Week-In-Review: Stocks End Week Lower On Political Headlines

Stocks End Week Lower On Political Headlines

It has been a very busy time in D.C. In the last few weeks, Trump placed tariffs on Steel and Aluminium, said he may hit China with tariffs, then replaced his: Chief Economic Advisor, The Secretary Of State, The Head of the CIA, and his National Security Advisor might be next. If that wasn’t enough, the government placed sanctions on Russia for meddling with the 2016 election, and Special Counsel Robert Mueller subpoenaed the Trump Organization for his investigation (I might be missing a few headlines). Normally, one would expect the stock market to be down considerably on just anyone of those headlines. Instead, stocks are barely budging. Instead, all the major indices are trading just below their record highs. That, ladies and gentlemen, is a very strong sign that the bulls are still in control of this market. Remember, it is not the news that matters, but how the market reacts to the news. The market only needs one or two big up days and we will be trading at new all time highs again. Stepping back, the next big important levels to watch are 2018’s high (resistance) for the major indices and February’s low (support) for the market. Until either level is broken, by definition, I have to expect this sloppy sideways choppy action to continue. 

Mon-Wed Action:

Stocks opened higher but ended mixed as the market paused to digest the recent (and strong) two week rally. In corporate news, Andrew Liveris announced he will step aside as executive chairman at DowDuPont in April. Jeff Fettig, co-lead independent director at DowDuPont, will take over the role. The Nasdaq continued to lead its peers as the big money continues to flow into tech stocks. On Tuesday, stocks traded between positive and negative territory as traders digested a slew of big headlines. On the political front, President Trump fired Rex Tillerson as Secretary of State and promoted Mike Pompeo, Director of the CIA, to fill that role. Additionally, Trump blocked the Qualcomm acquisition by Broadcom which would have been the largest tech deal in history. Trump cited concerns of national security and QCOM fell hard on the news. Finally, inflation was tame as the consumer price index (CPI) grew by +0.2% in February, which matched estimates. Stocks fell on Wednesday after fear spread that President Trump would slap tariffs on China and they would retaliate in some fashion which could spark a trade war. There are a lot of IFs in that logic. Separately, economic news was lackluster at best with retail sales falling -0.2%, missing estimates for a gain of +0.3%. This was the third straight month that retail sales fell. Additionally, U.S. producer prices increased slightly more than expected in February which sparked some to worry about inflation.

Thur & Fri Action:

On Thursday, stocks ended mixed as investors digested a busy day of data. In the morning, the White House said it was thinking about implementing tariffs on at least $30 billion of Chinese imports. Separately, the Treasury Department said it will issue sanctions again Russia for interfering with the 2016 elections. Then, The New York Times reported that special counsel Robert Mueller subpoenaed Trump’s businesses and the Trump Organization which put downward pressure on stocks. On a somewhat bullish note, despite all these negative headlines, the Dow rallied over 100 points and he Nasdaq and S&P 500 ended with very modest losses. Stocks were relatively quiet on Friday as investors digested a busy week.

Market Outlook: Chop City

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. The big level of support to watch is February’s low and then the 200 DMA line for the major indices. For now, as long as those levels hold, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More

Week-In-Review: Bull Market Turns 9, Correction Ends As Nasdaq Hits New High

Bull Market Turns 9, Correction Ends As Nasdaq Hits New High

So that was fast! The latest correction is now pretty much over as the Nasdaq Composite and Nasdaq 100 both hit fresh record highs on Friday. The other popular averages are only a few percentage points below their record highs but are quickly marching higher. The Dow Jones Industrial Average, benchmark S&P 500 and small-cap Russell 2000 are just about all back above their respective 50 DMA lines and marching back to their recent 2018 highs. The weaker areas of the market include: The Transports, Utilities, REITs, Housing, Commodities, and to a smaller extend retail. Stepping back, it looks like the market wants to continue racing higher as buyers continue to show up and buy the latest dip. 

