Stocks Prepare to Crash as the Last Buyer Stops Buying

Stocks are now on borrowed time.

Corporate buybacks have been the single largest driver of stock prices in the last quarter. Institutional investors have been net sellers for 15 weeks. And individual investors have been pulling capital out of stock funds in record amounts.

This leaves corporate buybacks as the sole driver of stocks. But now that is ending.

Announced buybacks plunged 34% in 1Q16. This is the single largest plunge in announcements since 2009.

GPC51716

Now, this does not mean buybacks are drying up all at once. As you can see in the chart above, there were a record number of buybacks announced in 2015. Those plans are beginning to be implemented.

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So there will be a significant degree of corporate buybacks going forward.

However, buyback announcements and actual purchases are not the same thing. Many times companies announce buyback programs that they later fail to complete. So the buying power here is much less than most realize.

Meanwhile, earnings are collapsing, while stocks remain near all-time highs.

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Either earnings need to erupt higher in the next few months (highly unlikely given lack of growth) or stocks need to drop at a minimum 20%.

We’re currently preparing for a similar situation today.

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Indeed, we haven’t closed a single loser since November 2014.

81 straight winners… and not one closed loser… in 18 months.

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So we are going to be raising the price on a Private Wealth Advisory subscription from $199 to $249 at the end of the month.

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Our FREE e-letter: http://gainspainscapital.com/

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Information has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. Phoenix Capital Research and its officers, directors, employees, agents and/or affiliates may have executed, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on this email. 

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