Meltup

Nov

2023

How We Called the Santa Rally Week’s Before Anyone Else

By Graham Summers, MBA

The following are excerpts from my Private Wealth Advisory market update to private clients written on 11-2-23. At that time the S&P 500 was trading in the 4,200s. It’s at 4,531 today.

The door is open to a Santa Rally to 4,600 or even higher on the S&P 500.

Why?

The Treasury just removed the single largest concern for stocks for the remainder of the year.

As I’ve noted previously, one of the most difficult aspects of stock market investing is that the market is a discounting mechanism for millions, if not billions, of pieces of information. The stock market represents the collective decisions of millions of individuals all of whom are thinking about a myriad of data points/ issues… and all of whom have literal money on the line.

However, out of all the millions or billions of pieces of information that the market is discounting at any given time, it typically only really cares about two or three issues at a time.

Sometimes it’s inflation. Other times it’s what the President is doing (or tweeting). Other times it’s China. Other times it’s what the Fed is doing or about to do. Other times it’s the economy. And so on and so forth.

What makes things even more difficult is the fact that the market changes its focus all the time. It might be really focused on inflation for a few weeks only to then ignore inflation for months on end. Similarly, the market might go weeks without acknowledging anything Fed officials say, only to then care a great deal about a single statement made by a single Fed official during an hour-long Q&A session.

I bring all of this up, because since late-July/ early-August 2023, the #1 thing the market has cared about has been the size of the Treasury’s long-duration debt issuance…

On July 31st 2023, the Treasury announced its financing needs for the third quarter (July through September). The Treasury announced it would:

1) Need to borrow $274 billion more than previously expected.

2) Increase its issuance of longer duration Treasury bonds for the first time since 2021.

Regarding #2, the actual increase in dollar terms of long duration bonds that the Treasury needed to issue was relatively small ($102 billion vs. $96 billion). However, the fact that there was increase in long duration issuance, combined with the increase in total debt issuance ($274 billion) was a surprise.

And the bond markets HATE surprises.

Since that time, bond investors have been dumping ALL long duration bonds. This has resulted in long-term Treasury yields rising (bond yields rise when bond prices fall). And because the stock market is priced based on long-duration Treasury yields, this has meant a sell-off in stocks.

The chart bel shows the yield on the 10-Year U.S. Treasury and the S&P 500 from the last QRA announcement on July 31st 2023 until last week. As you can see, the two items have been moving in lockstep.

Which brings us to this week (week of 10-30-23).

On Monday the 30th of October, the Treasury issued its QRA for the fourth quarter of 2023. It surprised the markets (in a good way) by stating that it would borrow only $776 billion (this was $76 billion less than previously expected).

Then, on Wednesday (11-1-3), the Treasury released its Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee.

In it, the Treasury Borrowing Advisory Committee wrote the following (emphasis added)

The Committee supported meaningful deviation from the historical recommendation for 15-20% T-Bill share. While most members supported a return to within the recommended band over time, the Committee noted that the work Treasury has done to meaningfully increase WAM over the past 15 years affords them increased flexibility with T-Bill share in the medium term.

Source: Treasury.gov

As I explained to clients in the remainder of this market update, the decision of the Treasury to rely extensively on short-term T-bills to finance the deficit would ignite a “risk on” rally that will likely last into year-end.

Since that time, the S&P 500 has done this:

For more market insights and analysis, join our free daily market commentary Gains Pains & Capital. You’ll immediately start receiving our Chief Market Strategist Graham Summers, MBA’s briefings to your inbox every morning before the market’s open.

And if you sign up today, you’ll also receive a special investment report How to Time a Market Bottom that the market set-up that has caught the bottoms after the Tech Crash, Housing Bust, and even the 2020 pandemic lows.

Even more importantly, you’ll find out what this trigger says about the market today!

This report usually costs $249, but if you join Gains Pains & Capital today, you’ll receive your copy for FREE.

To do so…

https://phoenixcapitalmarketing.com/TMB.html

Aug

2023

Ignore the Noise, This is the Framework For the Markets Today

By Graham Summers, MBA

Nothing has changed in the U.S. in the last month.