Mon-Wed Action:

On Monday, stocks rallied nicely as investors bought stocks after President Trump opened the door to renegotiate NAFTA. In a series of tweets Monday morning, Trump said: “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,” adding that “Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done.”
On Tuesday, stocks were quiet after North Korea said it was open to talking to the U.S. about it’s nuclear program. In other news, Trump tweeted and said people may leave the White House. Separately, rumor spread that Gary Cohen may leave if the Tariffs are imposed. After Tuesday’s close, Gary Cohen officially resigned which sent futures down a few hundred points. As expected stocks opened lower on Wednesday and were under pressure most of the day due to the turmoil in D.C.

Thur & Fri Action:

Stocks rallied on Thursday after President Trump said he would exempt Canada and Mexico and the leave the door open to exempt other countries from the tariffs on Steel and Aluminum. In other news, before the open, the European Central Bank (ECB) held its latest meeting and once again it was largely dovish. Before Friday’s open, the Labor Department said U.S. employers added 313,000 new jobs last month (easily beating the 205k estimate) but wages were weaker than expected.

Market Outlook: Market Bouncing Back

The market is bouncing back after a quick 10% pullback. The big level of support to watch is February’s low and then the 200 DMA line for the major indices. For now, as long as that level holds, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Want To Learn How To Invest? Sign Up For 1-on-1 Sessions With Adam Sarhan.

Week-In-Review: A Near Term Low

A Near Term Low

Friday appears to be another near term low in the market. The bears emerged victorious last week as the market traced out a series of ominous technical signs. On a weekly basis, the market opened higher and closed lower which is known as a negative reversal. Additionally, the weekly range (high and low) eclipsed the prior week’s range which is known as an outside reversal. Finally, the Dow Industrials and the benchmark S&P 500 both sliced and closed below their respective 50 DMA lines which is not a healthy sign. Fundamentally, the environment still remains bullish which means that the market can still rally after it pauses to digest the recent and very strong two-year rally. Conversely, if February’s lows are breached, odds favor we are heading lower. Stepping back, the two big areas to watch are 2018’s high which is resistance and Feb’s low which is support. By definition, we are moving sideways until either resistance or support is breached. 

Mon-Wed Action:

On Monday, stocks jumped 400 points as the week began with a bang. Over the past two weeks, the Dow has jumped over 2,400 points as stocks bounced back from deeply oversold levels. The so-called “FAANG” stocks — including Facebook, Apple, Amazon, Netflix, and Google-parent Alphabet led the way higher and briefly returned to pre-correction levels. After a two week hiatus, the sellers showed up on Tuesday and sent stocks lower. The market opened higher but closed lower which was a near-term sign of fatigue. Jerome “Jay” Powell, the new Fed Chairman, hinted that the Fed is open to raising rates a few more times in 2018 to combat inflation. Mr. Powell said, “We’ve seen some data that in my case will add some confidence to my view that inflation is moving up to target.” Once again, stocks opened higher on Wednesday but closed lower as sellers regained control of the market and caused the S&P 500 and Dow Industrials to break and close below their respective 50 DMA lines.

Thur & Fri Action:

Stocks fell hard on  Thursday after Jay Powell spent the day testifying on the Hill and President Trump announced tariffs on Steel and Aluminum. Trump said the U.S. will implement a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports starting next week. Stocks opened lower on Friday but reversed course after buyers showed up and quelled the latest bout of selling. Once again, the market fell far very fast and was oversold and due to bounce. That raises the odds that another near term low was placed.

Market Outlook: Market Bouncing

The market is bouncing back after a steep 10% pullback. The big level of support to watch is February’s low and then the 200 DMA line for the major indices. For now, as long as that level holds, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Want To Learn How To Invest? Sign Up For 1-on-1 Sessions With Adam Sarhan.

Week-In-Review: Stocks End Week Mostly Higher

Stocks End Week Mostly Higher

This was a constructive week on Wall Street, stocks opened lower but closed higher for most of the popular indices. A subtle, yet important, sign of strength is to see a market open lower but close higher in any given period. All things being equal, the longer the period, the stronger the ramification for the market. So, the fact that the major indices opened lower last week, which was shortened holiday week, but closed higher on a weekly basis, is a bullish sign. Separately, if you look at a monthly chart, it is on track to do close to the same thing as next week will be the last week of February. Stepping back, the action is very constructive as buyers quickly showed up and are doing their best to quell the big drop we saw earlier in the month. As long as February’s lows hold, the bulls remain in control of this market.

