At this point, the market is beyond overextended.
Last week was options expiration (Wall Street’s favorite time to shred options traders). And thanks to Ben Bernanke’s promise to keep the money printers running (“none of what we’ve said implies tighter policy any time soon”) traders shot for 1,700 on the S&P 500 last week.
What’s truly worrisome is that stocks are rallying higher and higher while economic fundamentals get worse and worse. GDP estimates for the second quarter have been reduced to 1% or even lower. Goldman Sachs has growth at 0.8%. Barclay’s sees 0.5%. And Morgan Stanley sees us hitting 0.3% growth.
These are truly horrible forecasts coming after the brutal downward revision for the first quarter (from 2.4% to 1.8%). And when you consider that growth is slowing like this while the Fed is running QE 3 and QE 4, then it becomes quite clear that the Fed is fast running out of out of evidence that QE accomplishes much of anything.
The signs of this are already showing up in corporate results. IBM, Intel, eBay, Google, Microsoft, Philip Morris, Blackberry have all missed revenue estimates. Corporate profits can be manipulated in a variety of ways. Revenues on the other hand cannot be fudged. Either money comes in the door or it doesn’t. The fact that so many firms are missing revenues estimates does not bode well for the market.
And against this backdrop of slowing growth and weaker corporate returns, inflation is once again rearing its head. Crude oil just hit a 16-month high. Home prices are soaring across the US with year over year increases over 30% (the highest on record) in some metropolitan areas. Costs for food are up with beef rising 4%, steak rising 11%, and so on.
In short, the sheer number of negative factors facing stocks today is enormous. And in this environment of slowing growth and falling corporate results, stocks are at all time highs.
This will all end very badly.
This is not doom and gloom. This is a fact. The Fed has created an even bigger bubble than the 2007 one.
The time to prepare for this is not once the collapse begins, but NOW, while stocks are still rallying. Stocks take their time moving up, but when they crash it happens VERY quickly.
With that in mind, I’ve already urged my Private Wealth Advisory clients to start prepping. We’ve opened six targeted trades to profit from the stock bubble bursting.
We’ve also taken care to prepare our finances and our loved ones for what’s coming, by following simple easy to follow steps concerning our savings, portfolios, and personal security via my Protect Your Family, Protect Your Savings & Protect Your Portfolio reports.
I’ve helped thousands of investors manage their risk and profit from market collapses. During the EU Crisis we locked in 72 straight winning trades and not one loser, including gains of 18%, 28% and more.
In fact, we’re currently on another winning streak having locked in nine winning trades in the last two months, including gains of 21% and 25%.
All for the small price of $299: the annual cost of a Private Wealth Advisory subscription.
To take action to prepare for what’s coming… and start taking steps to insure that when this bubble bursts you don’t lose your shirt.
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Yours in Profits,