.6 million taxpayers supporting 102.4 million other people. Here I count retirees — 51.2M, disabled — 10.5 million, and Food stamp recipients — 40.7 million. The usdebtclock.com site, however, lists 165.7 million people receiving some sort of benefit. I had to start receiving Social Security checks last year, so I guess I’m one of them. Government support, however, is probably a relative term. I figure that I contribute back about a 1/3 of what I get each year and I also pay back another third of it in taxes. In addition, I’ve been paying the maximum contribution into Social Security for some time.

Part II: The Current Stock Market Type Is Bull Quiet

At the end of September, the market continues in Bull mode and it’s been that way for most of 2017. People should be fully invested with a modified buy and hold (i.e., 25% trailing stop on everything). The Market SQN score for 100 days, the period for my market types, is Bull. The Market SQN score for 200 days and 25 days are both Strong Bull, while the 50 day score is Neutral. The first graph shows the S&P 500 in weekly bars over the last year and you can easily see the bull market.

By the way, we have had a bull market type for a long time now. Does that mean it will continue? No, it’s pretty much like a trend – you never know when it will stop. But it has continued for a long time and had you invested appropriately, you would have reaped large rewards.
The market has occasionally taken a dip in the last year, for example in August and prior to the election in 2016. And yes, the market type showed a downturn about March when interest rates became more of a concern. But the trend is still up and that’s what’s important. Furthermore, the S&P 500 hit 22 all-time high days within the last 100 days. This is not an atmosphere in which a bear market should concern you.
Volatility remains Quiet on an historic basis. The big daily moves back in August did get the volatility line off the bottom of the chart but as you can see, the line went back to the bottom of the blue zone. As long as volatility remains so quiet, the chances for the market shifting to a bear direction remain very small.
The table below reports the three major US Indices levels through the end of September. The Dow and S&P 500 are both up over 12% on the year. The NASDAQ, despite a late September decline, is up over 22%. Contrast that return with the money that people are making from savings accounts or are making by sitting on the sidelines because they are predicting a bear market. How about you?
I want to add an extra market to track here, the price of Bitcoin. I think Bitcoin has the potential to be significant in the future. In fact, several crypto-currencies have such a possibility and we will track them here. These include Bitcoin, Ethereum, Monero, and Dashcoin. You probably haven’t heard of the latter, but I’m guessing you will soon — everyone in the world except US citizens can own it. We’ll be talking about possible crypto-currency strategies at the London Infinite Wealth Workshop.
The following is a Bitcoin chart over the last year. Notice anything interesting?
Bitcoin was first introduced as a concept in a paper in 2008. As of early this year, it was worth well under $1000. Notice what’s happened to the price of gold as bitcoin has become more popular — even in scary times recently when one would have expected gold to go up. There are now around 1,000 crypto-currencies in existence, most of which will be deadly to your wealth if you own them.

Part III: Our Four Star Inflation-Deflation Model

Commodities, basic materials, and gold have been going up over the last six month which produced an inflationary model score, one of the highest scores we’ve seen for quite a while. See the historical numbers for previous years and the monthly figures for the last year below.
I took a look at the shadowstat.com data and notice that the inflation rate, based upon how the 1980 version of the CPI still shows close to a 10% inflation rate.
Part IV: Tracking the Dollar

From it’s recent high at the start of the year to its low in September, the USD was down 12%.

In last month’s update, RJ suggested that the dollar could find support around the low 90s and it did seem to bounce off that area. That may be short-lived, however, because I am going to London this month and if the Tharp Effect persists, the dollar will start to plunge soon. The Tharp Effect is a phenomenon that occurs whenever Van travels internationally where the price of the USD seems to drop and the trip costs him more.

The market type has been either Bull Quiet or Strong Bull Quiet for many months. Today, the market continues on in a Bull Quiet market type.

I can’t believe how many headlines I’ve read about a potential market crash happening soon. One of the better traders I’ve known has performed miserably this year because he believes we are due for a bear market crash. But look at the market type. What’s the market doing right now? It’s bull quiet. PERIOD.

Until next month, this is Van Tharp.

Workshop Schedule

October 2017 LONDON, ENGLAND
Early enrollment discount ends today, October 4th.
interview with van
Check out this interview Super Trader Jack Smith did with Van Tharp as they discuss Van's life changing workshop on infinite wealth.