Mon-Wed Action:

Stocks were closed on Monday in observance of the President’s Day holiday. On Tuesday, stocks fell hard after Wal-Mart ($WMT) gapped down after reporting earnings. The Dow lost 254 points as Wal-Mart suffered its worst day since 1988. Investors were spooked because the yield on the benchmark 10-year U.S. note hit the highest level since 2014. Separately, the yield jumped on the shorter-term two-year note to the highest level in 9 years. On Wednesday, stocks opened higher but closed lower after sellers showed up in the last hour of the day and aggressively sold stocks. At 2pm EST, the Fed released the minutes of its latest meeting which showed policy makers are ready to raise rates a few more times in 2018. Initially, stocks rallied after the minutes were released but closed lower as sellers showed up before the close.

Thur & Fri Action:

Stocks rallied sharply on Thursday as the yield fell on the 10-year note. In corporate news, Chesapeake Energy jumped nearly 20% after reporting earnings while shares of Roku plunged nearly 20% after they released earnings. Separately, shares of Netflix (NFLX) and Amazon.com (AMZN) hit fresh record highs. Stocks rallied on Friday as investors showed up and continued buying stocks to end the week on a positive note.

Market Outlook: Market Bouncing

The market is bouncing back after a steep 10% pullback. The big level of support to watch is February’s low and then the 200 DMA line for the major indices. For now, as long as that level holds, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Want To Learn How To Invest? Sign Up For 1-on-1 Sessions With Adam Sarhan.

Week-In-Review: Stocks Bounce Back With A Vengeance

Stocks Bounce Back With A Vengeance

Last week I wrote, “The market looks like it just put in a near term low on Friday as the bulls showed up and defended the longer-term 200 DMA line.” That is exactly what happened as stocks soared last week and enjoyed their best week since 2013. I also said, “History shows us that 80% of corrections do not turn into bear markets and 20% do.” and the snap back action suggests this bull market has more room to run. Earnings are expected to grow massively and that is the big bullish catalyst that may keep this bull market alive longer-than-expected. For now, as long as February’s low holds, the bulls remain in control of this market. If support is broken, then this correction will likely get much worse. Conversely, the next level of resistance to watch are the recent highs from late January. If the market takes out those highs, that will be an incredible feat and suggest we are headed higher. Until then, I have to expect more sideways/sloppy action to continue. The market rallied hard last week and could easily pullback to digest that big run. 

Mon-Wed Action:

Stocks soared on Monday as investors scooped up shares at beaten down levels. It is important to note that the previous Friday, institutions showed up and defended the longer-term 200 DMA line which set the stage for this week’s rally. There are two important factors that occur when the market snaps back from deeply oversold levels. First, there is a tremendous amount of short covering (people buy back stock to exit their short positions) and second, the buy the dip crowd shows up and buy stocks at lower prices. Stocks opened lower and closed near their highs as buyers showed up and bought the latest dip. Once again, the market opened lower on Wednesday after inflation ticked higher but the bulls showed up and aggressively quelled the bearish pressure helping it close nicely higher by the close. The big money largely flowed into tech stocks and financials as the market jumped nicely and broke out of a small head and shoulders continuation pattern.

Thur & Fri Action:

The market rallied nicely on Thursday as investors continued buying stocks. Shares of Cisco ($CSCO) rallied nicely after the networking giant reported earnings. Separately, Amazon ($AMZN) said it will team up with Bank of America ($BAC) to offer loans to merchants. Stocks were relatively quiet on Friday as the market enjoyed its best weekly gain since 2013.

Market Outlook: Market Bouncing

The market is bouncing back after a steep 10% pullback. The big level of support to watch is February’s low and then the 200 DMA line for the major indices. For now, as long as that level holds, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Want To Learn How To Invest? Sign Up For 1-on-1 Sessions With Adam Sarhan.