The primary framework for investing in the U.S. is as follows:

1) The stock market is bubbling up due to:

a. There being too much liquidity in the financial system.

b. Inflation, particularly core inflation remains elevated (4.8%).

c. Stocks are a better inflation hedge that bonds or cash.

2) The U.S. economy isn’t growing rapidly, but it’s not contracting either.

a. The Atlanta Fed’s GDP Now metric shows economic growth of 2.4%.

b. The Federal government is running its largest deficit as a percentage of GDP in history outside of wartime/ a recession. Much of this deficit is going towards social programs and stimulus measures.

c. Social spending and economic stimulus measures will continue if not increase as we head into the 2024 Presidential election.

d. The recent debt ceiling deal removes all spending caps through the 2024 election.

Put simply we are in a situation in which nothing is going great, but pretty much everything is going OK. Inflation remains high, but it has come down from its peak. The economy is still growing, albeit at a sub-3% pace. And there is ample liquidity in the financial system.

All of this is generally “risk on” for the markets… which means this situation will continue until something significant breaks. This doesn’t mean that stocks won’t correct or ever fall in price again. But it does mean that we are likely in a new bull market and that things will continue to be in “risk on” mode until something major breaks.

Regarding the potential for a recession, the yield curve, particularly the all-important 2s10s (what you get when you subtract the yield of the 2-Year U.S. Treasury from the yield of the 10-Year U.S. Treasury) remains extremely inverted.

This has predicted every recession since 1955. However, the actual recession doesn’t hit until this dis-inverts, meaning it moves back into positive territory. And as the below chart shows, it can take months if not years for the yield curve to dis-invert once it becomes inverted.

Put simply, until this chart moves back into positive territory, this is just a warning that a recession is coming eventually. Nothing more.

So again, there are red flags in the financial system today, but these are warnings not signals that it’s time to get REALLY bearish. The purpose of investing is to make money, not miss out on gains because of a warning. So we ride this bull run for as long as we can until it ends.

Indeed, my proprietary Bull Market Trigger is about to register its first “buy” in over a decade.

This signal has only registered TWO times in the last 25 years: in 2003 and 2010. And it’s close to registering a new signal today,

If you’ve yet to take steps to prepare for invest accordingly, we have published an exclusive special report How to Time a Market Bottom.

It details the my proprietary bull market trigger, how stocks have performed following prior signals, and what it is stating right now.

Normally this report would be sold for $249. But we are making it FREE to anyone who joins our Daily Market Commentary Gains Pains & Capital.

To pick up your copy, swing by:

https://phoenixcapitalmarketing.com/TMB.html

This image has an empty alt attribute; its file name is signature.jpg

Jan

2021

What Gamestop Means for the Broader Market

Stocks have entered a kind of speculative frenzy.

You’ve no doubt heard or read about Gamestop (GME) the bricks and mortar video game retailer.

The company has been in trouble for months, failing to turn a profit since 2018. And this is happening despite revenues growing.

Because of this, hedge funds have taken MASSIVE short positions in this company, borrowing shares from their brokers to bet that GME’s stock will collapse as the company lurches towards bankruptcy.

How big were the bets against GME’s stock? Well over 100% of the company’s shares are currently being used by shorts.

Yes, short sellers can technically borrow more shares than actually exist. And that’s where the speculative frenzy comes in.

Individual traders,(not institutional traders or hedge funds), who are big fans of GME’s business have launched a campaign to trigger a short squeeze in GME shares.

Remember how I said the short sellers had “borrowed” GME shares? Well, this means that they need to return those borrowed shares to their brokers at some point.

The only way to do this is by buying GME’s stock.

As a result of this, GME shares have gone from $20 to over $200 in pre-market trader today. And they’ve done this in the span of two weeks.

Let’s be clear here, this move has NOTHING to do with GME’s business. This is 100% manipulation being triggered by traders taking advantage of the shorts to ignite an explosive rally.

This tells us one thing…

That for the first time in more than two decades, individual investors are coming back into stocks.

The financial media likes to talk about stocks as though everyone on the planet owns them. It’s true that roughly half of American households have exposure to the stock market, but almost all of this exposure is based on indirect purchases via 401(k)s and other stock-based retirement accounts.

Rarely, if ever, do individual Americans open brokerage accounts and start buying stocks directly.