Because this workshop starts a week after the first one, contact us if you need extra time to make arrangements and we can extend the early bird discount. But that only applies to this event.
November 2017
Learn to Trade Three Forex Trading Systems with an Edge

Gabriel will be teaching three robust Forex systems based on trend-following. Each system is based on similar “ingredients,” but each has a different recipe to capture a different part of the trend. Consequently, the systems are complementary to each other and together offer several trading setups nearly every day of the year.

Gabriel will spend most of the workshop teaching his trend-following systems. The first half day is spent to go over the specifics of trading the Forex market and cover such topics as:

  • Why trade Forex?
  • What are the advantages and drawbacks of trading Forex versus other instruments?
  • What are the main market characteristics, and who are the Forex market participants?
  • What methods work best in the Forex market?
  • All you need to know about Forex trading sessions and the currency pairs.
  • How are Forex chart characteristics different than stocks or futures?
  • What do you look for in a Forex broker? What do you avoid?
  • Why Forex may actually be the best market for new traders to learn trading.
  • What are the trading edges that work in Forex?

Join us for this three-day workshop and leave prepared to trade the systems right away. Plus, join us for 2 days of live Forex trading so you can trade the systems live for even more hands on experience!
More about Forex
Learn why it's so important to attend both of these workshops from students who share their experiences with each.
January 2018
February 2018
March 2018 - Sydney, Australia
Stay tuned...dates will be released soon for Sydney, Australia in March 2018. We will have a Peak Performance 101 plus one, possibly two, more workshops.
More 2018 Peeks
April: NEW Futures Trading and Live Futures Trading, Plus Adaptive Swing Trading.
May: Peak Performance 203, plus Peak Performance 101.
Dates to be announced.

The Super Trader Summit is in December.

Trading Tip

October 2017 System Quality Number® Report
The SQN® Report
by Van K. Tharp, Ph.D.

There are numerous ETFs that track everything from countries, commodities, currencies and stock market indices to individual market sectors. ETFs provide a wonderfully easy way to discover what’s happening in the world markets. I apply a version of my System Quality Number® (SQN®) score to measure the relative performance of numerous markets in a world model.

The Market SQN score uses the daily percent change for input over a 100-day period. Typically, a Market SQN score over 1.47 is strongly bullish and a score below -0.7 is very weak. The following color codes help communicate the strengths and weaknesses of the ETFs in this report:

  • Dark Green: ETFs with very strong Market SQN scores > 1.47
  • Light Green: ETFs with strong Market SQN scores (0.70 to 1.47).
  • Yellow: ETFs with slightly positive Market SQN scores (0 to 0.70). These are Neutral/Sideways.
  • Brown: ETFs with slightly negative Market SQN scores (0 to -0.7).
  • Red: Very weak ETFs that earn negative Market SQN scores (< -0.7).

This is basically the same rating scale that we use for the Market SQN Score in the Market Update. The world market model spreadsheet report below contains a cross section of currently available ETFs; excluding inverse funds and leveraged funds. In short, it covers equity markets around the globe, major asset classes, equity market segments, industrial sectors, and major currencies.

World Market Summary — Equities & Currencies

Each month we look at the equities markets across the globe by segment, region, and sector.

For the fifth month in a row, the US Dollar is the weakest currency. In July it was the second weakest ETF in the entire database. In August, it became the weakest symbol overall and this month, it moved to the 2nd weakest overall ETF. Since the whole world market model is totally valued in the US dollar, everything outside the US should look better as a result of the weak Dollar.

Overall, the US market segments look much like last month, yellow and green. The Dow is dark green, but everything else is light green or neutral (yellow). In the Americas geography, country market scores are all positive — either yellow or green. Canada and Chile are both dark green. The Canadian Dollar is particularly strong which helps Canada. Global equities ex-US and emerging markets are both green, light and dark respectively.

Asia is mostly green with some yellow. China and Thailand are both dark green. In contrast, Australia (despite a strong Aussie dollar) is neutral as is India, Malaysia, South Korea, and Taiwan.

Europe is all green with the exception of Spain which is yellow. Austria and the Netherlands are both dark green. The Middle East and South Africa are both neutral. But Pakistan (which is in the database but not shown in this table) is the weakest ETF in the database right now.
SQNChart 10
As mentioned, the US Dollar is the second weakest ETF in the database this month and it is the only red currency. The strongest currencies in order are — the Canadian Dollar, the Euro, the Swedish Krona, and the Yuan. Bitcoin is also strong again this month. The neutral currencies include the Rupee, the Yen, the Pound and the Real. However, since we are going to London, I expect the Pound to go up while we are there.