Week-In-Review: Stock Bounce After Very Tough Week On Wall Street

Stocks Bounce After Very Tough Week On Wall Street

The market looks like it just put in a near term low on Friday as the bulls showed up and defended the longer-term 200 DMA line. In the last two weeks, the market erased the last 10-week’s of gains. That, ladies and gentlemen, is not an insignificant sum and should not be taken lightly. Clearly, that is not aunt Jane and uncle Joe selling, it’s the big institutions. The market went from egregiously overbought to egregiously oversold in a few trading days. The vehemence of this sell-off is worrisome because we are still in a bull market. Imagine, what will happen when we enter a bear market. Stepping back, from a longer-term point of view, a nice steep correction would do wonders to restore the health of this very strong unabated bull run, it is way overdue. History shows us that 80% of corrections do not turn into bear markets and 20% do. So, if this one turns into a bear market, then we will adjust and be ready. History also shows us that markets do not top out overnight, instead tops take time to form. For now, we know the overtly strong bull market has cracked and the crazy “buy at any price” mentality is gone. That may come back, but for now, patience is paramount.

Mon-Wed Action:

The stock market imploded on Monday as sellers regained control of the market. At one point, the Dow was down 1,500 points and the S&P 500 turned negative for the year. That followed Friday’s 666 point shellacking. The financials and energy sectors were the worst performing sectors and dragged the market lower. Ray Dalio, the largest hedge fund manager in the world, tried to calm markets and said these are just ‘minor corrections,’ still lots of cash to buy the dip.” The damage over the past few days has been severe and should not be taken lightly. Stocks jumped 567 points on Tuesday as the bulls tried to regain control. On Wednesday, the Dow jumped nearly 400 points before sellers showed up and sent stocks lower by the close. That was the largest intra-day reversal in 2 years and clearly shows the bears are in control.

Thur & Fri Action:

The Dow plunged 1,000 points on Thursday as sellers aggressively sold stocks all day. To help allay any concerns about the Fed tightening too fast, Chicago Fed President Charles Evans said that the Fed will not raise rates before mid-2018. Interestingly, stocks are falling as earnings continue to be strong. Of the S&P 500 companies that had reported close to 80% had announced better-than-expected earnings which sets the stage for a strong 2018. On Friday, the market opened higher, fell hard, then reversed and closed higher after the bulls showed up and defended the longer-term 200 DMA line. As long as Friday’s lows hold, Friday appears to be a near term low.

Market Outlook: Market Correcting

The market is pulling back and the bulls are trying to defend the longer-term 200 DMA line. For now, as long as that level holds, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Hit A Wall? Not Sure What To Do In The Market? We Can Help. Don’t Go It Alone, Learn More Here…
 

Week-In-Review: Stocks Finally Pullback, Now What?

Stocks Finally Pullback, Now What?

The market is finally pulling back to consolidate its very healthy and very strong advance. Remember, markets do not go up forever and it is perfectly normal (and healthy) to see the market pullback after a very strong rally to consolidate the move. Nice orderly pullbacks are healthy and allow savvy investors to step in and buy (when the weak hands are selling). Separately, it is important to note that 200-500 point daily swings are the new “normal” for the Dow. Historically, the market can easily move 1-2% on any given day (up or down) without blinking an eye. Now, that the Dow is trading near 25k, a 1% move equals 250 points. So a 200-500 point move is not as “severe” as it used to be when it represented a move greater than 2%. Right now, the market is in “pullback mode” and I expect that to continue until the major indices trade near their respective 50 DMA lines. That is the next important level of support to watch. Ideally, for the bulls, the market will pull into the 50 DMA line, sit for a little, then move higher again.   

Mon-Wed Action:

On Monday, the Dow fell 177 points as investors were concerned regarding the 10-year treasury yields. The Dow, along with the S&P 500, posted its worst decline of the year on Monday. On Tuesday, stocks fell 362 points, which was the largest decline since August 2017, as investors continued to worry about rising yields. After Tuesday’s close President Trump delivered his first State Of The Union Address and outlined a bullish path for the future. Stocks opened higher on Wednesday but gave back most of the gains on the last trading day of January. Stocks enjoyed healthy gains in January which was the best month since March 2016. Separately, the Fed held its first meeting of the year and said it was concerned about rising inflation. That is the Fed’s way of telling the market to expect more tightening going forward. Remember, one of the primary drivers of this very strong bull market has been easy money from the Fed and other central banks. So any signs (or hints) of tightening easily spooks investors. Separately, a slew of earnings were released this week with a mixed to mostly lower reaction.