The last time they did was at the height of the Tech Bubble – the largest stock market bubble in history. A bubble driven by loose money from the Fed and a technology revolution. A bubble that saw individual stocks rising by 25% or even 50% in a single day.

Much like what GME is doing today.

That was the kind of bubble that required individual Americans to get “stock crazy” to the point of opening individual brokerage accounts to start day trading. At the height of the Tech Bubble, a little over one in five Americans were doing this.

And we’re about to see another similar episode.

Yes, this is a bubble and yes it will burst. But for now, it remains intact.

With that in mind, we’ve just published an investment report titled Triple Your Money With the Mother of All Bubbles.

It outlines what the Fed is doing, why it’s doing it, and a unique investment that could easily triple as the Fed unleashes a tsunami of liquidity pushing stocks to nosebleed levels.

The last time the Fed began an easing cycle, this investment rose over 1,439%. And this time around we could see similar gains.

To pick up your copy of Triple Your Money With the Mother of All Bubbles go to:

https://www.phoenixcapitalmarketing.com/MOAB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Nov

2020

S&P 500 at 4,000 By Year End? Don’t Laugh

The market continues to grind higher.

At this point, we’re about to enter the final month of the year. Most fund managers have had a TERRIBLE year. Only a handful of them accurately predicted the March meltdown and even fewer managed to buy at the lows once the market bottomed.

What does this mean?

That an entire industry of money managers has about four weeks to play “catch up” so they can post the best possible returns for 2020. Those who fail will lose clients and assets under management.

This has the makings of a market melt-up into year-end.

The S&P 500 has broken out of its three-month consolidation period. This breakout if it holds predicts a move to 4,000 before year-end.

This sounds crazy I know, but which is crazier… 4,000 on the S&P 500, or the notion that money managers will say, “you know what, I’ve performed terribly this year… I’m going to just take it easy in December and post my awful returns to my clients.”

You get my point.

Throw in the fact that both the Fed and the European Central Bank (ECB) are both printing tremendous amounts of money with both banks’ balance sheets hitting new all-time highs and you have the makings of a MELTUP into year-end.

And then of course… there’s the market’s reaction if the 2020 Presidential election ends up going for Trump.

KABOOM!

With that in mind, I stand by my original forecast that President Trump will end up winning this election. And our clients are already doing this with our new special report titled…

The MAGA Portfolio: Five Investments That Will Make Fortunes During Trump’s Second Term.

In it, we detail five unique investments that we expect will produce the most extraordinary gains during President Trump’s second term.

Each one of these investments is in a unique position to profit from the combination of Trump economic reforms and Fed monetary easing, combining high growth opportunities with extreme profitability.

We are offering this report exclusively to subscribers of our e-letter Gains Pains & Capital. To pick up your copy please swing by:

https://phoenixcapitalmarketing.com/MAGA.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Nov

2020

How to Profit From Fund Managers’ Panic Buying Into Year-End

The market continues to grind higher.

What does this mean?

This has the makings of a market melt-up into year-end.

The S&P 500 has broken out of its three-month consolidation period. This breakout if it holds predicts a move to 4,000 before year-end.

You get my point.

And then of course… there’s the market’s reaction if the 2020 Presidential election ends up going for Trump.

KABOOM!

With that in mind, I stand by my original forecast that President Trump will end up winning this election. And our clients are already doing this with our new special report titled…

The MAGA Portfolio: Five Investments That Will Make Fortunes During Trump’s Second Term.

In it, we detail five unique investments that we expect will produce the most extraordinary gains during President Trump’s second term.

Each one of these investments is in a unique position to profit from the combination of Trump economic reforms and Fed monetary easing, combining high growth opportunities with extreme profitability.

We are offering this report exclusively to subscribers of our e-letter Gains Pains & Capital. To pick up your copy please swing by:

https://phoenixcapitalmarketing.com/MAGA.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Oct

2020

Gold Is Holding Support, Will the Next Move Be Up?

Gold continues to hold up surprisingly well despite $USD strength.

The precious metal is coining tighter and tighter into a triangle formation. When the breakout finally comes, it will be violent.