In the US stock market sectors, the strongest sectors are dark green — Biotech, Aerospace and Defense, Biotech and Genome. There are many light green sectors. In neutral are: Energy, Pharmaceuticals, REITs, Insurance, Media, Networking, and Regional Banks. The weakest sectors are Consumer related, Oil and Gas related, Retail, Food and Beverage, and Telecom. Due to a low volatility in the market, the VIX based ETF (VXX) remains still weak and is the only red sector.

Commodities, Real Estate, Debt, and the Top and Bottom Lists

Commodities are a mix again. We have no red sectors this month but Agriculture, Livestock, and Natural Gas are all weak. Oil and Silver have moved to brown. Blended Commodities, Gold, Coal, Steel, Global Water are all light green. And the strongest commodities at the end of September are Base Metals, Timber, and Global Agribusiness.

Real estate is a mixed bag with US real estate being brown and Chinese real estate being dark green.

All of the interest rate products are light green and yellow. The strength here is in corporate bonds, junk bonds, and short term bonds
SQNChart 11
The Top Ranking List:

The top list has nothing above 3.0, but all 15 ETFs have scores above 2.0. Some of the best scoring ETFs are very specialized … like Rare Earth Strategic Metals, German Small Caps and China Consumers. These are all ETFs that we have recently added to our database but I’m not seeing any significant trends or commonalities among them here.

The Bottom Ranking List:

This month’s bottom list is similar to the top list in that many of the ETFs there are newer ones such as Pakistan. Some of the same items remain from recent months such as the US Dollar, VIX, and some of the commodities (Livestock, Agriculture, Sugar, Coffee, and Natural Gas).


Let’s look at the summary table which measures the percentage of ETFs in each of the strength categories. You can see the distribution of the database by Market SQN score in bullish, neutral and bearish categories below —
SQNChart 12
The trend over the last few months may have turned this month — or maybe it just stalled. The database went from 66%/ 20%/ 11% in July to 60%/ 22%/ 16% in August to 59%/28%/11% in September.

Until next month this is Van Tharp.

Be careful to base your actions upon what IS happening, not what you think might happen. The markets always offer opportunities, but to capture those opportunities, you MUST know what you are doing. If you want to trade these markets, you need to approach them as a trader, not a long-term investor. We’d like to help you learn how to trade professionally because trying to navigate the markets without an education is hazardous to your wealth. All the beliefs given in this update are my own. Though I find them useful, you may not. You can only trade your own beliefs about the markets.
NEW E-learning Course!
Forex Trading Systems: The Busted Breakout System
Click on the image below to watch a brief 1 minute video that hightlights this new course.
Gabriel developed and refined his Busted Breakout system on the concept of trend-following while he was still enrolled in the Super Trader program.

The system has a high win rate (about 65%) and it takes advantage of a price pattern that happens again and again in the charts — breakout failures. The main advantage of this is that it benefits from running for other peoples’ stops. This is a unique edge of the system making the trade break-even early on. Watching 15-minute charts for 4-6 hours a day and trading only the biggest, most liquid currency pairs, the system finds easily more than 150 trades per year. The pattern works equally well on 5min, 60min and 240min charts so the trade opportunity per year can be much higher depending how you trade. Gabriel is confident that someone with the programming skills could turn the system into a well-performing automated trading system.

The three-day workshop cost is $3,995 but the cost of the home study program is $1,295. As a special introduction price for early responders you can get this new home study for just $995.
Plus, buy the home study now and if you decide to join us at the 3-day Forex Trading workshop in November (or for any Forex workshop in the future), you can deduct $600 off of your course payment for the workshop.
This is win-win for all! If you are among the group of clients who simply cannot come to one of our workshops this home study offers you the benefit of still gaining access to a robust and premium forex trading system. Gabriel has traded it himself in several timeframes for many years now offering a persistent edge in the market.
But, if you have already been considering attending the workshop this is a great way for you to get a full-steam head-start and walk through the workshop door already understanding the system well. You will then have the opportunity to ask Gabriel anything you need. And in addition, learn two new Forex trading systems. The three systems taught in the workshop all offer unique advantages. They complement each other giving you the opportunity to reap various stages in a trend.

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