Thur & Fri Action:

Stocks were quiet on Thursday as investors waited for Apple, Google, and Amazon to report earnings after Thursday’s close. Apple and Google fell while Amazon rallied after earnings. Before Friday’s open, the government said U.S. employers added 200k new jobs in January, beating the Street’s estimate for 175k. A stronger than expected jobs report strengthens the case for the Federal Reserve to raise rates which spooked investors. At one point, the Dow fell 665 points as the market continued pulling back from one of the most extended/overbought conditions in history! In last week’s report, I pointed out that the Dow was 2,000 points above its 50 DMA line and 4,000 points above its 200 DMA line. At this point, the best thing the market can do is pullback into its 50 DMA line.

Market Outlook: Bulls Are Strong

The bulls are back in control and the market remains very strong. As always, keep your losses small and never argue with the tape. Hit A Wall? Want To Achieve More Goals? We Can Help.
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Week-In-Review: Stocks Rally On Strong Earnings

Stocks Rally On Strong Earnings

The bulls remain in clear control of this market as the impressive rally continues unchecked. There are a few important things to note: First, the market is extremely extended. Second, it refuses to fall. In fact, pullbacks last a few hours, not even a few days. Third, even stocks that gap down on earnings are almost immediately bought up which tells you everything you need to know about this very strong bull market. I’m still of the mindset that we are entering a climax run where the market just takes off and rallies into no-man’s land. Historically, a climax run occurs in the late stages of a bull market and you can easily see the market surge 50% in a few months as the buying frenzy gets out of control. We still have a slew of earnings that are coming out over the next few weeks but needless to say, in the short-term, the market is way overdue to pullback. 

Mon-Wed Action:

Stocks rallied on Monday, erasing slight losses from earlier in the session, as U.S. lawmakers reached a deal that would re-open the government after it closed Friday night at midnight. Separately, earnings season is off to a good start. So far, nearly all of the big banks are trading higher after reporting Q1 results and nearly 68% of the companies in the S&P 500 that reported earnings beat estimates according to data from CNBC and FactSet. After Monday’s close, Netflix gapped up after reporting solid numbers. On Tuesday, the Nasdaq and S&P 500 hit fresh record highs as Netflix surged. The video streaming giant said it added 8.33 million new subscribers, easily beating the Street’s estimate for a gain of 6.39 million.  Netflix’s stock vaulted over +10% on Tuesday which helped the company’s market cap jump above $100 billion for the first time. Stocks opened higher on Wednesday, but sold off mid-day before rallying back into the close.

Thur & Fri Action:

Stocks were quiet on Thursday after weaker-than-expected housing data was released. On Wednesday, existing home sales missed estimates. Then, on Thursday, New Home Sales came in at 625,000, missing estimates for 680,000. A slew of housing stocks fell on the news. Stocks rallied on Friday after President Trump gave a speech in Davos and said U.S. is open for business. Before Friday’s open, the government said, Q4 GDP rose by 2.6%, missing estimates for a gain of +2.9%.

Market Outlook: Bulls Are Strong

The bulls are back in control and the market remains very strong. As always, keep your losses small and never argue with the tape. Hit A Wall? Want To Get More Done? Achieve More Goals? We Can Help.
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Week-In-Review: Stocks Continue To Rally As Earnings Season Begins

Stocks Rally As Earnings Season Begins

Not much changed from my comments last week. Stocks went from being overbought, to being very over-bought in a matter of a few weeks. The fact that the market refuses to fall in a meaningful fashion clearly shows you how strong the bulls are right now. Stepping back, it is important to keep a cool head and remain cognizant of the fact that the market is very over-bought and due to pullback. Buying up here, after a big move, is not prudent and it is a matter of when, not if, the market pulls back. The first important level to watch is the 50 day moving average for the major indices. Last week I noted that the semiconductor stocks ($SMH) fell while the broader markets rallied. Someone most of have been reading because, since then, Semis rallied hard and are now back above the 50 DMA line. Stepping back, the market remains very strong as we head into earnings season. Remember, in bull markets, surprises happen to the upside, not the downside. 