If you need signs of impressive relative strength, look at the gold mining juniors (GDXJ). During selloffs it is not uncommon to see this ETF drop 3% of even 5% in a single day.

It fell just a little over 1% on Friday.

And then there is gold’s long-term chart, where we see the precious metal consolidating at support (green line) an explosive move up. This is very similar to the consolidation period we saw in late 2019 (purple rectangle).

If we hold that green line the next leg up will take your breath away. It might not be this week or next, but when it hits, it will be massive.

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

As I write this there are just 17 left.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Apr

2020

Three Charts You Need to See Today

As I keep saying, it doesn’t matter what we think… it’s what the market thinks that matters.

Personally, I think it’s insane that the Fed has nationalized the entire debt markets. Similarly, I think it was a massive mistake to shut down the economy. And I think that the human suffering created by this mess is truly horrific.

Stocks don’t seem to think any of this. Stocks think that things are going to recover relatively quickly. I think that’s insane, but again, as an investor, it doesn’t matter what I think… it’s what the market thinks that matters.

With that in mind, stocks are breaking through resistance this morning. Multiple “risk” measures I track suggest we’re moving higher.

The ratio between stocks and Treasuries has broken above its 50% retracement and held there.

————————————————————

Get a LIFETIME Subscription to All Of Our Products For Just $5,000

An annual subscription (1 year) to all of our current newsletters costs $3,500.

But today, you can get a LIFETIME subscription to ALL of them, along with every new product we ever launch, for just $5,000.

Today is the last day this offer is available.

To lock in one of the remaining slots…

CLICK HERE NOW!!!

———————————————————–

Credit spreads have held support (reds line) and are forming bull flags (red lines). This suggests an upwards breakout which would be decidedly “risk on.”

And finally, breadth continues to move higher. Moreover, every correction in breadth has held support before breaking higher (red lines). This tells us more and more stocks are joining into the rally. That is what we need to see for a new bull market to begin.

Again, I think the fact this is happening during an economic depression is insane. But as investors, it doesn’t matter what we think… it’s what the market thinks that matters.

And the market thinks more upside is coming.

They also think the Fed and other central banks are going unleash an inflationary storm. Gold is breaking out in every major currency.

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Feb

2020

Do NOT Let Politics Stop You From Taking This Once in a Life-time Opportunity

Ignore the doom and gloom crowd, they’re trying to scare you into missing out on one of the greatest investing environments in history.

That investing environment is based on the coming U.S. economic boom. The U.S. is the largest economy in the world by a considerable margin (it’s roughly the size of the 2^nd, 3^rd, and 4^th, largest economies combined).

If the U.S. enters an economic boom, the rest of the world will follow. The reason so few investors understand this is because it’s been decades since the U.S. has a real economic boom.

Beyond the internet, what major innovation of the last 20 years can we point to? Social media hasn’t increased productivity in any meaningful way. Crypto currencies are just another investing fad driven by excess liquidity. Sure, computers are faster and there are electric cars, … but has anything truly revolutionary occurred?

Not yet. But it’s going to over the next five years.

The reason for this is that President Trump is going to win the 2020 election in a landslide. And without another election looming, his administration is going to cut regulations and business limiting legislation at a pace not seen since the Reagan administration.

This, combined with the Fed easing monetary conditions, is going to induce an economic miracle in the U.S. We’re going to see GDP growth of 3%, 4%, possibly even 5%.

And the markets knows it. Indeed, if the global economy is falling off a cliff, the markets didn’t get the memo.

Consider copper. The industrial metal has so many uses that it’s often called “the commodity with a PhD in economics” because it so accurately predicts economic activity.

A supposed coronavirus epidemic, the trade war, the so-called recession (it’s not), impeachment, etc. Despite all of that negative stuff, copper didn’t even break below support (red line). And it remains WELL above its 2016 low. In fact, if anything, it is forming a clear bull flag (purple lines) and is preparing for what looks to be a MAJOR bull market.

Let me ask you, if the below chart was a stock, would you be bullish or bearish?

But what about industrial commodities in general? Surely, they’re showing signs of trouble, right? There’s NO WAY they’re predicting an economic boom!

Nope. Here again we see a near decade long bear market ending (blue lines). More recently a two year downtrend has been broken (purple lines) and support (red line) has held.

Again, if this chart was a stock, would you be a buyer or a seller? Personally, I know I’d be backing up the truck.

What about lumber? All that industrial metals demand is probably just China hoarding commodities to control prices. Surely, lumber, which is more closely aligned with the U.S. economy is showing signs of trouble?

I’ve got three words for you: Raging. Bull. Market.

The two-year downtrend (purple lines) is broken. And the next leg up in a MAJOR bull market is here.

Look, I don’t care about what various gurus or talking heads are predicting… I’d rather listen to the markets.

After all, they’re what’s going to make you rich…

And the markets are telling us… no, they’re SCREAMING that the U.S. economy is about to explode higher as President Trump wins the 2020 election in a landslide.

I want to be clear here…

I DO NOT care about politics. You can hate President Trump or you can love him. That’s 100% up to you.

But the reality is that under the Trump administration the stock market is giving us a once in a lifetime opportunity to GET RICH from our investments.

My clients are already doing this with our new special report titled…

The MAGA Portfolio: Five Investments That Will Make Fortunes During Trump’s Second Term.

In it, I detail five HIGH OCTANE investments that are primed to EXPLODE higher when President Trump wins a second term.

In it, I detail five unique investments that I expect will produce the most extraordinary gains during President Trump’s second term.

Each one of these investments is in a unique position to profit from the combination of Trump economic reforms and Fed monetary easing, combining high growth opportunities with extreme profitability.

We are offering this report exclusively to subscribers of our e-letter Gains Pains & Capital. To pick up your copy please swing by:

https://phoenixcapitalmarketing.com/MAGA.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Feb

2020

Markets were closed yesterday in honor of President’s day, so today (Tuesday) is the first day of market action for the week.

Stocks are slightly down as I write this, (less than 0.5). The S&P 500 remains in a clear bull market channel. But there are signs we could see a pull-back (think 3% or so).

Stocks follow credit. And credit has just hit the level at which I would expect to see a pullback of sorts.

—————————————————–

Get a LIFETIME Subscription to All Of Our Products For Just $2,500

An annual subscription to all of our current newsletters costs $1,500.

But today, you can get a LIFETIME subscription to ALL of them, along with every new product we ever launch, for just $2,500.

That’s less that the cost of two year’s worth of subscriptions.

And if you are already a paying subscriber to one or more of our newsletters, we will refund your current orders, if you take advantage of this offer.

To do so…

CLICK HERE NOW!!!

——————————————-

The same is true of breadth. If we were going to see a pullback, there is where I’d expect it to hit.

Put simply, if we are going to get a pullback, it should start this week. But based on the market’s internals and price action, this pullback should be shallow (think 3% or so) and used as a buying opportunity.

Why?

Stocks are a discounting mechanism. And they are the most accurate forecaster of future events in history. So, this raises the question… what is the stock market discounting with the recent global breakout?

I believe the market is discounting a landslide victory for President Trump in 2020, followed by an economic boom in the U.S.

The fact is that for 20 odd years, the U.S. has been relatively weak from an economic perspective. Most of the economic growth was driven by asset bubbles, not a growth in incomes or innovation.

Beyond the internet, what major innovation of the last 20 years can we point to? Social media hasn’t increased productivity in any meaningful way. Crypto-currencies are just another investing fad driven by excess liquidity. Sure, computers are faster… but has anything truly revolutionary occurred?

The answer is no.

I believe this will change in the coming months and years. The combination of the Trump administration’s regulation cutting, and the Fed’s monetary easing, is going to provide risk-takers, entrepreneurs, and innovators with a unique environment in which new, revolutionary ideas can truly ignite.

This is what U.S. stocks began to discount when they broke of two-year consolidation range in mid-2019. At that it was evident that the impeachment farce would go nowhere and that the Fed finally began to ease again.

This is going to ignite a global melt-up. The U.S. is the largest economy in the world with a GPD equal to that of the 2^nd, 3^rd, and 4th largest economies combined.

Which is why U.S. stocks were the first to ignite to the upside. The Global Dow has only just joined in, breaking out of its own two-year consolidation range.

Yes, for the last two years global stocks have gone nowhere. They have only just begun to catch wind of what U.S. stocks figured out six months ago.