Mon-Wed Action:

Stocks were closed on Monday in observance of the MLK holiday. Stocks gapped up over 200 points on Tuesday but sellers finally showed up and the Dow fell around 100 points intra -day before rallying back and closing unchanged. On a daily bar, that was a negative reversal which normally marks a near term high. Instead of falling, stocks rallied hard on Wednesday after Apple (AAPL) said it will repatriate billions of dollars in overseas cash and several big banks reported earnings. The Dow jumped 322 points as investors cheered a strong start to earnings season. Accordingly to data from CNBC and Reuters, most of the companies that have reported earning so far have beat estimates.

Thur & Fri Action:

Stocks were mixed to slightly lower on Thursday as the market paused to digest its recent (and very strong) gain. Morgan Stanley (MS) reported stronger-than-expected earnings which capped off a bullish start to earnings season from the big banks. So far, most of the big banks rallied after reporting earnings which is a bullish sign. Separately, some people were concerned about a government shut down. Congress has until Friday night to avoid a shutdown. Historically, a government shutdown leads to a short-term pullback for the market. Stocks were quiet on Friday as the market waited to see what would happen in D.C. with respect to the government shutdown. The official deadline is Friday at midnight.

Market Outlook: Bulls Are Strong

The bulls are back in control and the market remains very strong. As always, keep your losses small and never argue with the tape. We’ve All Hit A “WALL” Before. Learn How To Break Your Mental Walls & Accomplish Your Goals…Learn More Here

Week-In-Review: Stocks Soar Ahead of Earnings Season

Stocks Rally Ahead of Earnings Season

Stocks went from being overbought, to being very over-bought in a matter of a few weeks. The fact that the market refuses to fall in a meaningful fashion clearly shows you how strong the bulls are right now. Stepping back, it is important to keep a cool head and remain cognizant of the fact that the market is very over-bought and due to pullback. Buying up here, after a big move, is not prudent and it is a matter of when, not if, the market pulls back. The first important level to watch is the 50 day moving average for the major indices. The one negative divergence that showed up on my radar last week was that the semiconductor stocks ($SMH) fell while the broader markets rallied. Semis tend to be a leading group, so I will continue to watch them closely. Outside of that, the market remains very strong as we head into earnings season. Remember, in bull markets, surprises happen to the upside, not the downside. 

Mon-Wed Action:

On Monday, stocks ended mixed to slightly lower as the market paused to digest the Dow’s strongest start to a new year since 2006. Right out of the gate in 2018, the major indices hit fresh record highs and also broke above key milestones. The Dow, S&P 500 and Nasdaq closed above 25,000, 2,700 and 7,000, respectively. On Tuesday, stocks rallied sharply helping the benchmark S&P 500 to enjoy the best start to a year since 1987.
On Wednesday, sellers showed up in the morning but the bulls quickly stepped in and aggressively bought stocks. At one point the Dow fell about 100 points but rallied back and ended slightly lower by the close.  The fact that the market refuses to pullback, even from very over-bought levels, tells you everything you need to know about the market right now. This type of very strong action tends to occur near a market top, not near a bottom. So just keep that in the back of your mind as this very strong bull market ages.

Thur & Fri Action:

Stocks rallied nicely on Thursday after Delta Air Lines ($DAL) and KB Home ($KBH) both rallied after reporting stronger-than-expected quarterly profits. Stocks rallied on Friday after several of the big banks reported earnings, and most rallied on the news. Overall, earnings are expected to have grown by 10.6% during the fourth quarter, according to S&P Capital IQ. Remember, from my point of view, the most important factor to look at during earnings season is how the market and individual stock react to their earnings.

Market Outlook: Bulls Are Strong

The bulls are back in control and the market remains very strong. As always, keep your losses small and never argue with the tape. What’s Stopping You From Achieving Your Goals? Answer: Your Mental Blocks…Learn More Here